Standard Purchase Orders

We create standard purchase orders for one-time purchases of various items when we know the details of the goods or services you require, including costs, quantities, and delivery schedules and accounting distributions.  Each standard purchase order line can have multiple shipments, and you can distribute the quantity of each shipment across multiple charge accounts, projects, tasks and requesters.

The standard purchase order has all major components and allows a supplier to locate and deliver the goods or services ordered. 

Header - Contains the purchase order number, the supplier’s name and address, basic ship-to and bill-to addresses, and the status.

Line - Details of the goods or services ordered, including name, quantity and price.

Shipment - Details of when and where to deliver items.

Distribution - Details of charge accounts and requisition references

Structure of a Simple Standard Purchase Order

The structure displayed above shows a purchase order with two items being ordered (Line 1 and Line 2).  Each item is expected to be shipped on the same day to a single address.  Furthermore, each item is charged to a single charge account.
Structure of a More Complex Standard Purchase Order
 
The structure displayed above shows a purchase order with two items being ordered (line 1 and line 2).  Line 1, however, has a single shipment with multiple distributions while line 2 has multiple shipments, each with a single distribution.  Notice that you cannot equate the number associated with a shipment line or distribution line with an item line.  For example, distribution 2 does not belong to shipment 2 or line 2.  Distribution 2 actually belongs to shipment 1 which belongs to item line 1.
Standard Purchase Order Header Information
 
These are the major fields entered when creating a standard purchase order header.

PO Number: The system will generate a PO number when the document is saved, if PO automatic number generation is enabled.  If manual numbering is enabled, you must enter a unique PO number.

PO Type: Select Standard Purchase Order for this field.

Creation Date: This will be the date that the document was initially saved.  It may be the same day, the next week or the next month before the purchase order is submitted for approval.

Supplier, Site and Contact: The list of values on the Supplier field contains active suppliers.  The list of values on the site field contains active sites that are designated as purchasing sites on the General tabbed region for the site.  If you cannot find the desired supplier or site, you may need to request that it be defined.  Choose a contact using the list of values if contacts are defined and no contact defaults.

Ship-to and Bill-to Locations: Ship-to and Bill-to locations default based on the supplier and site you select.  You can override the values that default.

Currency: The functional currency defaults.  Use the Currency button to change the functional currency if you are using multiple currencies.

Buyer: The defaulted buyer is the employee name associated with the user name of the person creating the purchase order.  If the Enforce Buyer Name option in the Purchasing Options window is set to Yes, you will not be able to override the default.

Status: The status of a newly created purchase order is Incomplete.  The status will be updated by the system based on actions taken by buyers or approvers.

Total: The total of the purchase order is displayed based on the extended line totals. 

Description: You can enter comments in the 240 character description field.  Although the description does not print on the printed purchase order, suppliers can use it if they have access to the system with Oracle i-Supplier Portal.

Standard Purchase Orders - Terms and Conditions

Payment terms: Specify payment terms indicate when you are expected to make payment for the goods or services received.  The terms may include an amount due, as well as a discount amount.  Commonly used payment terms are Net 30 or 2/10, Net/30.  You can create additional payment terms as necessary.

Freight terms: Specify freight terms to indicate who is responsible for the direct charges related to transporting shipped goods.  Commonly used freight terms include Due (indicating you pay the freight charges) or Prepaid (indicating that the supplier will pay for the freight charges).

Carrier: Specify the name of the freight carrier responsible for physical transportation of the goods.

FOB, or Free-On-Board: Specify FOB to indicate the point at which ownership of the goods (and therefore costs of loss or damage) transfers from the supplier to you.  Commonly used FOB terms include Origin (indicating that ownership transfers at the point when the supplier delivers the goods to the carrier) and Destination (indicating that ownership transfers at the point when the carrier delivers the goods to you).

Pay On: Provides a default value of Receipt if the selected supplier site has been enabled for the Pay on Receipt functionality.  If Receipt is selected, an invoice will be automatically created for this purchase order when receipt of the goods has been acknowledged and you run the Pay on Receipt Auto Invoice process.  If you do not want an invoice to be created, you can clear the value that defaults into the field.

Special Conditions:

Confirming Order - Indicates that you’ve already communicated the order to the supplier and this purchase order is simply providing written confirmation.  When you select the Confirming Order option, the words “This is a confirming order.  Do not duplicate.” will be included on the printed purchase order.

Firm  - This is a setting used with MRP to indicate to that module that it can neither change the details nor suggest changes to the details of the purchase order based on changed demands that have occurred since the order was originally created.

Acceptance Required - Indicates whether acknowledgement of receipt of the purchase order is requested from the supplier.  When the box is checked, the buyer can also provide the date by which that acknowledgement is requested. 

Notes:

Supplier Note - This field can be used to enter up to 240 characters which will print on the purchase order sent to the supplier.

Receiver Note - This field also allows up to 240 characters to be entered, but will not be printed on the purchase order.  Notes to receiver can be viewed by users entering actual receipt transactions. 

Standard Purchase Order Lines - Tabbed Regions

Enter initial information regarding the goods or services being ordered in the tabbed regions for the line.  If sufficient valid default information is available, Purchasing creates shipments and distributions for each line.

Items Tabbed Region: Enter basic information such as the items, descriptions, quantities, and dates needed.

Price Reference Tabbed Region: Pricing information will default in this tabbed region from the item definition.

Reference Documents Tabbed Region: Use the Reference Documents tabbed region to reference contracts or catalog quotations when purchasing items from established agreements.  If you have associated a catalog quotation with an approved supplier list or are have set the PO: Automatic Document Sourcing profile option to Yes, and have valid quotations in the system, quotation information will default.

More Tabbed Region: Enter information regarding hazardous materials and supplier notes in this tabbed region.

Standard Purchase Order Line - Items Tabbed Region

Num: The system will automatically generate a unique line number for each line you create.

Type: The value that defaults to new lines is the value set as the default in the Purchasing Options window.  If you enter a system item, the type set on the item’s definition will override the original defaulting value if necessary.

Item/Revision: Select from the list of values if ordering an item that’s already been defined in the item master.  Once selected, the category, description, UOM and price will populate based on the item definition.  If the system item has been placed under revision control, you must also select the appropriate revision number being ordered.  If ordering items that have not been defined in the item master, skip the Item/Revision fields and manually enter a category, description, UOM and price.

Category: A required field populated either from the predefined item’s definition or manually.  You cannot change the purchasing category if you choose a system item.

Description: For system items, you can update the description only if that functionality has been enabled for item attribute controlling descriptions.  The full item description for the current line is displayed beneath the Lines tabbed region.  You must provide a description for one-time items.

UOM (Unit of Measure): The UOM qualifies the quantity that will next be entered.  Suppliers need to know whether you’re ordering 3 each, 3 boxes or 3 pounds.  The value initially populates with the default set up for the line type selected, and is then overridden by the value set on the item definition.

Quantity: Enter the total quantity to be ordered.

Promise/Need-By Dates: Enter the date that you have requested delivery from the supplier in the Need-By date field.  If you have communicated with the supplier who has committed to a delivery date, enter it in the Promise field instead.  It’s important that only supplier-provided dates be entered in the Promise field, and non supplier-provided dates be entered only in the Need-By date field.  These dates will be used to measure supplier performance related to delivery issues.

Supplier Item: If available, you can enter the number or name that the item has been assigned on the supplier’s item list.  For example, our item master may have assigned a number/name in Oracle of “Pencils, Lead No. 2”, but the supplier’s number for the item in their system may be “12-7732”.

Charge Account: If an item is distributed to a single charge account, the account number is displayed for viewing purposes only, it cannot be updated directly in this window.  If an item is being distributed to multiple charge accounts, the word “Multiple” will be displayed, requiring you to drill down to either the Shipment or Distribution level of the purchase order to see charge account combinations.

Amount: This is a display field which holds the results of the quantity ordered multiplied by the price.

Standard Purchase Order Line - Price Reference Tabbed Region

Num: The system will automatically generate a unique line number for each line you create.

List Price/Market Price: When ordering predefined items, the list price and market price will default from the item’s definition if specified.  You can either accept the defaults or make changes.  The list price is the price paid with no discounts, while the market price is what the item is currently selling for in the market.

Price Type: This is a user-defined list of values developed through lookup codes.  Commonly used price types include fixed, variable and cost plus fee

Standard Purchase Order Line - Reference Documents Tabbed Region

Num: The system will automatically generate a unique line number for each line you create.

Contract: You cannot enter a contract number until you have entered a supplier in the header, and the contract must be for this supplier.  The contract you choose must be effective; that is, the current date has to be within the effective date and the expiration date of the contract.  If you reference a contract purchase agreement on a standard purchase order line, Purchasing adds the total amount of the purchase order line to the released amount on the contract purchase agreement. Purchasing lists only those contracts with the same supplier as the one on your standard purchase order.

Quotation/Line/Quotation Type/Supplier Quotation: These fields are display only and will be populated if you selected a quotation from the Supplier Item Catalog.  These fields will also be populated if you have created sourcing rules and either associated a catalog with an approved supplier list (PO: Automatic Document Sourcing = No) or have active, unexpired quotations in the system (PO: Automatic Document Sourcing = Yes).  This catalog will be discussed later in this module.

Standard Purchase Order Line - More Tabbed Region

 
Num: The system will automatically generate a unique line number for each line you create.

Note to Supplier: Enter up to 240 characters of special information that needs to be communicated to the supplier.  Notes at this level are specific to the particular line entered as opposed to notes to suppliers entered at the header level that pertain to all lines on the purchase order.  If 240 characters are not sufficient, use the Attachments feature to add a text attachment that will print on the purchase order.

UN Number/Hazard: If applicable, enter the UN identification number for the item.  Any default, if present, comes from the item definition.  If you’ve entered a UN Number, the corresponding hazard class is displayed.  Otherwise, you can enter a hazard class for this item.

Capital Expense: Indicates that the purchase is a capital expenditure that will be later integrated with Assets or some other asset system.  

Standard Purchase Order Line - Temporary Labor Tabbed Region

If your organization has licensed and implemented Oracle Services Procurement, an additional tab for Temporary Labor appears in the Line region of the Purchase Order window. This region enables the entry of information related to the contractor that will be providing services.

First Name & Last Name: Enter the contractors name.

Start Date & End Date: Enter the starting date and ending date that the contractor is going to be working.
Standard Purchase Order Shipments - Tabbed Regions

The Shipment section of the purchase order contains detail regarding quantities of items to be shipped by specified ship dates and to specified ship locations.  When you save your work, Purchasing creates distributions if sufficient, valid, default information is available and if there are no existing distributions.

Standard Purchase Order Shipment - Shipments Tabbed Region

Num: The system will automatically generate a unique line number for each line you create.

Org: If you entered a system item, you can pick only inventory organizations in which the item is defined.  If you entered a revision number on the purchase order line, then the item revision must also be defined in the inventory organization.  If you did not enter an item, then you can select from a list of values of inventory organizations.

Ship-To: You can pick any location that is not tied to a specific inventory organization or any location whose associated organization matches the organization in the previous field.

UOM/Quantity: The first shipment line for any item will have the full quantity and UOM defaulting from the Items tabbed region previously discussed.  If you decrease this quantity, Purchasing will automatically default the remaining quantity ordered that has not yet been placed on the shipment line on the next shipment line you create.  The total quantity of scheduled shipments for a particular line must sum to the quantity in the Items tabbed region. Note that Quantity becomes Amount for Oracle Procurement Services lines.

Need-By: Enter a Need-By date.  This field is optional unless the item is a planned item.  This field is used in several reports that relate to analyzing supplier performance.

Promised Date/Original Promise: Enter the date that the supplier promised delivery of the items.  If you are subsequently contacted by the Supplier with a different date, you will simply overwrite the previous promise date with the new promise date.  When this is done, Purchasing shifts the original promised date into the Original Promise field so that supplier performance can be measured against these dates.  If the supplier again extends the delivery date promised, you can again overwrite the promise date with the new promise date.  The system will continue to maintain the promise date initially provided in the original promise date field.  Supplier performance can then be measured for the time between the original promise date and the current promise date.  Suppliers can themselves update their promised delivery date through the iSupplier Portal.

Charge Account: If a shipment is purchased from a single charge account, the account number is displayed for viewing purposes only, it cannot be updated directly in this window.  If an item is being purchased from multiple charge accounts, the word “Multiple” will be displayed, requiring you to drill down to the Distribution level of the purchase order to see account numbers.

Amount: This is a display field which holds the results of the quantity ordered multiplied by the price.

Country of Origin (not shown above): The Country of Origin is the country in which an item is manufactured and is used to track goods for reporting purposes (Movement Statistics).

Taxable and Tax Code (not shown above): Select Taxable and you are required to enter a Tax Code. Enter or use the default Tax Code for taxable items. The defaults for Tax Codes come from the Preferences and Purchasing Options windows.

Standard Purchase Order Shipment - More Tabbed Region

Num: The system will automatically generate a unique line number for each line you create.

Receipt Close Tolerance (%): Purchasing automatically closes a shipment for receiving if it is within the receipt closing tolerance at the receiving close point.  Set the receiving close point in the Purchasing Options window.

Invoice Close Tolerance (%): Purchasing automatically closes a shipment for invoicing if it is within the invoice closing tolerance at billing, when Payables matches invoices to purchase orders or receipts.

Invoice Matching: Select which information will be compared to the invoice when matching.  All must match within tolerance for the selected option.

Two-Way: Purchase order and invoice quantities as well as purchase order and invoice unit prices must match within tolerance before the corresponding invoice can be paid.  The receipt close tolerance can be set to 0% to allow the system to automatically close fully received lines.

Three-Way: Purchase order, receipt, and invoice quantities as well as purchase order and invoice unit process must match within tolerance before the corresponding invoice can be paid.

Four-Way: Purchase order, receipt, accepted, and invoice quantities as well as purchase order and invoice unit prices must match within tolerance before the corresponding invoice can be paid.

Accrue on Receipt: Check box to indicate that the items on this purchase order line should be accrued on receipt. Inventory destined items always accrue upon receipt.  For expense items, if the Accrue Expense Items flag in the Purchasing Options window is set to Period End, the items cannot accrue upon receipt, and you cannot change the shipment level default. If the Accrue Expense Items flag is set to At Receipt, the default is to accrue upon receipt, but you can change it to Period End.

Firm: A setting used with MRP to indicate to that module that it cannot change or suggest changes to the details of this purchase order based on changed demand that has occurred since the order was originally created.

VMI (not shown above): Vendor Managed Inventory (VMI) refers to a business arrangement in which the buyer delegates replenishing and planning activity for an item to the supplier. If the line item is under VMI control this flag will be checked. For more information about VMI.

Consigned (not shown above): Consigned inventory refers to a type of inventory practice where you receive and maintain goods belonging to one of your suppliers. If the line item is a consigned item, this flag will be checked. For more information about consigned inventory.

Standard Purchase Order Shipment - Status Tabbed Region

Num: The system will automatically generate a unique line number for each line you create.

Status: This status will be updated by the system based on actions taken by buyers, receivers or accounts payable staff.

Ordered/Received/Canceled/Billed: Quantities will be displayed to indicate the quantities that have been ordered, received, cancelled and billed.  Quantities are updated through actions taken by buyers, receivers and accounts payables staff.
Standard Purchase Order Shipment - Item Tabbed Region

Standard Purchase Order Shipment - Receiving Controls Button

Use the Receiving Controls window to enter receiving control information for purchase orders and releases.  Note that controls you enter here apply to specific purchase orders/releases and override the receiving controls you enter in the Receiving Options window.

Standard Purchase Order... Continuation