Oracle Procurement Process: Purchase Orders

Oracle Purchasing Document Flow

Oracle Purchase Order Types

Oracle Purchase Order Types

In Oracle Purchasing there are several different types of purchase orders designed to satisfy different business requirements.

Standard Purchase Order (PO)

A one-time commitment to purchase goods or services.  You create standard purchase orders when you know the details of the goods or services, estimated costs, quantities, delivery schedules, and accounting distributions.

Planned Purchase Order

A long-term purchase agreement committing you to buy goods or services.  Planned purchase orders include tentative delivery schedules and accounting distributions.  Create planned releases to authorize suppliers to ship. 

Blanket Purchase Agreement

A long-term agreement allowing for stable pricing over the life of the agreement, while also allowing flexible order quantity commitments and delivery schedules.  Pricing on blanket purchase agreements can include break pricing.  You typically use this agreement when negotiating volume discounts on individual items.  Create blanket releases to authorize suppliers to ship.

Contract Purchase Agreement

A master terms and conditions document.  Typically use contract purchase agreements when negotiating pricing on a volume of business to manage terms and conditions.  Suppliers are authorized to ship through standard purchase order lines referencing the contract.  Contracts can be coupled with a catalog quotation to reference pricing on a per item basis.

Global Agreement (not shown above)

A special type of purchase agreement that is similar in structure to a blanket purchase agreement. Using global agreements, buyers can negotiate enterprise-wide pricing, business by business, then execute and manage those global agreements in one central shared services environment. Organizations within the enterprise then access the agreement to create purchase orders that leverage the Pre-negotiated prices and terms.

Note: Global agreements can be either Blanket or Contract Purchase Agreements.

Purchase Order Components and Record Structure

 
The structure of an Oracle Purchasing purchase order consists of four major components.

Header

Each purchase order has a header that provides the supplier’s name/number and address (through sites), basic ship-to and bill-to addresses (through locations) and a status.

Lines

Goods or services ordered are listed on the Lines region, including quantities, price, need-by date, notes to supplier and price reference information.  You can order system items or one-time items (a category and description).  Even companies who are not inventory focused can benefit from defining system items to reduce data entry requirements for their staff.

Shipments

Use the Shipments window to specify inventory organizations, ship-to locations and the date you want your supplier to deliver the items on the purchase order line.  A purchase order line with a quantity of six items can, for example, have two scheduled shipments on separate dates.

Distributions

Use the purchase order Distributions window to enter distribution information for purchase order shipments or to view distributions that Purchasing has automatically created for you. You can enter multiple distributions per shipment line.  You can also view the on-line requisitions included on the purchase order or enter information about paper requisitions in this window.
Approval Assignments for Purchase Order Types

Before going to discus all type purchase orders we need to update approval groups with the details of new document types.

Navigation: MCR PO > Setup > Approvals > Approval Assignments

Purchase Order Statuses - Typical Cycle

Where to Update Statuses

MCR PO > Purchase Orders > Purchase Orders

MCR PO > Purchase Orders > Purchase Order Summary

In Oracle Purchasing, purchase order statuses can be updated either in the Purchase Order window or in the Purchase Order Summary window.  Actions available to effect statuses will be different dependent on the current document status and where you are updating.

Review of Status Types

Incomplete: Initial status on all new purchase orders.

In Process: Status of the document when it’s sitting on the “desk” of the approver identified in your security, routing and approval setups.

Approved: A user with sufficient authority has reviewed and approved the document.

Rejected: Status of the document when the approver has denied approval.

Requires Re-Approval: Status of the document when controlled changes have been made to the document.

Frozen: You can freeze only at the header and release level.  You freeze a purchase order when you want to prevent any future modifications to the purchase order.  When you freeze a purchase order, you can still receive and pay for goods you already ordered.

On Hold: You can place a purchase order on hold only at the header level.  This unapproved the purchase order while preventing printing, receiving, invoicing, and future approval until you remove the hold.

Closed: Oracle Purchasing automatically closes shipments for receiving and invoicing based on controls that you specify in the Purchasing Options window.  Once all shipments for a given line are closed, Oracle Purchasing automatically closes the line. When all lines for a given header are closed, Purchasing automatically closes the document. Oracle Purchasing does not include closed shipments in the Open Purchase Order reports.

Closed for Receiving - You can close for receiving at the header, release, line, and shipment levels. Note that if you close for receiving a purchase order header that is currently open, Oracle Purchasing sets the status of all purchase order shipments to Closed for Receiving, but the purchase order lines and header remain open.

Closed for Invoicing - You can close for invoicing at the header, release, line, and shipment levels. Note that if you close for invoicing a purchase order header that is currently open, Oracle Purchasing sets the status of all purchase order distributions to Closed for Invoicing, but the purchase order lines and header remain open.  The Close for Invoicing status does not prevent you from matching an invoice to a purchase order or to a receipt.  You can close and reopen documents and their components for invoicing and receiving using the Control Document window.

Open: You can reopen documents (at the header, release, line and shipment levels) that have been previously closed to allow additional actions to be performed.

Canceled: Oracle Purchasing lets you terminate an existing commitment to buy from a supplier by canceling document headers, lines, shipments, or releases.  When you cancel a purchase order entity, you are unable to receive or pay for cancelled items and services, however, you can pay for all previously received orders.  Canceled actions are permanent and can not be reversed.  If you are using online requisitions, Oracle Purchasing returns unfilled requisitions associated with cancelled purchase order entities to the requisition pool based on the Cancel Requisitions control you specify in the Purchasing Options window.

Finally Closed: Prevent modifications to or actions against completed documents, lines, and shipments by final closing them. Final-closed documents are not accessible in the corresponding entry forms, and you cannot perform the following actions against final-closed entities: receive, transfer, inspect, deliver, correct receipt quantities, invoice, return to supplier, or return to receiving.  You can approve documents that include final-closed entities, but you cannot approve documents that are final closed at the header level.  Final closing documents is an internal control action that has no bearing on your contractual relationship with the supplier.  You cannot undo a final-close action.

Note:  Only documents that have never been approved can be deleted.  Optionally, you can delete unapproved lines, unapproved shipments and unapproved distributions added to previously approved documents.  Deleted records cannot be viewed once the action is saved.  If you are using automatic numbering, you cannot reuse document numbers that you delete with this option.  If you use online requisitions, Oracle Purchasing returns all requisitions associated with your delete action to the requisition pool.  You can reassign these unfilled requisitions to other purchase orders or releases.