Back to Back Order in Oracle APPS:

In Back to Back order the shipment process is completed through Order Management (OM) as a standard order after the item is received against a Purchase Order (PO).

Back to Back order flow applies to scenario where Customer order a product which

• We do not stock
• We do not manufacture

Customer places order to us, we place the order with our supplier and our supplier ships the product to us and we in turn ship the product to our customer.

This is a common scenario for Wholesale Distributors who use the S3 (Sell-Source-Ship) business model as well as for other demand channels. This process is called as ‘back-to-back orders’ or ‘procure-to-order’.

Key Item attributes:

In the Purchasing tab, select the Check boxes Purchased & Purchasable. Enter the Default Buyer and List Price.

In the General Planning tab, select Make or Buy as Buy.

Note: Item must either have the make/buy flag on the General Planning tab set to ‘buy’, or else have a sourcing rule saying that it is to be sourced from a vendor. (In our case we have kept it as Buy)

In the Work in Process tab, select the Check box Build in WIP.

In the Order Management tab, select the Check boxes Customer Ordered, Customer Orders Enabled, Shippable, OE Transactable and Assemble to Order. Keep Default SO Source Type as Internal.

Note: The ATO item attribute is checked as the B2B process utilizes the ATO process of the workflow. However, the item is not manufactured in WIP, and instead is a 'Buy' item that is replenished by a supply order in PO. Hence the item may also be called an ATO Buy item.

Assign the Item to Inventory Organization.

Add the Item to the Price List.

Create a Sales Order.

Enter the Line details and Save, Status will be Entered.

Note: Make sure the ATO checkbox is enabled and Source Type in Shipping Tab is Internal in line level.

Book the Sales order, Order status will change to ‘Status Eligible’

Right click on the line & Click Progress Order.

‘Create Supply Order –Eligible’ window opens, Click OK.

Status changes to ‘External Req Requested’

Import Requisition:

Navigation: Orders, Returns → Requisition Import

Run the concurrent request with the Import Source as ‘CTO’.

Open the output of Requisition Import & check the number of approved requisitions created.

Order status changes to ‘External Req Open’

Note: When Req Import processes, the purchase requisition is reserved to the sales order line. If we view the Inventory Reservations form → Supply tab, we can see that the reservation is linked to a requisition and we can also see the requisition number and line number.

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Go to Oracle Purchasing → Requisitions → Requisition Summary

Enter the Import Source as ‘CTO’ and click ‘Find’

System will display all the requisitions which have CTO as Import Source. Note down the Requisition Number.

Autocreate Purchase Order:

Go to Oracle Purchasing → AutoCreate. Enter the Requisition number and click find.

Through either Manual or Automatic option convert the Requisition to Purchase Order.

Note down the Purchase Order number.

Get the Purchase Order approved.

Once the PO is approved, the Sale order line status changes to ‘PO Open’.

Note: When the requisition becomes a PO or a blanket release, the reservation moves with it. The Reservations form → Supply tab, then shows the reservation is linked to a PO or a blanket, and we can see the PO number or the PO and release number, as well as the line number.

Complete the receipt process:

On completion of Receipt Process, Sales order line status changes to ‘Awaiting Shipping’.

Tools → Scheduling → Reservation Details

We can see that the Receipt Qty got automatically reserved to the Sales order.

From here on, we can do Pick Release and Ship Confirm like a normal sales order.

Changes or Cancellations:

• If the sales order line is cancelled or the quantity is reduced, then the reservation is reduced and a notification is automatically sent to the buyer explaining that there is now a PO outstanding for a higher quantity than what is needed for the sales order. The buyer can then decide whether to cancel the PO line or to buy the product anyway and put it into inventory.
• If the Schedule date on the sales order line is changed, again a notification is sent to the buyer, who can then decide to either change the date on the PO or cancel it or do nothing. If the buyer decides to cancel the PO, then a new requisition will be created the next time AutoCreate Requisition is run.
• If the PO is cancelled or a partial quantity is cancelled, then the reservation is cancelled or reduced appropriately. The next time AutoCreate Requisition is run, it will create another requisition for the unreserved amount on the sales order.

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Planned Purchase Order in Oracle Purchasing:

A planned purchase order is a long–term agreement committing to buy items or services from a single source. You must specify tentative delivery schedules and all details for goods or services that you want to buy, including charge account, quantities and estimated cost.

You can issue scheduled releases against a planned purchase order to place the actual orders. If you use encumbrance accounting, you can use the planned purchase order to reserve funds for long term agreements.

You can also change the accounting distributions on each release and the system will reverse the encumbrance for the planned purchase order and create a new encumbrance for the release.

Planned Purchase Order (PPO) Flow:

We will see how to create a PPO & release it.

Navigation: Purchase Orders → Purchase Orders

Select type as ‘Planned Purchase Order’ & fill other header details. Enter Item, Quantity, Price and Promised / Need By date.

Click ‘Terms’ tab & enter ‘Amount Limit’ (total of all releases) and ‘Minimum Release’ (the least amount a release must have) amount.

Get the Planned Purchase order approved.

Next step is to create Releases.

Navigation: Purchase Orders → Releases

Enter the Planned Purchase Order Number, Line No., Shipment No., Quantity & Save.

Click ‘Agreement’ tab to cross verify the Amount Limit, Minimum Release & Total Released amount against this PPO.

Approve the Release.

Query the Planned Purchase Order and click ‘Agreement’ tab to see the details of releases made.

How to Override Planned Purchase Order price in Releases ?

In ‘Price Reference’ tab of PPO, Enable ‘Allow Price Override’ checkbox & enter the ‘Price Limit’ until which the Item price can be modified in releases.

 The Original Price in our PPO is INR 12/- & now we have given the price limit as INR 15/-

On saving, system will display a pop up message stating we are creating a new document revision. Click OK.

 The status will change to ‘Requires Reapproval’. Again Approve the PPO.

When we release the PPO, the ‘Price’ field will not be grayed out like before. System will allow us to change the Price.

I am changing the price to INR 16/- (we have given the price limit as INR 15/-). Since the price entered is greater than the Price limit system displays the below error message.

Change the Price to any value lesser or equal to Price Limit, save & approve the release.

Once a Release is approved, Receipt for the Released Quantity can be taken.

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Request for Quotation (RFQ) process in Oracle Purchasing:

A Request for Quotation (RFQ) is a formal request sent to the suppliers to find the pricing and other information for an item or items. Based on the information supplied, the supplier quotes a quotation against the RFQ form.

In general, RFQ’s are created before purchasing any item to actually know the price quotes from one or more suppliers.

RFQ’s can be auto created from an existing Purchase Requisition or can be a fresh RFQ.

There are three types of RFQ’s,

• Bid: Used for a specific, fixed quantity, location and date. For example, a Bid would be used for a large or expensive piece of equipment that you've never ordered before or for an item that incurs transportation or other special costs. You cannot specify price breaks for a Bid RFQ or quotation.
• Catalogue: Used for high-volume items or items for which your supplier sends you information regularly. A Catalog RFQ or quotation includes price breaks at different quantity levels.
• Standard: Used for items you'll need only once or not very often, but not necessarily for a specific, fixed quantity, location, and date. For example, you could use a Catalog quotation or RFQ for office supplies, but use a Standard quotation or RFQ for a special type of pen you don't order very often. A Standard quotation or RFQ also includes price breaks at different quantity levels.

For demonstration purpose let us convert a Purchase requisition to Standard RFQ & Standard RFQ to Standard Quotation & the Standard Quotation into a Blanket Purchase Agreement.

Requisition – 11005997 has been created by the Purchase Requisition department.

We will create RFQ using Auto Create option. Navigate to Auto create form and enter the Requisition number & click find.

In Auto create method we can convert the requisition to RFQ either through Manual or Automatic method. Here we will see how to manually create RFQ.

Enable the Checkbox against the Requisition & select the Document Type as ‘RFQ’ and Click ‘Manual’ button.

Click on the Requisition line & click ‘Add To Document’ button

The selected Requisition line will be added to ‘Document Builder’ section.

Click ‘Create’ and enter ‘Supplier List Name’ & again click ‘Create’

Note: To know how to create a Supplier List click the following link

http://dj-oracleapps.blogspot.in/2015/07/defining-supplier-lists-in-oracle.html

System will display the generated RFQ Number.

Query the generated RFQ in RFQ’s form

Navigation: RFQ’s and Quotations → RFQ’s

Enter / Change the Ship To & Bill To locations

Due Date: This is the date by when you want your suppliers to reply. Purchasing prints the reply due date on the RFQ. Purchasing notifies you if the current date is between the RFQ reply due date and the close date when the RFQ is in Active status.

Enter the Reply Via code for the method you want the supplier to use to send the quotation. For example: by mail, telephone or FAX.

Enter the Close Date for the RFQ. Purchasing prints the close date on the RFQ. Purchasing warns you when you enter a quotation against a RFQ after its close date.

Select Require Quote Approval to enforce approval of any quotation referencing this RFQ before the quotation can be used for a purchase order.

Enter the beginning & ending Effective Dates for the supplier quotation.

Click ‘Terms’ tab to enter Payment Terms, Freight Terms, Carrier, FOB & Note To Supplier

Click ‘Price Breaks’ tab to enter the Price break details

Note: Price Breaks are available only in Catalogue & Standard RFQ.

Define as many Price breaks as needed. Enter Discounts & Effective From & To dates (if applicable) and Save.

Click ‘Suppliers’ tab to check / enter a list of Suppliers from whom you are going to request Quotations.

Note: Since we gave Supplier List Name while auto creating RFQ from Requisition, all the suppliers from the Supplier List will be listed here. Further you can delete / add suppliers by manually entering the Supplier & Site or from any other Supplier List by clicking ‘Add From List’.

 

Manually change the status of RFQ to ‘Active’ after entering all the required information’s.

Various statuses of RFQ and its Impact:

• In Process - The initial status when you create the RFQ.
• Active - Choose this status when the RFQ is complete and you are ready to send it to your suppliers. Only Active RFQ’s are printed.
• Printed - The status assigned to the RFQ when you have printed at least one copy of it. RFQ is printed by running concurrent ‘Printed RFQ Report (Portrait/XML)’. You must change the status to Active if you want to reprint the RFQ.
• Closed - Choose this status to close the RFQ when all suppliers have responded or when you no longer want responses. When you close an RFQ, Purchasing deletes all follow up notifications associated with it.

Once the RFQ is printed it will be sent to Suppliers. Suppliers will receive it & send back their Quotations. In order to record the data provided by the suppliers, convert the RFQ into Quotation

Query the RFQ, Tools → Copy Document

Select the Action, Type of Quotation and Supplier from whom you have received the Quotation, Site & click OK.

System will display the generated Quotation Number.

Repeat the same process for all the Suppliers.

Query the Quotation in Quotations form

Navigation: RFQ’s and Quotations → Quotations

In our case we have sent the RFQ for two suppliers & we have recorded the supplier quote in Quotations ‘14000002’ & ‘14000003’.

Query the Quotations and change the Price break as provided by the Supplier in their Quote.

Save the record and do the same for other Quotation as well.

Once the changes are done, Change the status to Active.

Quote Analysis:

Open the Quote Analysis form and enter the RFQ No. & click find

System will display all the Quotations recorded against the RFQ.

Select the line you want to Approve & click ‘Approve Entire Quotation’ button and select the Type, Reason for approving the Quotation, Approver and Click OK.

Query the approved Quotation, through Tools → Copy Document convert the Quotation to Purchase Order.

Note: A Standard Quotation can be converted as a ‘Blanket Purchase Agreement’ only.

Click OK

All the Quotation details will be copied to the generated Purchase order. Query the Purchase order, check the details & process.

Differences between the types of RFQ & Quotations:

Bid	Catalogue	Standard
Qty & Price is firm No Price Breaks Used for Items you’ve never ordered	For Normal Items Price Breaks available Used for High Volume of Items	For One time Purchase Price Breaks available For High / Special valued Items

Pictorial representation: Which type of RFQ’s can be converted to what type of Quotation’s & Purchase Orders?

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