Oracle Apps Purchasing - ASL Sourcing to Requisitions Setup

This blog post steps through the required setups that are necessary in order to use Sourcing functionality that is provided by Oracle Purchasing. This functionality will default the Source Document, Supplier, and Supplier Site onto a requisition when either a category (commodity) or item is entered onto a requisition.

Prerequisites:
1) Define items.
2) Create suppliers and supplier sites in the Suppliers window.

Section 1: Defining the Supplier and Item/Commodity Combination

To define the supplier and item/commodity combination please follow the steps below:

1. Navigate to the Approved Supplier List window (Navigation: Supply Base > Approved Supplier List).

2. In the Organizations window that appears, choose the ship-to organization for which to define Approved Supplier List (ASL) entries.

3. Choose one of the following options to which to assign a supplier:

1) Item - Assigns a supplier to a particular item.
2) Commodity - Assigns a supplier to a group of items belonging to a category (or commodity).

4. Select an Item or Commodity.

5. Choose a Business Type from the following:

1) Direct (Supplier): Choose this if the Company sells their products directly. If Direct is selected, choose the supplier Name and optionally, the Site.

Attention: The supplier Name and Site, if specified, must match the sourcing rule Supplier and Site to default the supplier information or source document information successfully. See Section 2, Defining Sourcing Rules.

2) Manufacturer: Company manufactures and sells through distributors. If Manufacturer is chosen, choose the Manufacturer Name.

3) Distributor: Company sells products made by manufacturers

Attention: If Distributor is selected, choose the distributor Name and optionally, the Site. A associate the Distributor with a Manufacturer, meaning define a Manufacturer in the ASL before defining its Distributor.

6. Choose the supplier's approval Status. Use one of the default Statuses provided or a custom defined ASL Supplier Status in the Approved Supplier List Statuses window. See Note < > for more details on creating custom ASL Supplier Statuses. If a supplier is debarred for a specific commodity, the supplier is prevented from supplying all items within that commodity. However, if a supplier for a commodity is approved, the item-specific status for the supplier still takes precedence.

7. Optionally choose the supplier item number: For Suppliers and Distributors, this supplier item number defaults to the purchase order and requisition lines, and is used to validate the source documents.

8. Optionally choose a Review By date. Use this date to determine when a proactive business review will be performed for the supplier.

9. Choose the Record Details tabbed region.

10. Choose one of the following in Global:

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 for the same item or commodity. meaning 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.

11. Save the form.

12. Optionally specify additional information, such as Supplier Scheduling, source documents, and capacity details for the ASL entry. For more information see Section 3, defining the Supplier/Item Attributes.

13. To disable an ASL entry that is no longer to be used please do the following:

1) In the Approved Supplier List window, identify the line (ASL entry) to be disabled.

2) In the Key Attributes tabbed region, select the Disabled check box for the line.

The item-supplier combination in this ASL entry is inactive for new documents that are created. Note that disabling an ASL entry is not the same as debarring a supplier. Debarring a supplier prevents sourcing to that supplier for that item or for all items in that commodity. Disabling an ASL entry disables just that line. If a separate ASL entry for the supplier is enabled Oracle will still source to that supplier. If a local ASL entry is disabled, Purchasing uses the Global entry instead, if there is one.

To re-enable a supplier and item/commodity combination deselect the Disabled check box. The item-supplier combination in this ASL entry is now active for new documents which are created.

Section 2: Defining the Supplier/Item Attributes

Use the Supplier-Item Attributes window to specify additional information for the Approved Supplier List entry, including source document, Supplier Scheduling, and planning constraint information.

To define the supplier and commodity/item attributes:

1. Navigate to the Supplier-Item Attributes window by choosing the Attributes button in the Approved Supplier List window.

Additional Information: The Create Local button creates a copy of an existing global Approved Supplier List entry and makes it local to the organization selected in the Organizations Window before the ASL form was opened. The Create Local button is not available if already creating a local entry or if a local entry for the item (in this or the Approved Supplier List window) already exists.

2. Choose the Purchasing UOM.

3. Choose the Release generation Method from the following options:

1) Automatic Release/Review: Automatically generate releases, but require a separate step for approval.

2) Automatic Release: Automatically generate approved releases. This choice is not available if Encumbrance is turned on.

3) Release Using AutoCreate: use the AutoCreate window to create releases.

4. Enter a Price Update Tolerance only if importing price/sales catalog information through the Purchasing Documents Open Interface.

The Price Update Tolerance specifies the maximum percentage increase allowed to a price for this item/supplier combination when the supplier sends updated price/sales catalog information through the Purchasing Documents Open Interface. This field affects only those documents blanket purchase agreements and catalog quotations imported through the Purchasing Documents Open Interface. See: Setting a Price Tolerance in a Price/Sales Catalog Update.

5. Optionally choose the Country of Origin.

The Country of Origin is the country in which an item is manufactured. Choose a Country of Origin if a supplier Site is specified in the Approved Supplier List window.

The Country of Origin is defaulted onto purchase orders for this item/supplier combination. However, the Country of Origin can be changed on the purchase order or later on the receipt.

6. Choose one of the following attribute groupings from the tabbed region:

1) Source Documents: Associate specific quotations or blanket purchase agreements with the supplier/item combination.

Note: If selecting Source Documents, setting the profile option PO: Automatic Document Sourcing to Yes enables Purchasing to default source documents automatically if preferred that rather than specifying source documents here..

1. Enter a unique Seq (Sequence) Number.

The Sequence Number is used internally. It does not affect the order with which Purchasing uses the source documents. If more than one source document is entered, Purchasing uses a blanket purchase agreement over a quotation, even if the quotation was created more recently. If there are only blanket purchase agreements or only quotations, Purchasing uses the one that was created most recently.

2. Select a Document Type from the following:

--Blanket
--Quotation

A requisition with a quotation as a source document becomes a standard purchase order. A requisition with a blanket purchase agreement as a source document becomes a release. Standard purchase orders get source document information only from quotations.

If creating a Blanket as a source document for Oracle Supplier Scheduling, make sure the Supply Agreement option is selected for the blanket purchase agreement in the Terms and Conditions window. Supplier Scheduling can communicate releases against a blanket purchase agreement only when this option is selected.

3. Choose a Document Number.

If Purchasing does not let allow a particular document number to be entered, it may be because the document is frozen, canceled, or not approved, or the agreement line is canceled. A quotation must be active.

4. Choose a Line Number. The Status and Effective Dates for the document, if any, are displayed.

5. Save the form.

2) Supplier Scheduling: Associate Supplier Scheduling information with the supplier/item combination. This option is available when an item and a supplier site is specified.

1. Optionally check Enable Planning Schedules and/or Enable Shipping Schedules if building Planning and/or Shipping Schedules.

If Enable Planning Schedules and/or Enable Shipping Schedules is checked, an assigned Scheduler may be added.

2. Check Enable AutoSchedule if to automatically build the schedule.

3. If Enable Planning Schedules and Enable AutoSchedule is checked, the following must be chosen:

--Plan Bucket Pattern
--Plan Schedule Type

4. If Enable Shipping Schedules and Enable AutoSchedule is checked, the following must be chosen:

--Ship Bucket Pattern
--Ship Schedule Type

5. If Enable Planning Schedules and Enable Authorizations is checked, it is an option to choose up to four Resource Authorizations with their associated timefences.

6. Save the form.

3) Capacity Constraints: Specify capacity constraints for the supplier/item combination. This option is available when an item and a supplier site is specified.

The information entered here is used by Supply Chain Planning for planned orders.

1. In the Processing Lead Time field, enter the number of lead days it takes to receive this item after ordering it.

2. Choose a Delivery Calendar pattern to define the dates upon which the supplier delivers to this organization.

This calendar is independent of the workday calendar.

3. Choose Order Modifier options to indicate ordering constraints, if any:

1) Minimum Order quantity: The minimum quantity that can be ordered.

2) Fixed Lot Multiple: The incremental quantity that can be ordered on top of the Minimum Order quantity. For example, if the Minimum Order quantity is 100 and the Fixed Lot Multiple is 10, at least 100 must be ordered, and if the ordered amount is more than that, the amount ordered must be 110, 120, and so on.

4. Create one or more entries in the Capacity area to indicate what the capacity is during a certain period or periods:

1) From Date: The date from which the capacity constraints take effect.

2) To Date: The date (optional) until which the capacity constraints take effect.

3) Capacity per Day: Quantity of units per day. This field is required if a From Date is entered.

5. Create one or more entries in the Tolerance Fences area to indicate how the capacity fluctuates depending on how many days in advance the orders will be made:

For example, if 12 Days in Advance is entered and a Tolerance % of 2, the amount ordered can exceed the supplier's capacity by 2 percent if ordered 12 days in advance. Tolerance % must be specified if specifying Days in Advance.

4) Inventory: The information that you enter here enables use of the Vendor Managed Inventory (VMI) and Consigned Inventory functionality within Purchasing. You can choose this option if you specified an item and a supplier site.

1. For Vender Managed Inventory check VMI Enabled and:

1) Enter the UOM that the following minimum and maximum quantities represent.

2) Enter the Minimum quantity level for this item.

3) Enter the Maximum quantity level for this item.

2. If Supply Chain Exchange (SCE) is enabled, check the Automatic Allowed box to enable the replenishment method approval selection below.

1) Select the replenishment Approval method of Automatic, Supplier and Buyer, or Buyer. This field is only enabled if SCE is enabled and VMI Automatic Allowed is checked.

3.) For consigned inventory check Consigned from Supplier and:

1) Enter the number of days allowed before billing in Billing Cycle (Days). The system will display the Last Billing Date.

Section 3: Defining Sourcing Rules

Sourcing can be defined that specify how to replenish items in an organization, such as purchased items in plants. Sourcing rules can also specify how to replenish all organizations, as when the entire enterprise gets a subassembly from a particular organization.

If there is a conflict between a sourcing rule and a bill of distribution, the sourcing rule takes precedence. For instance, if assigning a bill of distribution to AUS that tells it to source a part from NYC, AUS can still define a sourcing rule to source the part from SAC. In this case, the local sourcing rule overrides the bill of distribution

To define a sourcing rule:

1. Navigate to the Sourcing Rule window.

2. Enter a unique sourcing rule name.

3. Indicate whether this sourcing rule is used for all organizations (global) or a single organization (local).

If the sourcing rule is local, enter an organization name; otherwise, the current organization will be the receiving organization.

4. Choose Copy From to copy the effectivity dates and shipping organization from another sourcing rule into this one.

5. Enter effectivity dates. A start date is mandatory, but entering an end date is optional.

6. For each range of effectivity dates, multiple shipping organizations may be included. For each shipping organization that is included, select a sourcing type to specify whether the organization makes, buys, or internally transfers the item. It is also possible to copy a list of shipping organizations from an existing sourcing rule.

If a customer organization is listed as the receiving organization, then a supplier organization can not be selected as the shipping organization.

Note: Suppliers and supplier sites are predefined in Oracle Payables.

7. Enter an allocation percentage for each shipping organization. Allocation percentage includes the number of planned orders issued to the part for the
entire the planning horizon. The total allocation may not exceed 100.

If the allocation percentage for all the shipping organizations included within a range of effectivity dates equals 100, Planning Active is checked. If the sourcing rule is not planning active, the planning process will not use the rule to assign planned orders.

Note: It does not allow setting the allocation percentage to less than or greater than 100 for sourcing rules that are already assigned in assignment sets.

8. Enter a numeric rank value to prioritize each sourcing type.

If two sources are listed with the same allocation percentage, planned orders are sourced from the highest rank first.

9. Select a shipping method, such as FEDEX, UPS, or rail.

10. Save the form.

Additional Information on Sourcing Rules:

1. Instructions for copy shipping organizations from an existing sourcing rule:

This feature allows the creation of long, previously defined lists of shipping organizations without manual entry.

1) Select a sourcing type to specify whether the item is made, bought, or internally transferred.

2) Choose Copy Shipping Orgs From.

3) In the Find window, select a sourcing rule that includes the shipping organizations to duplicate in this new sourcing rule.

4) Choose OK.

2. To purge a sourcing rule:

1) Select a sourcing rule name.

2). Choose Purge.

Section 4: Assigning Sourcing Rules and Bills of Distribution

Once sourcing rules and/or bills of distribution have been created, these must be assigned to particular items and/or organizations. These assignments are grouped together in assignment sets. This is where various sourcing strategies define a particular supply chain network.

Each assignment set represents a selection of organizations and/or items to be planned. To influence the planning process, an assignment set must be included in these plan options.

In an assignment set assign sourcing rules and bills of distribution at different levels as follows:

1) An item across all organizations

2) A single item in an inventory organization

3) All items in an inventory organization

4) Categories of items

5) Categories of items in an inventory organization

6) All organizations

These levels allow flexibility to assign a replenishment rule to as many or as few items as possible. For example, a category of items could be defined as packaging material, and a sourcing rule that identifies the suppliers could be assigned.

To assign a sourcing rule or bill of distribution:

1. Navigate to the Sourcing Rule/Bill of Distribution Assignments window.

2. Enter an assignment set name and description.

Note: The assignment specified in profile option MRP: Default Sourcing Assignment Set is the only one used by Oracle Purchasing for its processing.

3. Select an Assigned To type See: Assignments Hierarchy.

Note: A sourcing rule or bill of distribution can be assigned to a category only if the the profile option, MRP:Sourcing Rule Category Set has been updated.

4. Enter an organization name, if the Assigned To type requires one.

Note: Customers modeled as organizations to a global sourcing rule can not be assigned.

5. Enter the name of the customer to which to assign a sourcing rule or bill of distribution.

6. Enter the specific site to which to assign a sourcing rule or bill of distribution.

7. Enter an Item/Category if you selected Item or Item-Org as the Assign To type.

8. Enter the sourcing rule or bill of distribution as the Type.

9. Enter the name of the sourcing rule or bill of distribution.

10. Save the form.

To purge a sourcing rule or bill of distribution:

1. Select an assignment set name.

2. Choose Purge.

Section 5: MRP Default Sourcing Assignment Set

A profile option must be set in order for Oracle Purchasing to recognize and find which group of Sourcing Rules to use. This profile option is the MRP: Default Sourcing Assignment Set and must be set with the correct Assignment Set value to be used.

Note: Oracle Purchasing will only recognize one Assignment Set from this profile option. The hierarchy for how Oracle chooses which value of a profile is as follows. First the system looks at the User value, if this is null it looks at the Responsibility (that the user is using) value. If this is null it looks at the Application value. And lastly, if all three of these are null Oracle will look at the value of the profile option at the Site level.

Section 6: Troubleshooting

If encountering any problems with automatic sourcing after it is set up, the following solutions may help.

Problem #1: Purchasing is not using the sourcing rules defined in the Sourcing Rule/Bill of Distribution window

Make sure that you have done both of the following:

1. Assigned the sourcing rules to an assignment set in the Sourcing Rule/Bill of Distribution Assignments window.

2. Make sure that the Assignment Set name in this window matches the assignment set name in the profile option MRP: Default Sourcing Assignment Set.

As stated above, Purchasing can use only one assignment set at a time. If Purchasing is not using the sourcing rules that as expected, they may belong to another assignment set. For the MRP: Default Sourcing Assignment Set profile option, choose the assignment set name to which the sourcing rules which are expected to be used are assigned in the Sourcing Rule/Bill of Distribution Assignments window.

Problem #2: Source document information is not defaulting onto my requisition or purchase order

Assuming the sourcing rules have been defined and assigned correctly, the problem could be one of the following:

1. Make sure the instructions in the following two sections have been followed:

1) Defining the Supplier and Commodity/Item Combination and

2) Defining the Supplier/Item Attributes. Make sure that, for the item, the supplier and site in the Approved Supplier List matches the supplier and site in the sourcing rule.

2. The Approved Supplier List entry may be local. In the Approved Supplier List window, choose the Record Details tabbed region and note the Global field. If the Global field is set to No, then the sourcing information specified for the item is used only locally, by the current organization or the organization that originally created the Approved Supplier List entry, and other organizations will not receive the source document information. Ensure that the correct organization is being used when entering in the requisition. Likewise, if there are two Approved Supplier List entries for an item, and one is local and the other is global, the local entry takes precedence for your organization.3. Sometimes only one Global entry is seen in the Approved Supplier List window, but local versions of that entry in the Supplier-Item Attributes window have been created. Recall that a local entry takes precedence over a global one and is used only by the organization in which it was created. In the Approved Supplier List window, choose the Attributes button. If local entries exist, the Create Local button will be dimmed.