Considerations for Purchase Order Creation

A purchase order is a commercial document that's used to request a seller to supply a product or service in return for payment. In Oracle Purchasing a purchase order can be created through an automated process or entered manually.

Consider these key attributes when creating a purchase order:

• Document Style

• Business Units (BU): Procurement BU, Requisitioning BU, Sold-to Legal Entity and Bill-to BU.

• Supplier, Supplier Site, and Supplier Contact

• Communication Method

• Bill-to Location

• Currency

Document Style

When you create a purchase order you select an appropriate document style. The document style helps to:

• Reduce the complexity of creating a purchase order by exposing only the needed functionality on the order.

• Control the look and feel of the user interface to match the usage of the purchase order and your business needs.

Business Units

It is important you understand the use of these business units in a purchase order.

Procurement BU

The procurement BU is responsible for procurement business functions including: supplier management, contract negotiation and administration, and purchase order issuance and administration. As a buyer, you can only create purchase orders for those business units who are identified as clients of your procurement BU. Depending on business requirements, a procurement BU can either:

• Perform these functions in response to its own requirements for purchased goods and services.

• Serve as a shared procurement service center that can process requisitions from multiple "client" business units.

Your procurement BU affiliation also gives you access to process those requisitions originating from these clients, and identified for processing in your procurement BU.

Requisitioning BU

The requisitioning BU, the business unit where the items are needed, is also typically the business unit that bears financial responsibility for the purchase.

Sold-to Legal Entity

In certain scenarios, businesses find it beneficial to channel purchases through international subsidiaries instead of directly dealing with suppliers. Examples include scenarios dealing with global trade or supply chain. The reasons range from country-specific legal requirements to favorable tax treatment. The sold-to legal entity on the purchase order identifies the party the purchase order goods or services are sold to. The sold-to legal entity is a legal entity with a tax registration number, and is liable for the purchase. Purchase order document numbers are sequenced uniquely for a sold-to business unit.

When you create a purchase order you can select any legal entity assigned to the ledger of the requisitioning BU without configuring new supply chain orchestration flows. For selecting any legal entity assigned to the ledger of the requisitioning BU without configuring new supply chain orchestration flows, set the Multiple Legal Entities on Order attribute to Allow or Warning on the Configure Requisitioning Business Process page.

Note: To select a sold-to legal entity on the purchase order, use the Override Purchase Order Sold To Legal Entity privilege. This privilege isn't assigned to any predefined job role.

Bill-to BU

The bill-to BU identifies the business unit responsible for processing invoices for the purchase order. The supplier site assignment record identifies the bill-to business unit for a client business unit. In the local procurement scenario, the client is the requisitioning business unit. You can centrally process invoices for orders from multiple requisitioning business units in a single bill-to business unit on the purchase order.

Supplier, Supplier Site, and Supplier Contact

Enter or select the name of the Supplier for this purchase order. To submit a purchase order for approval, you must provide a supplier.

Note: You can't change the supplier after the purchase order is open. The purchase order becomes a legal document when you and the supplier approve it (acknowledgment optionally may be required). To change the supplier after you approve a purchase order, you must cancel the existing purchase order. Then create a new one for the other supplier.

Enter or select the Supplier Site for this purchase order. If the supplier you choose has only one site, the value populates this field. Before you can submit a purchase order for approval, you must provide a supplier site.

You can optionally enter the name of the contact at the supplier site. If the supplier you choose has only one contact name, the value populates this field.

Communication Method

You can communicate your purchase orders and agreements, along with any attachments to suppliers using print, fax, or email. Attachments might include amendments, contract terms, and contractual deliverables.

You can also communicate purchase orders and their change orders using Oracle Collaboration Messaging.

For electronic business to business communication, you can only communicate attachments with purchase orders and change orders when using Oracle Collaboration Messaging.

The default communication method on the document is from the specified supplier site's preferred communication method.

The application automatically initiates the communication process upon approval of the document, if:

• A communication method other than None is specified on the document.

• Or the supplier site is set up for communication by means of business to business electronic communication.

Alternatively, you can communicate documents to your supplier in batch by scheduling the Communicate Purchasing Documents process. The process sends the communication using the method specified on the purchasing document.

To resend your document, use the Communicate action. With this action you can use a communication method different from the supplier's preferred communication method.

Bill-to Location

Enter the Bill-to Location for the purchase order. If you entered a supplier and supplier site, the default location is the location you assigned to the supplier or supplier site. You can accept this value or change it to another location.

Currency

Enter or select the Currency for the purchase order. You can change currency information until the purchase order is approved.