Sourcing Rule in Oracle Purchasing

Sourcing rules determine the movement of materials between organizations in a global enterprise; these organizations include the suppliers and the materials include those items made at the manufacturing organizations.

Sourcing rule can be global (available to all organizations) or local (available to the only organization in which it is defined)

Replenishment source can be:

1) An inter-organization transfer (Transfer From)

2) The replenished organization that manufactures the item (Make At)

3) An external supplier (Buy From)

Make at:

This option specifies that you will make any items associated with the rule at the receiving organization.

Buy From:

This option specifies that you will buy any items associated with the rule from supplier. You must enter appropriate supplier and site (optional).

Transfer from:

This option specifies a diff organization within the enterprise as the source of the items. Using this option you will identify the source organization. You must have already defined the shipping network between source and receiving organization.

Ship method

Ship Method determines the Intransit time and shipping cost which planning will use in its calculations.

Allocation and Rank in Sourcing rule

You can rank the sources of supply named in the rules and bills, giving one priority over another when the planning process generates recommendations. You can also assign sourcing percentages to these sources, allowing you to allocate a portion of the total orders to each source. You cannot apply sourcing rules and bills of distribution (make them Planning Active) until the sum of the allocation percentages equals 100.

Once you have defined your sourcing rules and bills of distribution, you must assign them to particular items and/or organizations.

Each Sourcing rule can be assigned to:

A single item (across all organizations)

An item in a specific organization

All items in a specific organization

A category of items

A category of items in an organization

All items in all organizations (globally)

Here, I’ll discuss how to create sourcing rule and assigning it to an item.

1) Verify Profile Options
Navigate to System Administrator à Profile à Personal Profile

Verify the following Profile Options

MRP:Default Sourcing Assignment Set: Supplier Scheduling

PO: Automatic Document Sourcing: Yes

PO: Allow Auto-generate Sourcing Rules: CREATE AND UPDATE

PO: Allow Autocreation of Oracle Sourcing Documents: Yes

2) Create a Item in Inventory with Purchasing Item Template

3) Create Sourcing Rule

Navigate to Purchasing à Supply Base à Sourcing Rules

Enter the Name, Effective Date

Select All Orgs

Select Type as Buy From

Enter Supplier Name, Allocation % and Rank

Save

4) Assigning Sourcing Rule

Navigate to Supply Base à Assign Sourcing Rule

Go to Menu à View à Find

Choose Supplier Scheduling from the list of values.

Add a new line with the item created and Assign the Sourcing Rule to the Item

5) Verify Sourcing Rule

Now, Navigate to Requisitions à Requisitions

Verify that the Sourcing Rule is defaulted on creation of the requisition for that particular item.

Enjoy Learning Oracle Apps J

Business Flow of Drop Ship Order

Drop Shipment is a process where the customer places an order on a company and the company instructs its supplier to directly ship the items to the customer.

Item creation for Drop Ship Orders

Enter the Item Name and Description.

Go to Tools à Copy From: Purchased Template. Click Apply and done

In the Order Management tab, select the Check boxes Customer Ordered, Customer Orders Enabled, Shippable, and OE Transactable.

Default SO Source Type as External.

Assign the Item to Inventory Organization

Add the Item to the Price List

Create a Sales Order

Go to Order Management Super User à Orders, Returns, Sales Order

Create a Sales Order with type Mixed and with the item created for Drop Ship Order.

Make Sure in the Shipping tab Source Type as External.

Once you save the Order the Order Line Status will be in Entered.

Now Book the Order. Order Line Status will be Booked.

Run the Workflow Background Process

Go to Purchasing à Reports/Run à Workflow Background Process

Item Type: OM Order Line

Process Deferred: Yes

Process Timeout: Yes

Make sure the request is completed Normal

Now, the Order Line Status will be Awaiting Receipt

Run Import Requisition Request

Navigate to Purchasing à Reports / Run à Requisition Import

Import Source: Order Entry

Open the request once the request is completed successfully.

Now, navigate to Order Management à Orders, Returns à Order Organizer

Enter the Sales Order Number and click Find.

Place the cursor on the Line tab, right click and go to Additional Line Information à Drop Ship

The Drop ship tab will show the Purchase Requisition Number with Approved status.

Copy the Purchase Requisition Number

Auto Create Purchase Order

Go to Purchasing à Auto Create

Clear the entire field and enter the copied Requisition Number and click Find. Auto Create Document window opens. Click the Automatic Button. New Document window opens. Enter the Supplier Name and Site and click Create.

Auto Create Purchase Order Window Opens with Purchase Order Created with Status Incomplete.

Click the Approve button and submit the PO for Approval.

Approve Purchase Order

Go to Purchasing à Purchase Order à Purchase Order Summary.

Enter the PO number and verify whether the PO is approved.

Receiving the Receipts

Go to Purchasing à Receiving à Receipts

Enter the PO Number and Click Find. Receipts window opens. Check the box in left side. Enter the Quantity received and Subinventory as Drop Ship. Save the Receipt.

Now, the Order Line Status will be Shipped and the Additional Line Information will show the PO Shipment as 1

Run Workflow Background Process

Go to Purchasing à Reports/Run à Workflow Background Process

Item Type: OM Order Line

Process Deferred: Yes

Process Timeout: Yes

Make sure the request is completed Normal

Now, the Order Line Status will be Closed

Mandatory Setups for Internal Sales Order (ISO)

Create Item in Master Items

Navigate to Inventory à Items à Master Items

Select organization V1 (Vision Operations)

Enter Item Name and Description

Go to Tools à Copy From: Apply the 'Purchased Item' template

Go to the Order Management tab and select the checkbox for Internal Ordered and Internal Orders Enabled

Save the record

Assign the Item to both Source and Destination Organization

Go to Tools à Organization Assignment à Check M1 and D1

Save the record

Setup Shipping Network between Inventory Organizations

Navigate to Inventory à Setup à Organizations à Shipping Networks

Click on Find

Verify the following or make changes where needed.

Transfer Type: Intransit

FOB: Receipt

Receipt Routing: Standard

Internal Order Required: checked

Define Inter-Location Transit Time

Navigate to Inventory à Setup à Organizations à Inter-Location Transit Times

Click F11 and Ctrl F11 to query.

Origin Type: Internal Location

Origin: M1- Seattle Mfg

Destination Type: Internal Location

Destination: D1- Singapore

Enter the Ship Method and Intransit Time as below:

Ship Method: Air Freight

Intransit Time: 4

Check the Default Method check Box.

Open Inventory Accounting Periods

Navigate to Inventory à Accounting Close Cycle à Inventory Accounting Periods

Verify if the Sysdate is in an Open accounting period; else open the same by clicking on the button Change Status, and clicking ok to the question "Open this Period?"

Create On-hand for Item in Source Inventory Organization

Navigate to Inventory à Transactions à Miscellaneous Transaction

Create a miscellaneous receipt transaction with the following information

Item: Enter the Item created

Subinventory: FGI    

UOM: Ea    

Quantity: 1000

Account: Select the account alias Miscellaneous (01-580-7740-0000-000)

Save record

Verify the On-Hand Availability

Navigate to Inventory à On-hand Availability à On-hand Quantity

Verify the on-hand quantity for the item

Define Transaction Type and Order Source in Purchasing setup

Navigate to Purchasing à Setup à Organizations à Purchasing Options

Notice the following and confirm

Internal Requisition Order Type: Mixed

Internal Requisition Order Source: Internal

Define Inter-Location Transit Time

Navigate to Inventory à Setup à Organizations à Intercompany Transaction Flows

Click on Intercompany Relation and verify the details as below

Once you are done with the above setups, you can create Internal Sales Order for the Item created and transacted between the two organizations.

Business Flow of Internal Sales Order (ISO)

Create Internal Requisition

Navigation: Purchasing à Requisitions à Requisitions

Select Type to Internal Requisition

Click into the Lines Region on the Item field then Enter Item with Quantity

Enter Destination Inventory Organization: Seattle Manufacturing

Location: M1- Seattle Mfg

Source: Inventory

Organization: Vision

Click the Distributions Button and enter the Charge Account and Save.

Note down the Internal Requisition Number. Click Approve the Requisition.

Make sure that the Requisition is approved.

Create Internal Orders

Navigation: Purchasing à Reports/Run

Submit the request - 'Create Internal Orders'

Make sure that the Request completed Normal.

Import the Internal Sales Order

Navigation: Order Management Super User àOrders, Returns à Import Orders à Order Import Request

Source: Internal

Order Reference: Requisition Number created before.

Submit the request and confirm it completes with success

Verify Import of Internal Sales Order

Navigation: Order Management Super User à Orders, Returns à Order Organizer

Source Type: Internal

Requisition number: Requisition Number created before

Click Find. Sales Order will be displayed confirming that the order was imported.

Pick Release the Internal Sales Order

Navigation: Order Management Super User à Shipping à Release Sales Order

Enter the Internal Sales Order number

In the Inventory tab, select the source inventory organization

In the Shipping tab, select Yes for Autocreate Delivery and Auto Pick Confirm

Click Execute now and Confirm the Pick Release process has completed with success

Ship Confirm the Internal Sales Order

Navigation: Order Management Super User à Shipping à Transactions

Enter the Internal Sales Order in the field 'From Order Number' and 'To Order Number'. Click Find

Now, go to the Delivery tab and click Ship Confirm.

Confirmation message will be displayed.

Verify the receipt of Item in Inventory

Navigation: Purchasing à Receiving à Receiving Transactions Summary

Select the Destination Inventory Organization

Select the Source to Internal

Enter the Item Number

Select Transactions and click Find

Create Intercompany AR Invoice

Navigation: Inventory à Reports/Run

Submit the request - 'Create Intercompany AR Invoice'

Run AutoInvoice (If not setup Automatic)

Navigation: AR à Interfaces à AutoInvoice

Create Intercompany AP Invoice

Navigation: Inventory à Reports/Run

Submit the request - 'Create Intercompany AP Invoice'

Run 'Payable Open Interface Import'.

This completes the steps for the internal order flow.