Professional Documents
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Executive Overview............................................................................................................ 3
Introduction......................................................................................................................... 3
Important Sourcing terms in Oracle Purchasing................................................................. 3
Approved Supplier List (ASL)........................................................................................ 3
ASL Attributes ................................................................................................................ 4
Global & Local ASL....................................................................................................... 4
Sourcing Rules ................................................................................................................ 4
Assign Sourcing Rules.................................................................................................... 4
Setup for Sourcing .............................................................................................................. 5
Create a Blanket Purchase Agreement........................................................................ 7
Sourcing Cycle in Core Purchasing .................................................................................. 12
Sourcing Cycle in iProcurement ....................................................................................... 13
Creating a Release from a BPA for a catalog item ....................................................... 13
Creating a Standard Purchase Order from a quotation for a Catalog Item. .................. 14
Creating a Standard Purchase Order from a Contract Purchase Order for a catalog item.
....................................................................................................................................... 15
Creating a Standard Purchase Order from a Contract Purchase Order for a Non Catalog
Item ............................................................................................................................... 16
PO Create Documents Workflow in Sourcing.................................................................. 17
Advanced Features of Automatic Sourcing ...................................................................... 20
Steps to implement Automatic Sourcing ...................................................................... 21
Tables involved in Sourcing ............................................................................................. 25
Summary ........................................................................................................................... 26
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Executive Overview
Sourcing is a function with strategic importance within the broader context of
procurement. Infact it is a subset of procurement with strategic context. Sourcing sets the
stage for the entire companys purchase for direct and indirect materials, and involves
highlevel, company-wide approaches to obtaining materials and services, identifying and
evaluating potential suppliers to meet those needs, negotiating and implementing
contracts with selected suppliers, monitoring and improving ongoing supplier
relationships.
This white paper focuses on the features that sourcing provides in the Procurement
module of Oracle Applications. It lays down the road map towards implementing
sourcing and describes in detail the sourcing cycle with related setups. It also discusses
the new sourcing feature in Oracle Applications- Automatic Sourcing.
Introduction
Oracle Purchasing allows users to automatically source items from suppliers based on the
sourcing rules and purchase agreements. The business needs of Sourcing are
Automatically default supplier and pricing information onto requisition lines
Source the item from negotiated purchase agreements
Reduce manual intervention
All procurement organizations maintain lists that associate the items and services they
buy from supplier organization. Data stored in a global repository containing relevant
details about each item/supplier/supplier site relationship, is known as an Approved
Supplier List (ASL). This repository includes information about all suppliers with
business statuses ranging from Approved (the supplier has demonstrated the ability to
satisfy rigorous quality, cost, and delivery requirements over a sustained period) to
Debarred (the supplier is temporarily/permanently disallowed on purchase orders due to
performance failure, ethics violations, etc.) or '
New'if you have never placed a purchase
order with the supplier.
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ASL Attributes
For each ASL entry, ASL attributes specify the Release Generation Method, purchasing
Unit of Measure, source Blanket Agreements and Catalog Quotations for automatic
reference during document creation.
Sourcing Rules
Sourcing rules define inventory replenishment method for either a single organization or
all organizations in the enterprise. They describe sourcing supply; for any organization,
they answer the question where do I get part A from? User defines rankings and %
allocation for replenishment sources in the form of Sourcing Rules.
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Setup for Sourcing
Define items.
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Create suppliers and supplier sites in the Suppliers window.
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Steps to implement sourcing are
Create a Blanket Purchase Agreement
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a. Direct (Supplier): This option should be selected when the supplier sells
his products or services directly to buyer organization. Specify the
supplier and supplier site.
b. Manufacturer: This option should be selected when the supplier does not
sell his product/services directly to the procuring organization but sells it
through distributors
c. Distributor: This option should be selected when the supplier sells
products made by manufacturers. A distributor needs to be associated
with manufacturer, which implies that a manufacturer should be defined in
ASL before defining its distributor.
1) Yes - This ASL entry is valid for all inventory organizations in this
Operating unit.
2) No - This ASL entry is local, meaning that it is valid only for the
organization chosen in the Organizations window when first
opening the Approved Supplier List window.
Note: If two ASL entries exist for the same item or commodity, one
Global entry that applies to all organizations and one local entry that
applies only to the local inventory organization, the local entry takes
precedence.
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To define the supplier and commodity/item attributes:
NOTE: If Requisition Line(s) are for a one-time item then the Release
Generation Method is not considered and the requisition is a candidate for
Automatic creation by the CREATEPO workflow. This Occurs in the
workflow (CREATEPO) after the workflow has verified that the
Requisition has the required information for automatic release creation
--Blanket
--Quotation
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c. Choose a Document Number.
d. Choose a Line Number. The Status and Effective Dates for the
document, if any, are displayed.
3. Indicate whether this sourcing rule is used for all organizations (global)
or a single organization (local).
4. Enter effective dates. A start date is mandatory, but entering an end date
is optional.
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To assign a sourcing rule:
3. Enter an Item/Category if the selection for the Assign To Type is Item or Item-Org.
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Sourcing Cycle in Core Purchasing
1. Create a requisition for the Item for which the Sourcing Rule and Approved
Supplier List has been created.
2. The Supplier and Supplier Site defaulted from the Sourcing Rule.
4. The Blanket Purchase Agreement, which was specified in the ASL, is now
attached to the Requisition.
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ItemType: PO Requisition Approval
Process Deferred: Yes
Process Stuck: No
Process Timeout: No
This step is not required if using the Create Documents workflow in Online
Mode, which is determined by the value of Requisition Approavl workflow
item attribute = Send PO Autocreation to Background is set to No. If this is set
to No then the Create Documents workflow will be done in online mode. If it is
set to yes it will be sent to the Background and this step is required
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The CREATEPO workflow performs the following checks before creating a release.
Wfstatus output for ItemType CREATEPO provides the status of these activities.
Also it validates the Source document extracted for that item and the Release
Generation Method from the extracted ASL.
If the Requisition Line(s) are for a one time item then the Release Generation Method
is not considered and the Requisition is a candidate for automatic creation by the
CREATEPO workflow.
If all the above conditions are satisfied then it will create the release.
The CREATEPO workflow performs the following checks before creating a release.
Wfstatus output for ItemType CREATEPO provides the status of these activities.
Also it validates the Source document extracted for that item. If all these conditions are
satisfied then it will create the Standard PO.
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Creating a Standard Purchase Order from a Contract Purchase Order for
a catalog item.
i) Create one item
ii) Create one contract purchase oder and ASL for that item. Contract is not
specified in ASL.
iii) Extract item and ASL in iProcurement.
iv) Search for the item in iProcurement.
v) Create a requisition in iProcurement for this item
vi) Approve the requisition.
vii) Run the workflow background process.
NOTE: If the Requisition Approval Worlflow item Attribute Send PO
Autocreation to Background is set to Yes.If Send PO Autocreation to
Background is set to No then this stepsis not required
The CREATEPO workflow performs the following checks before creating a release.
Wfstatus output for ItemType CREATEPO provides the status of these activities.
Now as it gets the details from the source document in core purchasing it will create a
standard Purchase order.
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Creating a Standard Purchase Order from a Contract Purchase Order for
a Non Catalog Item
The CREATEPO workflow performs the following checks before creating a release.
Wfstatus output for ItemType CREATEPO provides the status of these activities.
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PO Create Documents Workflow in Sourcing
The PO Create Documents Workflow is used in Sourcing to create the releases from
BPAs and standard purchase orders from Quotations automatically.
The wft file involved is poxwfatc.wft. Follow the below steps in order to configure the
PO Create Documents Workflow
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Following attributes need to be set for
A) Generating Release from a BPA in Sourcing
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The attribute SEND_CREATEPO_TO_BACKGROUND should be set to Y if the
PO Autocreation has to be sent to Background.
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Advanced Features of Automatic Sourcing
Oracle Purchasing enables the automatic creation of Sourcing Rules, Sourcing Rule
Assignments and Approved Supplier List entries during Blanket Agreement approval
submission. The system automatically creates the relevant entries, once the Blanket
Agreement is approved.
1) A new Profile Option "PO: Allow Auto-generate Sourcing Rules and ASL" has been
introduced. The default value is ' None' . In order to activate this feature, the profile option
value needs to be set to either "Create Only" or "Create and Update".
If the value is set to "Create only" then the "Enable Automatic Sourcing" checkbox and
the "Release Generation Method" field are visible and can be updated on the Approval
window.
If the value is set to "Create and Update", then the "Enable Automatic Sourcing"
Checkbox, the "Update Sourcing Rule and ASL Entries" checkbox and the "Release
Generation Method" field are visible and can be updated on the Approval window.
Note: If the Archival mode being used for Blanket Agreements is "Archive on Print", this
feature cannot be used and the new fields and checkboxes would not be visible in the
Approval window. User must select "Archive on Approve" to use this feature.
2. Sourcing Rule Name Prefix can be customized. The prefix value is read from the
activity attribute "PO Sourcing Rule Name Prefix" in PO Approval Workflow. The
default value is "PURCH".
Note: The new Sourcing Rules will be assigned at the Item Level and will be added to the
assignment set that is specified in the profile option "MRP: Default Sourcing Rule
Assignment set". The ASL will be created as a Global ASL.
This process will update existing Sourcing rules only if all of the following are true:
The process will try to create or update Approved Supplier List entries even if Sourcing
Rule creation/update failed for the Blanket Agreement line item.
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For exception reporting, run the Purchasing Interface Errors report with a source type of
'
ASR - Automatic Sourcing Rule Builder'to view the exceptions encountered during the
creation of sourcing rules and/or approved supplier list entries.
iii) Set the Profile Option MRP: Default Assignment Set to the Set in which
Sourcing Rule will get attached.
iv) Create a BPA. Ensure that the effectivity dates are specified
v) Approve the BPA. In Approval window check the checkbox Create Sourcing
Rule and select the Release Generation method
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Note: Please note that this checkbox will only be enabled when the
Profile Option PO: Allow Auto-generate Sourcing Rules is set.
vi) Run the Workflow Background Process for item type = PO Approval ( even if
the sytem is setup to use PO approval in online mode this background process
must be run to create or update the ASL / Sourcing Rules for the data on the
Blanket Purchase Order submitted for approval.
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vii) ASL is automatically generated with the document attached in the Attribute.
Release Generation Method has also been populated automatically.
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viii) Sourcing Rule is also generated and attached to the assignment set specified in
Profile Option MRP: Default Assignment Set.
ix) The Sourcing Rule will show the same Supplier/Supplier Site with 100% allocation
and same effectivity dates as that of BPA.
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Tables involved in Sourcing
1. PO_APPROVED_SUPPLIER_LIST
PO_APPROVED_SUPPLIER_LIST stores the relationship between an item or
commodity; a supplier, distributor, or manufacturer; ship-to
organizations; and approval/certification status.
2. PO_ASL_ATTRIBUTES
PO_ASL_ATTRIBUTES stores all information for the
supplier/item/organization relationship defined in
PO_APPROVED_SUPPLIER_LIST. This information
is maintained separately to allow each organization to define its own
attributes, even if using a Global ASL entry for the supplier/item
relationship and approval status.
3. PO_ASL_DOCUMENTS
PO_ASL_DOCUMENTS stores sourcing references to supply agreements,
blanket agreements, and catalog quotations associated with particular
suppliers and items in PO_APPROVED_SUPPLIER_LIST.
4. PO_ASL_STATUSES
5. PO_ASL_STATUS_RULES
PO_ASL_STATUS_RULES stores the business rules associated with each
defined ASL status.
6. MRP_SOURCING_RULES
MRP_SOURCING_RULES stores sourcing rule names and descriptions. The
Define Sourcing Rule form populates this table.
7. MRP_ASSIGNMENT_SETS
MRP_ASSIGNMENT_SETS stores information about Sourcing Assignment Sets.
The Define Assignment Sets form populates this table.
8. MRP_SR_ASSIGNMENTS
MRP_SR_ASSIGNMENTS stores the assignment of sourcing rules
or bills of distribution to items, organizations, category, or
at the global level. The Assign Sourcing Rules Form populates this table.
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9. PO_ASL_ATTRIBUTES_VAL_V (view)
PO_ASL_ATTRIBUTES_VAL_V is a view used by the Create Documents
workflow that is created from table PO_ASL_ATTRIBUTES and table
PO_APPROVED_SUPPLIER_LIST
Summary
Purchasing provides great flexibility in implementing Sourcing. To use this feature
successfully, business needs and supply chain strategy should be identified. With the
correct setups and different techniques of Sourcing outlined in this paper, you have
greater flexibility than ever before to make this feature suit your business processes.
By implementing this sourcing functionality employer will give full access to the users
and free up the purchasing department to concentrate on securing the best deals for the
organization.
Acknowledgement
We wish to record our sincere appreciation towards:
Mike Williams, Linda Johnston, Lisa Oinonen and Starr Smelley of Procurement Team
for reviewing this paper and for making it complete with their feedback.
We are grateful to Adiraju Sastry and Chandu Tadanki for their constant encouragement
and support.
References
Oracle Purchasing User'
s Guide Release 11i (Part No.A82913-04)
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ASL-Sourcing in Procurement
November 2004
Author: Nandini basu & Rajiv Arora (CPIM)
Oracle Corporation
World Headquarters
500 Oracle Parkway
Redwood Shores, CA 94065
U.S.A.
Worldwide Inquiries:
Phone: +1.650.506.7000
Fax: +1.650.506.7200
www.oracle.com
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