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Global / Centralized Procurement

Global / centralized procurement allows companies to consolidate purchases across multiple business units. This provides cost savings from volume discounts, centralized control over purchasing, and better oversight to prevent wasteful spending. Key steps include defining transaction flows between procuring and receiving units, setting up global agreements that can be used across units, and configuring automatic sourcing and approvals to span business groups. Centralized procurement requires certain profile options and security access be configured to integrate financial accounting between units.

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Vaibhav Kulkarni
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90 views

Global / Centralized Procurement

Global / centralized procurement allows companies to consolidate purchases across multiple business units. This provides cost savings from volume discounts, centralized control over purchasing, and better oversight to prevent wasteful spending. Key steps include defining transaction flows between procuring and receiving units, setting up global agreements that can be used across units, and configuring automatic sourcing and approvals to span business groups. Centralized procurement requires certain profile options and security access be configured to integrate financial accounting between units.

Uploaded by

Vaibhav Kulkarni
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Global / Centralized Procurement

Global / Centralized Procurement


In a multi-org environment, many a times business demands centralize procurement across multiple
operating units as this provides following major benefits

1. Provides cost savings by consolidating purchases for volume discounts


2. Centralized control provides a single source of information for businesses
3. Better control on purchasing is possible under centralized purchasing. There is no chance of reckless
purchase since one unit is authorized to make purchase for the whole organization.

Business Flow Demonstrated in this White Paper:

Step1: Creation of Requisition from Operating Unit i.e. “ZZ Plant”


Step 2: Creation of Purchase order in Centralized Operating Unit i.e. “Vision Operations”
Step3: Receiving in Inventory Organization (i.e. Org ZA1) which belongs to Operating Unite “ZZ Plant”
Step4: Request for Intercompany Invoice Generation:

 Create Intercompany AR Invoices: Shipping / Procuring OU: Vision Operations


 Create Intercompany AP Invoices: Selling/ Receiving Operating Unit: ZZ Plant

Mandatory setup:
1. Setup Following profile options
INV: Intercompany Invoice for Internal Orders = Yes

CST: Transfer Pricing Option = Yes, Price Not As Incoming Cost

2. Make sure your Security profiles setup provide access to all the Organizations involved in Purchasing
Process.
Make Sure Centralized Operating Unit should also be defined as Logical Inventory organization.
Make Sure Purchasing Item access is been given to all inventory organizations involved in Global
procurement Process. (This includes the Logical inventory organization also)

3: Creation of Internal Customer


Global / Centralized Procurement

4. Creation of Intercompany Transactions Flow:

Setup> Organizations> Intercompany Transaction Flows

(Note: ‘Start’ should be ‘Procuring Organization’. End should be operating Unit of ‘Receiving Inventory’ organization.)
Global / Centralized Procurement

Transaction Flow:

Step1: Create Purchase Requisition


(Note: Operating unit will be the Requesting Operating Unit. Organization should be the Inventory organization within a
requesting OU where you would like to receive material)

Step2:
Approve requisition

Step3:
Create PO in Centralized OU (In our case ‘Vision Operations’ is centralized OU) which will be buying on behalf of other OU’s

Responsibility: Purchasing Super User


Navigation: Auto Create > Find out the requisition that needs

Click on ‘Automatic’ Button.

Most Important: Select Centralized OU (In our case ‘Vision Operations’) as a Purchasing Org.
Global / Centralized Procurement

Step 4: Provide Ship-to and Bill-to Details at PO Header, Verify details, Check Shipment level details, Initiate PO Approval.
Global / Centralized Procurement

Step 5: Receive Material in requesting Inventory Organization (in our case ZA1 is requesting Org)
Global / Centralized Procurement

Run the following Request


Create Intercompany AR Invoices: Shipping / Procuring OU: Vision Operations
Create Intercompany AP Invoices: Selling/ Receiving Operating Unit: ZZ Plant
Global / Centralized Procurement

Centralized Procurement Setup


Submitted by Anonymous on Thu, 01/07/2010 - 18:11

Oracle Purchasing provides features to enable consolidation of similar functions across all of your global
business units. This consolidation is typically referred to as centralized procurement or sourcing service
centers. The goal of which is to create autonomous procurement business units within the enterprise.

Centralized Procurement Accounting:

In a centralized procurement environment you may create a purchase order in one operating unit, but
require shipment to a different operating unit. Accounts are provided to ensure proper financial
reconciliation between the procuring business unit and the receiving business unit using intercompany
invoicing. This accounting requires that a transaction flow is defined between the two organizations.

Global Agreements
Global agreements are agreements (blanket purchase agreements or contract purchase agreements) with a supplier that can be shared
between business units. Global agreements empower the centralized service unit to negotiate on behalf of some or all other business units
and store the negotiation outcome in a single document. This single document can then be used for automatic sourcing of requisition
demand from any enabled business units.

Centralized Procurement Automatic Sourcing


Sourcing rules, sourcing rule assignments and approved supplier lists (global ASL) are created in the owning business unit. The global
agreements referenced by automatic sourcing are then available for execution in all business units enabled by the buyer. Complete process
automation is achieved by defining sourcing rule assignments for the global agreements in the executing business unit.

Centralized Procurement Step by Step


Define Transaction Flows
Transaction flows define the procurement relationship between different operating units. The details of this relationship define how the
expenses are transferred from one business unit to the other (could be a different set of books).
Defining a transaction flow consists of these steps:

 Define transaction flow


 Define intermediate nodes
 Define intercompany relationship

Define Global Agreements


Global agreements are blanket purchase agreements and contract purchase agreements which have been created to be used in a
centralized procurement environment. Defining a global agreement consists of these steps:

 To take full advantage of all centralized procurement features, set the profile HR: Cross Business Groups to Yes at the site level.
 Define a supplier site for the supplier in each operating unit that will be defined as a purchasing organization for the global
agreement. The supplier site names do not need to be the same as the supplier site name in the global agreement.
 Create a new blanket purchase agreement or contract purchase agreement with the Global checkbox enabled.
 Enable the the global agreement (select the purchasing organization and purchasing site) for those operating units that are
authorized to order referencing the global agreement.
 Define sourcing rule assignments for the global agreement in the executing operating unit.

Global Buyer Setup Steps


Enterprises using centralized purchasing can set up a global buyer which can create, update, and default onto purchasing documents. This
enables buyers from multiple business units to fully participate in these actions without redundant setup procedures.
1. Define the global buyer as an employee in the business group that the buyer belongs to using the Oracle Human Resources Enter
Persons window.
2. Define the global buyer as a buyer using the Oracle Purchasing Enter Buyers window. This can be done in any business group.
3. Set profile option HR: Cross Business Groups to Yes at the site level.
4. Assign as many Oracle Purchasing responsibilities as required to this global buyer. These responsibilities do not need to be linked to any
specific business group.
Global / Centralized Procurement

Global Requester Setup Steps


Enterprises using centralized purchasing can set up a global requester.
This enables requisition creation from multiple business units (operating units).
1. Set profile option HR: Cross Business Groups to Yes at the site level.
2. Assign the Oracle Purchasing responsibility associated with the operating unit to the requester. You can assign all that are needed.
3. Requester selects the appropriate responsibility and creates the requisition.

Global Supervisor Setup Steps


Enterprises using centralized purchasing can set up a global supervisor to approve purchase requisitions. This enables approvals from
multiple business units.
Note: The global supervisor feature is only available to those enterprises using the employee/supervisor approval path.
1. Define the supervisor and assign to an approval group as you would normally set them up.
2. Set profile option HR: Cross Business Groups to Yes at the site level.Once the profile is set to Yes, requisitions can be routed and
forwarded to individuals in different business groups. The action history reflects the names of those who take action even though they are in
different business groups.

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