Blanket Purchase Agreement

Blanket Purchase Agreement 
Blanket purchase agreements and releases allow you to negotiate stable, long-term contracts while maintaining flexible delivery schedules and order quantity commitments.  You create blanket purchase agreements when you know the details of the goods or services you plan to buy from a specific supplier, but you do not yet know delivery schedule details.  You can use blanket purchase agreements to specify negotiated prices for your items before actually purchasing them.
When to Use a Blanket Purchase Agreement

Blanket Releases
A blanket release is an actual order of goods or services you issue against a blanket purchase agreement.  The blanket purchase agreement determines the characteristics and the prices of the items.  The release can be created manually or automatically.

Once you have an approved blanket agreement you need only create a release to authorize delivery of goods or services.  You can create blanket purchase agreement releases using the following methods:

·         The Releases window

·         PO Create Documents workflow

·         Auto Create window

·         The Create Releases process

Manually Created Releases

You can manually enter releases against active blanket purchase agreements.  You can set up purchasing to warn you if a blanket purchase agreement exists for items that you try to requisition.  Because the blanket purchase agreement is in place, you can create a blanket release instead of submitting a requisition.  If you choose not to enable to warn if a blanket purchase agreement exists, can submit requisitions and the buyer can create the blanket release.

Automatically Created Releases

Buyers can expedite creation of releases using the Auto Create window or by submitting the Create Releases program.  In addition, the PO Create Documents workflow can be set up to automatically create blanket purchase agreement releases for requisitions that are submitted, regardless of whether their origin is the Requisitions window or Oracle iProcurement.

In Order to create BPA, we can create through Quotation or Auto Create.

1^st We will create BPA through Quotation:
Navigation: MCR PO > RFQ’s and Quotations > Quotations > Query for Quotation 2001.


Click on OK

 
Click on OK

 
Blanket Purchase Agreements: Additional Information - Header

Amount Agreed: When creating a blanket purchase agreement, you can indicate the dollar amount of the agreement.

Released: The dollar value displayed in this field is the total dollar value of all releases issued against the blanket purchase agreement. 

Global: Select the Global checkbox only if you are creating a global agreement. Global agreements will be discussed later in this module.
Terms and Conditions

You can access the Agreement Controls area of the Terms button.  The effective start and stop dates for the agreement can be entered.  Releases can only be created during these dates when the blanket is effective. 

Amount Limit: You can optionally change the defaulted value for the Amount Limit.  Initially this value is equal to the Amount Agreed.  You may provide a higher value in the Amount Limit field which will allow the total released amount to exceed the Amount Agreed.  If the total amount released exceeds the Amount Limit, the release cannot be approved.

Minimum Release: You can also specify a Minimum Release dollar value which will require that the dollar amount for individual releases exceeds the Minimum Release amount set.  Often you establish the Minimum Release amount based on your estimated costs of processing individual releases.  For example, if the estimated cost of processing releases is $25, then the user may set the Minimum Release amount to $25.
Blanket Purchase Agreements: Additional Information – Lines
 
Items Tabbed Region

Notice that the Quantity field has been grayed out.  By definition of a blanket purchase agreement, you are uncertain of the quantities that will be needed of each item listed.  The price that is entered for each item is for an implied quantity of one.  Reduced pricing that may be available when purchasing larger quantities will be entered through the Price Breaks button that will be discussed shortly.

Price Reference Tabbed Region

The Allow Price Override check box is used for blanket purchase agreements and planned purchase orders only.  This check box indicates that the release price can be different from the price on the purchase agreement or purchase order line.  If you allow price override, enter the dollar amount of the Price Limit.  This is the maximum price per item you allow for the item on this agreement line.  If you do not allow a price override, Oracle Purchasing displays on the release the shipment price from the purchase agreement and prevents you from updating it.  Select Negotiated to indicate that the purchase price is negotiated.  If the actual price is greater than or equal to the list price, then the field is unchecked by default.  If the actual price is less than the list price, then the field is checked as the default.  You can accept the default value or change it.
Reference Documents Tabbed Region
 
This tabbed region is generally not used on blanket purchase agreements unless the blanket was created by copying a quotation. 
More Tabbed Region

The information entered here is the same as for a standard purchase order.
Agreement Tabbed Region

You can establish controls at the line level if desired.  Additional controls such as minimum release amount, quantity agreed and amount agreed can be established for individual purchase agreement lines.  Whether or not you have agreed to minimum quantities or amounts, the system will automatically keep track on this tabbed region of the quantities and amounts actually released against the blanket.  Internal quantity and amount targets not formally negotiated as agreed to quantities or amounts with the supplier should not be entered in the agreement.  Entry of internal targets could be interpreted and enforced as legal binding to the user.

The Cumulative Pricing check box will be enabled by default depending on a setup option in the Purchasing Options of the default value hierarchy.  The default may be changed depending on the actual pricing negotiated with the supplier. 
Blanket Purchase Agreements: Price Breaks
 
Blanket Purchase Agreements: Additional Information - Price Breaks

After entering the Purchase Orders window and choosing a Type of Blanket Purchase Agreement, the button normally titled Shipments changes to Price Breaks.  This form adjustment is necessary to support reduced pricing agreements for volume purchases.

Quantity: This quantity is not an ordered quantity, but simply a quantity that if purchased would result in reduced pricing.  The quantity indicated may need to be reached on an individual release (when the Cumulative Pricing check box on the Agreement tabbed region previously discussed is unchecked) or may be able to be reached through an accumulation of releases issued against the blanket purchase agreement line (Cumulative Pricing check box is checked).

Effective Dates: Enter the date range that this price remains in effect.

Break Price: Enter the reduced price that will be paid for each quantity listed.

Discount (%): If a Break Price is entered, the Discount (%) field will display the percentage that this price is off the price listed on the Items tabbed region for the purchase of an implied quantity of one.

Note: Oracle Purchasing is integrated with Oracle Advanced Pricing to allow you to model complex pricing rules for items listed on Global Blanket Agreements. Requisitions and orders sourced to these agreements can now leverage dynamic pricing formulas and/or modifiers defined in Oracle Advanced Pricing, in addition to the agreement line price and price breaks. 
Click on Approve.
BPA has got approved.


Blanket Purchase Agreement Continuation