Integration Between Purchasing and Advanced Pricing in Oracle

Applications Release 11.5.10

Tina Mitchell & Arwen HawesBIAS Corporation

July 20th, 2007

Overview

• Purchasing Professionals can now define complex pricing structures using the functionality available with Oracle Advanced Pricing

• New integration between Advanced Pricing and Purchasing- New Controls Reduce Manual Keying of Prices on Requisitions and

Purchase Orders- Automates and controls pricing - Manages time sensitive promotions

Problems in Purchasing Prior to Integration Between the two

Applications

• Difficult to manage purchasing prices based on attributes of the item being purchased

• Difficult to manage price breaks• Difficult to manage time sensitive promotions

Case Study• Jenny’s Pancake Emporium purchases maple syrup from

Vermont Syrup Company.

– Different volumes have different prices– Different grades have different prices

• Purchasing agents are manually tracking the supplier prices due to the complex pricing.

• Due to variety of reasons, the price on the purchase order could be incorrect.

• The Accounts Payable group has recurring issues with invoice discrepancies between the purchase order and the invoice.

Cost Lost Per Transaction

• Potential to lose volume discounts in Purchasing.

• Potential to have incorrect cost of goods in the warehouse and in fixed assets.

• Potential Increase in Cost Per Transaction to remediate the issue - Inventory, Purchasing, Payables, Fixed Assets, etc.

Terminology

• Purchase Order Type: Standard, Contract, Blanket.

• A Contract Purchase Agreement is an agreement of specific terms and conditions without indicating the goods and services that you will be purchasing. Standard purchase orders are created, referencing the contract purchase agreement.

Terminology, cont…• A Price List is a list of prices from a particular supplier for an

individual item or item category. Prices can be stored by:

- unit price- percentage price- formulaic price - price break

• A Modifier is an Oracle specific term used in pricing. Modifiers alter the price of an item. They can discount or increase the price.

• A Pricing Attribute is a property of an item that is used in the derivation of a price. It could be any range of characteristics that are documented within Oracle.

Basic Set UpsRequired

• Profile Options • Item and/or

Purchasing Category • Contract Agreement Optional• Price List• Modifier • Approved Supplier

Demonstrations1. Price changes when the purchasing contract is

referenced2. Price changes when different volumes are ordered3. Price changes when different grades are ordered4. Price is ‘Modified’ when specific grade is

purchased, regardless of volume

Implementation Considerations

• Integration is limited to single line discounts and surcharges.

• Integration limited to Requisitions and Standard Purchase Orders (referencing a Contract Purchasing Agreement).

• Release 12 introduces integration with blanket purchase agreements.

ConclusionIntegration between Purchasing and the Advanced Pricing

module:- Provides buyers with the ability to develop and maintain

complex pricing structures.- Provides buyers with a more effective tool to manage

multiple pricing programs, from simplistic to complex.- Provides historical pricing history.- Reduces matching errors due to inconsistent pricing.- Provides requesters and their approvers with accurate

pricing information.- Leverages a flexible rules based engine to automate the

pricing process

References

• Oracle Purchasing Integration with Oracle Advanced Pricing – Release 11.5.10; September 2006; Metalink Note 394490.1

• 11.5.10: Does Advanced Pricing In Purchasing Require Oracle Pricing To Be Installed?; Metalink note 299698.1

• Questions about using Advanced Pricing in Purchase Orders and Requisitions; Metalink note 343100.1