Defining Purchasing Options in Oracle Purchasing

Use the Purchasing Options window to define default values and controls for functions throughout purchasing module. We can override these options, when we create purchasing documents.

Document Control:

• Enter the Price Tolerance Percentage. This is the percentage by which the auto created purchase order line price cannot exceed the requisition line price. If you select Enforce Price Tolerance Percentage, you can create, but not approve, purchase orders for which this tolerance is exceeded.

Select Enforce Price Tolerance (%) if you want Purchasing to enforce the price tolerance percentage.

Note: If the price on a requisition line is zero, then price tolerance checks do not apply.

• Enter the Price Tolerance Amount. This is the amount by which the auto created purchase order line price cannot exceed the requisition line price.

Note: If you set both price tolerance percentage and amount value, then system will apply the more restrictive of the two.

• Enforce Full Lot Quantity:

• None: The requisition quantity won’t be rounded to the LOT quantity.
• Automatic: The requisition quantity is forced to the rounded LOT quantity.
• Advisory: An advisory message suggesting rounding and a suggested rounding quantity are displayed, but we can override.

• Receipt Close Point is when the shipment is closed for receiving - Accepted (passed inspection), Delivered or Received.
• Cancel Requisitions options apply only to requisitions from which purchase orders were auto created.

• Always: When the Purchase order is cancelled, the corresponding requisition also will get cancelled automatically.
• Never: When the Purchase order is cancelled, Purchasing does not cancel the requisition, so it is again available for inclusion on a purchase order.
• Optional: While canceling the purchase order, you are given the option to cancel the requisition.

• If you have selected Gapless Invoice Numbering for the entire business unit or for a specific supplier site, enter the SBI Buying Company Identifier. This is an identifier included in the invoice number created by the Pay on Receipt process, as well as for debit memos resulting from return receipts, and invoices resulting from retroactive purchase price adjustments.

This portion of the invoice number identifies the buying business unit and is included as follows:

<Prefix>-<SBI Buying Company Identifier>-<Selling Company Identifier>-<Invoice Type Code>-<Seq #>

Where,

Prefix is specified by the profile option PO: ERS Invoice Number Prefix and only applies to invoices resulting from the Payment on Receipt process.

SBI Buying Company Identifier is a unique code for the operating unit.

Selling Company Identifier is a code for the supplier site. It is defined in the supplier site window.

Invoice Type Code:

• ERS(Evaluated Receipt Settlement) for Pay on Receipt invoices
• RTS(Return to Supplier) for Debit Memos
• PPA(Purchase Price Adjustment) for invoices resulting from a retroactive price adjustment

Seq# is a gapless sequence number defined for each buying company/selling company/invoice type combination when Gapless Invoice Numbering is enabled.

• The Output Format selection defines the output format for purchase orders sent to the supplier using print, e-mail, or fax.
• Select Display Disposition Messages if you want to see any disposition messages defined against inventory items when they are placed on requisitions.
• Select Notify If Blanket PO Exists if you want to be notified of existing blanket purchase agreements when you create a requisition, purchase order, or blanket purchase agreement line for the item. If you sourced the item, you see the following message: Blanket purchase order [number] already exists for this item.

Your requestors can directly create a release for the blanket purchase agreements instead of creating a requisition or purchase order if you allow your requestor to enter releases.

• You can define for each item whether you allow updating of the item description during the creation of requisition, RFQ, quotation, or purchase order lines. This update affects only the line you are creating.

Select Allow Item Description Update if you want ‘Yes’ to be the initial default of the Allow Description Update attribute when you are defining a new item.

• Select Enforce Buyer Name to enforce entry of only your name as the buyer on purchase orders. Otherwise, you can enter the name of any active buyer.
• Select Enforce Supplier Hold if you do not want to be able to approve purchase orders created with suppliers that are on hold. Use the Suppliers window to place suppliers on hold.
• Select Gapless Invoice Numbering to enable gapless (no breaks in numbering) invoice number generation for your buying organization during Pay on Receipt processing.
• Select RFQ Required if you want ‘Yes’ to be the initial default of the Allow Description Update attribute when you are defining a new item.
• Select Group Shipments if you want to group shipments during the automatic creation of purchase orders. If you select this check box, then shipments are grouped. Otherwise, Oracle Purchasing creates a separate shipment for each requisition line. Distributions are not grouped.

Note: In the Purchasing Options page, if the Group Shipments check box is selected, then the same selection is reflected in the Auto Create Documents window as well as the Buyer Work Center Document Builder region.

Document Defaults:

• Select one of the following Requisition Import Group By options for requisitions imported through the requisition open interface: All (not grouped), Buyer, Category, Item, Location or Supplier.

The order type you choose here is the type that Purchasing uses to create sales orders from internal requisitions.

• Internal Requisition Order Type: Select the default order type for internal requisitions. Order types are defined in Order Management. The order type you choose here is the type that Purchasing uses to create sales orders from internal requisitions.
• Internal Requisition Order Source: Select the default Order Source for internal requisitions. Purchasing defaults and only uses Internal. This is the source, Order Import uses to transfer internal requisitions from Purchasing to Order Management.

• Enter the Receipt Close Tolerance Percentage for your shipments. Purchasing automatically closes a shipment for receiving if it is within the receiving close tolerance at the receiving close point.
• Enter the Invoice Close Tolerance Percentage for shipments. Purchasing automatically closes a shipment for invoicing if it is within the invoicing close tolerance at billing, when Payables matches invoices to purchase orders or receipts.
• Quote Warning Delay: This is the number of days before a quotation expires that you want to receive an expiration warning. When a quotation is due to expire within the number of days you provide here, you receive the following message in the Notifications Summary window: Quotations active or approaching expiration: [number].
• Acceptance Required Flag: If you select a method, you can enter the due by date by which the Supplier should give his acceptance for your purchase order.

• None: Concept not applicable
• Document: Acceptance is entered for the entire document.
• Document or Shipment: Acceptance is entered for the document or for individual shipments.

• Select a default Line Type for Requisition, RFQ, Quotation and Purchase order lines. The selected line type will be defaulted. You can override the line type for each document line.
• Select the currency Rate Type that defaults on Requisitions, Purchase orders, RFQ’s and Quotations. If the Rate Type is User, you can override this default for each document line. If the functional currency (defined in your ledger) is different from your transaction currency then Purchasing defaults in the appropriate conversion Rate Type, Rate and Rate Date.
• Select one of the following options for Match Approval Level:

• Two-Way: Purchase order and invoice quantities must match within tolerance before the corresponding invoice can be paid.
• Three-Way: Purchase order, receipt, and invoice quantities must match within tolerance before the corresponding invoice can be paid.
• Four-Way: Purchase order, receipt, inspection, and invoice quantities must match within tolerance before the corresponding invoice can be paid.

• Select the Price Break Type that defaults on blanket purchase orders:

• Cumulative: Price breaks apply to the cumulative quantity on all release shipments for the item.
• Non-cumulative: Price breaks apply to quantities on individual release shipments for the item.

• Select the Price Type that defaults on purchase orders.
• Enter the Minimum Release Amount that defaults on blanket, contract and planned purchase orders.

Receipt Accounting:

• Choose one of the following Accrue Expense Items options:

• At Receipt: Accrue expense items upon receipt. You can override this flag in the Shipment Details window when you are entering purchase orders and releases.
• Period End: Accrue expense items at period end.

• For Accrue Inventory Items, we have only one choice: On Receipt.

• An offset is an accounting entry that is created to offset or balance another accounting entry. Automatic Offset Method is the method used to automatically create the account for the offsetting transaction. Here the offsetting account is the Receiving Inspection Account, which offsets the Accrual Account transaction at the time of receipt and the Charge Account at the time of delivery. The Automatic Offset Method controls which of the two accounts are used as the base account and which as the overlay account, as well as which segment is used to overlay the base account segment.

Choose one of the following Automatic Offset Method options:

• None: No substitutions are made and the Receiving Inspection account for the destination organization is used.
• Balancing: The base account is the Receiving Inspection Account for the destination organization and the balancing segment is overlaid with the balancing segment of the Charge Account.
• Account: The base account is the Charge Account and the account segment is overlaid with the account segment of the Receiving Inspection Account.

• Enter the default Expense AP Accrual Account.

Document Numbering:

• Select the Document Number Entry method for RFQ, Quotation, Purchase order and Requisition numbers:

• Automatic: Purchasing automatically assigns a unique sequential number to each document when you create the document.
• Manual: You provide a document number manually when you enter the document.

Note:

You can change the method of entering document numbers at any time. If you originally allow manual entry and switch to automatic entry, make sure to enter a Next Number that is higher than the highest number you assigned manually.

• Select the Document Number Type you want Purchasing to use for RFQ, Quotation, Purchase order and Requisition numbers: Numeric or Alphanumeric.

Note:

You should setup the numbering type to be the same in all operating units if you are planning to create and enable global agreements.

• Enter the Next Number. This is the starting value you want Purchasing to use for generating unique sequential document numbers if you choose Automatic document number entry. Purchasing displays the next document number that will be used for a new document when you create the new document. You cannot enter this field if you choose Manual document number entry.

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