21Define Sourcing Configuration

This chapter contains the following:

Manage Negotiation Styles

Creating a Negotiation Style: Worked Example

Negotiation styles control the definition of your negotiation documents. Negotiation styles can specify the terminology used within the document and control which processing capabilities can be performed using the style. For example, you can define a simple negotiation style and then use it to create very straightforward, streamlined negotiations. Alternately, you can create a negotiation style that takes advantage of many processing features. You can then use this style to create a complex negotiation. Using negotiation styles, you can also define default textual content for certain sections of a negotiation document.

In this example, Jan Martin is going to create a new negotiation style for use with RFQs. She allows alternate lines, multiple responses and response revision.

Creating a Negotiation Style

  1. In the Setup and Maintenance page, Jan selects the Procurement offering, and then clicks Setup.

  2. On the Setup: Procurement page, she clicks the Sourcing functional area, and then clicks the Manage Negotiation Styles task. (if you do not see the task, make sure you have selected All Tasks in the Show Tasks menu).

  3. From the Manage Negotiation Styles page, Jan clicks the add icon to create a new style.

  4. Jan creates her new style using the Create Negotiation Style page. She calls the style Alternate Lines and Responses, and gives it a description of Use this style with RFQs that need to allow suppliers to enter alternate response lines.

  5. She deselects the auction and RFI document types. This new style can only be used for an RFQ.

  6. She leaves the default terminology values as they are since she doesn't need to change them.

  7. In the Controls region, she selects which negotiation features are available using this style.

  8. She allows suppliers to select the lines they reply to and to offer partial line quantities.

  9. She allows suppliers to respond with alternative lines and to revise existing responses.

  10. She enables the collaboration team and requirements features.

  11. Now she is finished so she saves her new negotiation style.

Negotiation Styles: Examples

You can create multiple negotiation styles that control the creation of your negotiation documents. Negotiation styles can specify the terminology used within the document and control which processing capabilities can be performed using the style. You can also create default content for certain sections of a negotiation document.

For example, you might create a slimmed down style that doesn't include Instructions

  • Instructions

  • Autoextend settings

  • Staggered closing

  • Cost factors

  • Contract terms

For some Sourcing capabilities, you must create a negotiation style that supports the capability. For example, to use the following capabilities:

  • Two stage RFQ

  • Project tasks

  • Alternate responses

Specifying Document Terminology

For each negotiation there is a pair of documents: negotiation document created by the category manager and a response document created by the supplier contact. Each of these documents has a label. Within the application, there are three types of negotiations: auction, RFI, or RFQ. Each type has its own document labels; however, you can change the labels used in the negotiation style. :

The following table shows the predefined values for negotiation document and response document.

Negotiation Document Supplier-side Response Document

Auction

Bid

RFI

Response

RFQ

Quote

When creating a negotiation style, you can create alternate labels for the category manager-side or supplier-side documents. Then any negotiation document created using that style replaces the default labels with the labels you created in the style. These replacements appear both in the online application and any printed versions of the document.

For example, you could use Tender or Offer for the supplier-side document, and you could use Solicitation for the buyer-side document.

Selecting Processing Capabilities and Defaults

In addition to specifying alternate document labels, you can select which processing capabilities are available using a negotiation style. By default, all capabilities are available. To create a style without that capability, simply deselect the capability when creating the style. The controls used with a negotiation style are the same controls used when creating a normal negotiation.

Note the following controls:

  • If you want to create two stage RFQs using this style, you must click the Two state RFQ check box.

  • If you want to use this style to associate a negotiation to Oracle Projects project plan information, click the Project tasks check box.

  • If you want to allow the supplier to respond with different line information, click the Alternate response lines check box.

Negotiation Styles: Explained

Negotiation styles control the definition of your negotiation documents. Negotiation styles can specify the terminology used within the document and control which processing capabilities can be performed using the style. For example, you can define a simple negotiation style and then use it to create very straightforward, streamlined negotiations. Alternately, you can create a negotiation style that takes advantage of many processing features. You can then use this style to create a complex negotiation.

Using negotiation styles, you can define default textual content for use in a negotiation document. Also, you can identify which negotiation capabilities are available when using this negotiation style.

Header Information

You enter header information to describe your negotiation style.

The following table shows the header level fields used in negotiation styles.

Field Meaning

Negotiation Style

Name of the negotiation style you are creating

Description

Optional text description of the style and its usage

Code

A unique alphanumeric code to identify the style.

Status

Availability of the style for use

Identifying Document Types

You can specify which document types category managers can create using this style. You can also change the terminology used to refer to different document types and related terms. For example, you might want to change the term quote to offer.

The following table shows the fields you can define for different document types.

Field Meaning

Enable

If enable is checked, you can use this style when creating negotiations of that type.

Document Type

Type of negotiation

Negotiation Display Name

Current display name used for this type of negotiation

Response Document Type

Name of the response for this negotiation type

Response Display Name

The current display name for responses to this negotiation type

Edit Content

Icon that you can use to modify the negotiation display name and the response display name

Setting Negotiation Controls

You can use a negotiation style to identify the negotiation features that are available using the style. You can enable or disable some controls, such as proxy bidding. Other controls are required, such as the negotiation close date. The negotiation controls that you can enable or disable are grouped according to the page they appear on. To enable a particular product feature for this negotiation style, select its check box.

Features include:

  • Two-stage RFQ

  • Integration with Oracle Fusion Project Management project plans.

  • Abstracts.

  • Team Scoring.

Manage Attribute Lists

Line Attribute Properties and Their Acceptable Values: Explained

Line attributes identify additional information about an item or service requested by the category manager. Use the following properties to describe your line attribute when defining it.

You use a line attribute's properties to control its behavior and how the supplier should respond.

Response

You can control the supplier's interaction with the attribute by specifying the response type. Optional responses do not require a supplier to offer a response. Suppliers must however provide a value for a required response. Suppliers can view attributes which are display only, but they cannot respond to them.

Value Type

Value type specifies the data type for the attribute value. There are four value types available. A text value accepts characters and numbers. A number value accepts only numbers and the decimal point. Date values accept dates that you select using the calendar picker. A URL value type accepts a URL in the format http://url.name.here. URLs also accept https:

Target

For each attribute, you can define a target value. This is the value which is most desirable for this attribute. You can also display the value to the supplier or keep it hidden.

Acceptable Values

For text values, you can specify a list of values from which the supplier can select. Any value not defined to the list is not accepted. For number and date values, you can define value ranges in terms of From Value and To Value. If you omit a From Value, that range includes everything up to the To value. Likewise, if you omit a To value, the range includes all values starting at the From value and above. Ranges cannot overlap. You can specify a single number by defining it as both the From and To values. Dates are defined similar to numbers.

Line Attributes and Multi-Attribute Scoring Negotiations

In a multi-attribute scored negotiation, you can have the application include the response values from the supplier along with the price offered when calculating the rank of that supplier's response. To perform this calculation, you give each possible response value a numeric score and then weight the attribute among the other attributes for the line. Note that while each value's score can be between 0 and 100, the weights for all the attributes defined for a line must add up to 100.

Creating Attribute Lists: Worked Example

Attribute lists are collections of line attributes that are commonly used together. Procurement application administrators can create public attribute lists for use when creating negotiations. When a negotiation author associates an attribute list with a negotiation line, all the attributes on the list are associated with the line. Any attributes on the list that are not needed can be deleted, and additional line attributes can be created if necessary. Attribute lists are an efficient way to streamline the negotiation creation process. They can also be used to encourage standardization and best practices.

In this example, the procurement application administrator is going to create an attribute list.

Creating an Attribute List

  1. From the Tasks panel, she clicks the Manage Attribute Lists link.

  2. On the Manage Attribute Lists page, she clicks the Add icon.

  3. On the Create Attribute List page, she enters name in the Attribute List field, optionally a description, and sets the Status to Active.

  4. She clicks Add Attribute Group to define a new group, or she can click Add Predefined Group to add an existing group to the list.

  5. Once the group has been added, she clicks Add Attribute and uses the Add Attribute page to define an attribute to the list.

  6. She repeats the last step until she has added all the necessary attributes to the list.

Creating Line Attributes: Worked Example

Line attributes make your negotiation line more descriptive and can also be used to ensure that all responses submitted for the line include specific details not included elsewhere in the line information.

In this example, the category manager for a national used car seller is defining a negotiation to deal with suppliers of used cars. She defines the negotiation as a multiattribute scored auction and defines line attributes to describe vehicles.

Defining Line Attributes

  1. After defining the negotiation line for the vehicle to buy, the category manager clicks the Edit icon at the end of the negotiation line for vehicle.

  2. On the Lines: Edit Line page, she scrolls until the Attributes region appears. She clicks Add Group. On the new row, she clicks in the Attribute column and enters Vehicle Specifications for the group name. The other columns on the line are write-protected since they don't apply to the Group element.

  3. From the Actions menu, she selects Add Attribute.

  4. On the Add Attribute page, she enters Color as the Attribute. She accepts the defaults of Required for Response and Text for Value Type. She enters a weight of 20 for this attribute. She chooses to have no target value for this line attribute.

  5. In the Acceptable Values region, she clicks the plus icon to add a row to the table. She proceeds to enter possible color values in the Response Value column and their numeric scores in the Score column. When finished, she clicks Save and Close to return to the Lines: Edit Line page.

  6. She highlights the row for the Vehicle Specifications group and selects Add Attribute from the Actions menu to add another attribute to the negotiation line.

  7. She names this attribute Mileage and this time selects Number as the Value Type. It has a weight of 80. She specifies a Target value of 5000 and displays this target to suppliers.

What's an attribute list?

A line attribute list is a collection of line attributes that you can apply to a negotiation line. When you apply an attribute list, all the line attributes on the list are associated with that line. Once applied to the line, you can modify the line attributes if necessary. You can also delete any attributes that are not appropriate to the line.

Manage Cost Factors

Cost Factors and Cost Factor Lists: Explained

Cost factors allow you to identify and negotiate on additional costs related to a line. They're

You can use cost factors to obtain a more realistic idea of the total cost of an item or service by factoring in any additional costs beyond just price. Such costs could include additional costs such as consulting or training. Cost factors can be added to a negotiation line, to lines in negotiation templates, or to collections of cost factors (called cost factor lists). A negotiation line can have more than one cost factor (of any type) defined to it. You can create three types of cost factors.

Fixed Amount Cost Factors

A fixed amount cost factor is a set value for the line, regardless of the quantity of units being asked for by the line.

Per-Unit Cost Factors

Per-unit cost factors are specified as a set value that is multiplied by the quantity of units being asked for by the line.

Percentage of Line Price Cost Factors

Percentage of line price cost factors are specified as a percentage. The percentage of line price is calculated by multiplying the unit price by the percentage of line price cost factor value.

Cost Factor Lists

Once you create cost factors for your additional costs, you can create lists of cost factors. Buyers can then apply these cost factor lists to negotiation lines to quickly identify the commonly occurring secondary costs that also must be negotiated. Buyers can create their own personal cost factor lists using cost factors that have been defined in the application.

Creating Cost Factors: Worked Example

Cost factors identify charges associated with a negotiation line in addition to price. For example, these could include charges for shipping and handling, retooling, or import duties.

Cost factors are calculated in one of three ways: fixed amount per line, fixed amount per unit of line, and percentage of line price. You can use these pricing bases to reflect the nature of the extra cost. The table shows a possible example cost factor for each type.

Cost Factor Pricing Basis

Shipping

Fixed amount per line

Hazardous materials charge

Flat amount per unit

Import tax

Percentage of line price

Vision Corporation is expanding into a new branch of its items and services. Negotiations dealing with this new area will need to negotiate new transportation-related costs with suppliers, specifically with the new Chicago office. The procurement application administrator is going to define several new cost factors. Once the cost factors are defined and enabled, they become available for buyers to use individually or as members of a cost factor list.

Creating Cost Factors

  1. From the Task panel on the Negotiations work area, the category manager clicks the Manage Cost Factors link.

  2. On the Manage Cost Factors page, the category manager reviews the existing cost factors to ensure there isn't already a cost factor that would be appropriate for the list. Not seeing one, she clicks the icon to add a new cost factor.

  3. When the new line appears, she enters Shipping as the name, General shipping charge as the description, and enters CHI_SHIPas the unique code. She selects Fixed-amount for the pricing basis lets the status default to active.

  4. She clicks the plus icon to add additional rows and enter the information for Hazard materials charge and Import tax cost factors.

  5. When finished, she clicks Save to save the new definitions.

Manage Cost Factor Lists

What is a cost factor list?

A cost factor list is a collection of cost factors that you can apply to a negotiation line. When you apply a cost factor list, all the cost factors on the list are associated with that line. You can delete any cost factors you do not need. Cost factor lists allow you to quickly associate a group of related or commonly used cost factors with a negotiation line. This speeds up the creation process.

Manage Negotiation Templates

Creating a Negotiation Template: Worked Example

If the majority of the negotiations you create contain the same features, for example, line attributes, terms and conditions, response controls; or negotiation data such as the value for the Location field, you may want to create a negotiation template that category managers can use each time they create a new negotiation.

Using a template saves time by streamlining the creation process. A negotiation template contains the features that are similar among the negotiations you commonly create. When you create new negotiations using templates, you can use the template as a shell for the negotiation, add to and edit details of the negotiation as necessary, and publish the negotiation.

In this example, Sue Parado, a category manage, will define a negotiation template to be used when negotiating for a list of incumbent supplies from Vision's inventory category 200.13 which contains printers.

Creating a Negotiation Template

  1. On the Negotiations work area, from the Task Panel, Sue clicks Manage Negotiation Templates.

  2. From the Manage Templates page, she clicks the Create icon.

  3. When the pop-up window appears, she selects the procurement business unit, negotiation type, a negotiation style if appropriate, negotiation outcome, and negotiation currency. Procurement business unit, negotiation outcome and negotiation currency are required fields. She then clicks Create.

  4. She uses the train stops displayed across the pages to create the negotiation template. This process is similar to the general negotiation creation process, but some fields and attributes are not available for use. For example, you cannot define a close date. The category manager will enter that date when she uses the template to create a negotiation.

  5. She enters Printer Auctionsas the template name, and on the Lines page, enters 200.13 for Category. On the Suppliers page, she enters the names of the suppliers with whom the company has purchased printers in the past.

  6. When the procurement application administrator has completed the appropriate fields, she activates and saves the new template.

What's the difference between a negotiation style and a negotiation template?

You can use both negotiation styles and negotiation templates when creating negotiation documents. The purpose for each is different, however, they both help shorten the creation process. A negotiation style uses only the creation features necessary to create the target type of negotiation. Any features not required are not accessible using that negotiation style. For example, if line attributes are not appropriate to a particular type of negotiation, the procurement application administrator can create a negotiation style that omits line attributes. When that negotiation style is used to create a negotiation document, the application pages used to create line attributes do not appear. By focusing only on the features required by the type of negotiation, the creation process is shortened.

A negotiation template is a skeleton you apply to a new negotiation you are creating. Negotiation templates can provide default data for many of the negotiation document attributes, for example addresses or invited suppliers. You can modify some of these attributes when creating your new negotiation document.

Negotiation templates also let companies standardize practices on negotiation creation. For example, different templates can be used with different item categories. You must have access to the Procurement Business Unit under which the template was created to access and use it.

Abstracts

Implementing Abstracts: Explained

Abstracts are negotiation summaries that you post on your external website so they can be displayed to suppliers. Then your suppliers can read information about your upcoming negotiations and decide if they are interested in participating without having to log in to the sourcing application to view information. Abstracts are used mainly in public sector entities such as state and local governments, EMEA and US federal negotiations.

To implement abstracts, you must

  • Create a negotiation style that supports abstracts. See the topic on creating negotiation style in this chapter.

  • Update the Configure Abstract Listing page.

Creating the Configure Abstract Listing Page

You use Setup and Maintenance to update the Configure Abstract Listing page:

  1. In the Setup and Maintenance work area, from the Setup drop-down menu, select the Procurement offering.

  2. Click Setup.

  3. Go toProcurement Foundation.

  4. Click the link for Configure Procurement Business Function.

  5. Select the Procurement business unit for which you want to configure the abstract listing page.

  6. On the Configure Procurement Business Function page, go to the Sourcing section.

  7. Click Configure Abstract Listing.

  8. On the Configure Abstract Listing page, set the controls and formats as appropriate for abstracts for this Procurement business unit. Note that you can also create text to be included as header or footers.

  9. When you are finished, click Save and Close.

Sourcing Programs

Enabling Sourcing Programs: Explained

A Sourcing Program provides a way for your organizations to set specific measurable savings and spend goals, group various sourcing initiatives together under a single program to achieve the set goals, track progress, and record results across negotiations. It provides visibility to performance metrics at a higher program level as well as granular negotiation level. Thus you can obtain a holistic view of the organization's achievements.

To enable Sourcing programs, you select it as a feature during implementation.

  1. In the Setup and Maintenance work area, from the Setup drop-down menu, select the Procurement offering.

  2. From the Actions menu, select Change Configuration.

  3. On the Configure Procurement page, select the row for Sourcing and click the pen icon in the Features column.

  4. On the Features page, select the Sourcing Programs check box.

  5. Click Done.