Understanding the Supplier Location Hierarchy and Multicurrency Pricing

PeopleSoft Purchasing uses the supplier location hierarchies to determine suppliers and various supplier locations for online requisitions. These hierarchies are also used by the PO Calculations Application Engine process (PO_POCALC) to determine the supplier necessary to create a purchase order and determines how pricing is ultimately derived based on this hierarchy.

This section also discusses how involvement of multicurrencies affects which pricing locations the system obtains. Depending on the setting of the multicurrency flags and which currencies have been set up for the purchasing business unit, requester, supplier location, and pricing locations, PeopleSoft Purchasing performs multicurrency conversions when required.

Here is the setup hierarchy for supplier location and pricing:

Field or Control	Description
Level 1	When defined, the system uses Item Ship To Supplier Locations to determine the priority supplier and the supplier location specified for the item and ship to location. Based on the supplier and supplier location, the pricing location is derived from the Maintain supplier setup. If not defined, it uses level 2 defaulting.
Level 2	When defined, the system uses the Item Region Supplier Locations to determine the priority supplier and the supplier order location specified for the item and region. Based on the supplier and supplier location selected for the region, pricing location is derived based on the supplier and supplier location selected for the region by accessing the location details from the Maintain supplier setup. If not defined, it uses level 3 defaulting.
Level 3	The system selects the supplier based on the Item Supplier setup. When defined, the system uses the Ship To supplier Location to get the supplier order locations to derive the pricing location from the Maintain supplier setup. Ordering locations can be different from the default locations. If not defined, it uses level 4 defaulting.
Level 4	The system selects the supplier based on the Item Supplier setup. When defined, the system uses the Region supplier Location to get the supplier order locations to derive the pricing location from the Maintain supplier setup. Ordering locations can be different from the default locations. If not defined, it uses level 5 defaulting.
Level 5	When defined, the system uses the supplier priorities established in the Item supplier setup to derive the pricing location from the Maintain supplier setup. If the Item supplier setup is the only one defined, the pricing location is always derived from the supplier default location. If not defined, there is no control hierarchy defined.

You can define various locations for a supplier on the supplier Information - Location page accessed from the Maintain suppliers menu. Each location that you define points to an ordering location and a pricing location.

The Item Ship To Supplier Location that you define on the Item Ship To Locations page is a setup based on the combination of the item and ship to location. This setup prioritizes the suppliers from which the item can be purchased for a ship to location and determines the specific supplier location from which to get a pricing location.

The Item Region Supplier Location that you define on the Item Region Locations page is a setup based on the combination of the item and region. This setup prioritizes the suppliers from which the item can be purchased for a region and determines the specific supplier location from which to get a pricing location. The region is derived from the ship to location on the requisition or staged purchase order's schedule.

The Ship To Supplier Location that you defined on the Ship To Locations page defines all of the suppliers that can ship an order to a particular ship to location and is not item-specific. Each supplier and the appropriate supplier order location appears. When determining the supplier ordering location, the system first references the Item supplier for the priority 1 supplier and then references the Ship To Location page to determine the order location.

The Region Supplier Location that you defined on the Region Locations page defines all of the suppliers that can ship an order to a particular region and is not item-specific. Each supplier and the appropriate supplier order location appears. When determining the supplier ordering location, the system first references the Item supplier for the priority 1 supplier and then references the Region Location page to determine the order location.

The Item supplier setup dictates only supplier priorities, and establishes supplier UOM pricing for their pricing locations. This setup does not dictate supplier order locations for the item. Supplier ordering locations default from one of the hierarchies discussed previously or, if no higher level defaults are found, from the default location defined on the Maintain supplier - Location page. The item supplier relationship that you defined on the Purchasing Attributes - Item Supplier page defines the pricing location for the supplier's default location.

Regardless of the setup that you implement, the pricing location the system uses is ultimately derived from the supplier ordering location. In addition, you can override anything that appears by default on the requisition. To ensure the override is carried to the purchase order, make sure that the Override Suggested supplier check box is clear on the Maintain Requisition - Requisition page and the Let POCalc Override supplier check box is clear on the Selected Item Details page accessed from the Sourcing Workbench.

By selecting this check box on the requisition, you enable the purchase order to be created using the same hierarchy and ignore all of the overriding information that the user enters on the requisition. Once the purchase order is created, the buyer can still override this information prior to dispatching.

For example, suppose that the user changes the supplier or supplier location that appear by default on the requisition, and the override suggested supplier check boxes are selected, the purchase order is created following the hierarchy. This overrides the user suggested supplier or supplier location on the requisition.

The purpose of defining the areas described here is to enable more control and automation in the system, thereby reducing the level of repetitive effort by the user. If you want a more automated system, a greater effort is required for the initial setup. This setup is a one-time effort that can increase the utilization of time-saving batch processing capabilities by the system. These setups require occasional updating as supplier changes occur.

Note:

These setup scenarios are based on normal day-to-day practices. Exceptions are handled through manual intervention at the requisition, sourcing, or the purchase order level.