ASL, Sourcing Rules, and Other Procurement Mysteries

Bill Pick
Fujitsu America, Inc.
Introduction
Ever wonder if you really are utilizing Oracle Procurement to its full potential? Or how all those ASL (Approved
Supplier List), Sourcing Rules, Security Rules, and other Purchasing setups work together to make the most out of
Procurement for your organization? This paper will explain more details surrounding the Oracle Release 12
functionality for Sourcing Rules and Assignments, Automatic Sourcing, Approved Supplier Lists, and Security and
Document Control, as well as other key setup decisions. It will also mention some new functionality in the latest
Oracle releases, and best practices for setting up Oracle Procurement.

About Fujitsu America

Fujitsu offers a comprehensive array of full-capability global services, industry solutions, implementations,
upgrades, and support delivered by more than 3,500 Oracle consultants worldwide. As an Oracle Diamond Global
Partner, Fujitsu is among eight Oracle global partners offering full capabilities with Oracle E-Business Suite,
PeopleSoft, and Fusion solutions. Driven by its Macroscope ProductivityCentre methodology, Fujitsus delivery
approach combines a strong depth of capability in EAI products and middleware tools and technologies, and fully
integrated enterprise-wide packages.

Key Setup Decisions in Oracle Procurement

There are currently 41 setup steps identified in order to set up Oracle Procurement. Many of these are fairly simple,
but there also are some with are fairly complex and interrelated, which can be confusing. In particular, those
involving Sourcing, Approved Supplier Lists, and Security and Document Control can be a mystery to many
users; these also can provide significant business productivity and process control benefits.

Sourcing Rules and Assignments

Sourcing Rules specify how to replenish items in an organization if they are purchased, manufactured, or
transferred from another organization. Sourcing rules can be set up to model the supply chain for part or all of a
multi-organization entity. Rules can be assigned to items or categories, so if purchased items in a given commodity
are all purchased from the same vendor(s), one rule can be set up for a category value representing that commodity
and then assigned to all items with that category value. Once this is done, all requirements for items in that
commodity will be sourced by the vendor(s) called out in that sourcing rule.
Sourcing rules can also be assigned either to specific organizations or to all organizations. (Any Organizationspecific rules take precedence over Global Rules.)
When approving a Blanket Purchase Agreement, you can set up the system to automatically create blanket purchase
sourcing rules by setting Profile Option PO: Allow Auto-generate Sourcing Rules to Yes. If your organization
uses blanket purchase agreements, this setting could significantly reduce the amount of maintenance required for
Sourcing rules and assignments.
In Sourcing Rule form (Exhibit 1), enter a name of your sourcing rule, specify whether the rule is for all
organizations or a specific organization, specify the type (Make, Buy From, Transfer From), enter the Allocation %
of business you want to assign to each supplier/site (the total must equal 100%), and optionally enter a shipping
method. Also if you want planning to recognize the allocation %, you must check the Planning Active checkbox
in the upper right corner of the form. This will drive planning to allocate that percentage of the total number of
planned orders (i.e. Requisitions) over the planning period.
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Exhibit 1
Once the Sourcing Rule is created, it must be assigned to an item/category in the Sourcing Rule Assignments form
shown in Exhibit 2. Rules can be assigned either to items or item-organization combinations. The same rule may be
applied to many items or categories. It should be noted that Purchasing uses only one Assignment set, so any
sourcing rules relating to purchased parts should be assigned in that one set. Planning uses one assignment set per
plan name.

Exhibit 2
Once the Sourcing Rule is created, it must be assigned to an item/category in the Sourcing Rule Assignments form
shown in Exhibit 2.

Document Types for Sourcing

Sourcing Rules will determine what supplier should be used for a given item or category. Sourcing information can
also be derived through Purchasing documents, which provide not only the supplier but also item, pricing, and term
information that can be applied to a purchase. There are three main document types used in Sourcing: Blanket
Purchase Agreements, Contract Purchase Agreements, and Quotations.

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Blanket Purchase Agreements are used when you know the items, pricing, time frame, and supplier for purchasing a
set of items but do not yet know detailed delivery information. Blanket Purchase Agreements can be made either
global or local, with local agreements taking precedence over global agreements (if both exist for the item and
supplier). Once established, Blanket Releases are then created against the Blanket Purchase Agreement with
specific quantities and dates.
Contract Purchase Agreements can also be created as local or global, but they are an agreement on terms and
conditions for a supplier without specifying what items will be purchased. If you are using Advanced Pricing for
Purchasing, these agreements can be used in conjunction with price lists, modifiers, and qualifiers to establish
pricing. These agreements are then referenced when creating a Standard Purchase Order in order to capture and
track the amount of total spend against the agreement.
Quotations come in three different types Catalog, Standard, and Bid Quotations. Catalog Quotations are typically
for high volume buys and can contain price break information. Standard Quotations are similar to Catalog
Quotations, except they are typically for occasional buys rather than high volume buys. Bid Quotations are intended
to be used for one time buys for a fixed quantity, location, and date; they also do not contain price break
information.

Automatic Sourcing
Automatic Sourcing can be enabled in Procurement using either Sourcing Rules and Assignments and/or Approved
Supplier List and Supplier-Item Attributes. By setting the Profile Option PO: Automatic Document Sourcing to
Yes, the system will default source documents automatically based on the most current Purchase Agreement or
Quotation for an item-supplier combination. If multiple documents exist, the order of precedence for sourcing on a
requisition (irrespective of creation date) is Blanket Purchase Agreement (Local, then Global), then Contract
Purchase Agreement (Local, then Global), then Quotation. The Document precedence order is the same for
Purchase Orders except Contract Purchase Agreements are not considered.

Approved Supplier Lists (ASL)

Another area of functionality that can be used to support sourcing is the Approved Supplier List (ASL). ASLs
associate items and services bought with the companies who supply, either formally or informally. Data is stored in
a controlled, global repository containing relevant details about each ship-from/ship-to/item relationship. The ASL
and Supplier-item Attributes windows can be used to specify Blanket Purchase Agreements, Contract Purchase
Agreements, and Quotations as source documents for a particular item and supplier or particular item category
(commodity) and supplier. Sourcing information in ASL must be manually maintained, but allows more control
than Automatic Document Sourcing as it will not automatically update with new purchase agreements or quotes.

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Exhibit 3 Approved Supplier List

There is an Item Attribute flag that controls if supplier approval is required in order to purchase an item or not. This
flag will control the enforcement of ASL information in terms of PO approval. In the Approved Supplier List,
entries can be made by item or by commodity. Business can be specified as Direct, Manufacturer, or Distributor (i.e.
the Manufacturer for an item can be specified and approved for quality control purposes but purchase of that item on
a purchase order can be made from a Distributor who is also approved and linked to the Manufacturers approved for
the item/commodity). ASL entries can be created as Global (all organizations) or Local (one specific organization).
Approved Supplier Statuses can be assigned (i.e. New, Approved, Debarred, etc.) and new Statuses can be created
with business rules associated to them.

Supplier/Item Attributes
By clicking on the Attributes button, you can access the Supplier Item Attributes form (Exhibit 4)

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Exhibit 4 Supplier Item Attributes

Here you can control item settings unique for a supplier of that item (i.e. Purchasing UOM, Release Method,
Country of Origin, etc.) as well as specify a Source Document (i.e. Blanket or Quotation). This is where sourcing
information as well as pricing, terms, etc. can be derived for a given item on a requisition when using the ASL for
Sourcing.
If using Supplier Scheduling, you can fill in details on the Supplier Scheduling Tab. You can enable Planning and/or
Shipping Schedules and optionally assign a Scheduler. You also have the option to enable Autoscheduling and
Authorizations here.
On the Planning Constraints tab, you can enter supplier-specific planning parameters that can be used by ASCP for
planned orders. Supplier-specific lead times, capacity calendar information, and tolerance fences to model capacity
fluctuations can be entered and maintained. On the Inventory tab, you may enter supplier-specific order modifiers
for minimum order quantity and fixed lot multiples. Also you can enable Vendor Managed Inventory (VMI) and/or
Consignment with their associated parameters on the Inventory tab.

Security & Document Control

As part of the Purchasing Options setup, you can configure several parameters surrounding document control and
defaulting by Operating Unit (see Exhibit 5). Price Tolerance percentages and amounts can be set to control the
difference between Purchase Order line price and Requisition line price. Cancel Requisitions can be set to determine
what to do with a requisition when the Purchase Order created from it is cancelled. When a documents security
level is set to Hierarchy, you can specify the name of the hierarchy to be used for security purposes. There is a
Notify if Blanket PO exists check box which can be checked to notify a user when they create a Requisition,
Purchase Order, or Blanket Agreement if an item already exists on another Blanket. These are just a few of the
Document Control options that can be set at the Operating Unit level.

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Exhibit 5 Purchasing Options

There also are several configuration options for Document defaults, including Requisition Import Group-By (which
will determine how imported requisitions will be grouped by item, supplier, category, buyer, etc.), Receipt Close
Tolerance % (Receipts will auto-close if within this tolerance), and Price Break Type that will default on Blankets
(can be either Cumulative or Non-Cumulative). Id encourage you to review the Purchasing User Guide for more
details on these and other Control and Default options available, as well as to review the Document Security Profile
Options matrix and the Approval and Security Setup Matrix for more guidance on the setup requirements, default
values, and ramifications of certain PO and RCV profile settings on document security.

Document Types
Document types are defined to set access, security, and control specifications for the different documents used in
Purchasing. (See Exhibit 6)

Exhibit 6 Update Document Types

In the Approval configuration options for any document, you can indicate whether or not the Owner Can Approve a
document, whether an Approver Can Modify a document, if you Can Change Forward-To when approving a
document, and whether you Can Change Approval Hierarchy for a document. In addition, for Requisitions you can
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also indicate if you Can Change Forward From for a Requisition and if you can Use Contract Agreements for
Autosourcing. Additionally you can specify a Forward Method (Direct, Hierarchy, etc.) and the Default Hierarchy to
use (if forward method is Hierarchy).
In terms of configuring Document Control for a given Document Type, the two key settings are Security Level and
Access Level. Security level refers to who will have the ability to access a document. Security level options include
Hierarchy (the Document Owner plus Users above them in the hierarchy may access the documents), Private
(Document Owner only may access the documents), Public (Any User may access the documents) and Purchasing
(Document Owner plus Buyers may access the documents). Access Level means for those who have access to a
given document, what level of access do they have? Options are Full (Users can view, modify, cancel, and final
close documents), Modify (Users can view and modify documents), and View Only (Users can only view
documents).

New R12 Functionality in Procurement, iProcurement, and Sourcing

In terms of new functionality now available in Oracle Purchasing Release 12.1.3 and higher that can be configured
and utilized, one of the main benefits is the availability of the Approvals Management Engine (AME) for PO
Approvals. This allows PO Approvers to be either sequential or in parallel, provides multiple voting methods for
approvals, allows you to create custom transaction types and workflow, and allows Buyers to add Ad Hoc approvers
and electronic signatories. Also included in new functionality is the ability to withdraw a PO after its submitted for
approval, the ability to configure notifications in a Purchase Order, and the enabling of Outside Processing lines in
Global Blanket Agreements.
New in iProcurement 12.1.3+ is the ability to set a primary favorite charge account (that can override the Employee
Charge Account), attachment support in the Change Order Process, and Account Generator support in Requisition
Import. New in Sourcing 12.1.3+ is Terms and Conditions Controls (the ability to require and capture Terms and
Conditions approvals before allowing a vendor to proceed), the display of which can be controlled by the Sourcing
Administrator.

Best Practices in Setting Up Procurement

While every organization is different in terms of desire for control, tolerance for data entry, etc., there are some
best practice suggestions that can be made regarding Sourcing, ASL, and Document Security and Control in
Oracle Purchasing. For Sourcing Rules and ASL, strongly consider the use of category-based rules and approvals to
minimize the data entry and maintenance required. This not only can streamline the sourcing function, but also
eliminate painful data errors or use of outdated information when maintenance is postponed or avoided. Similarly,
strongly consider setting Profile Option PO: Allow Auto-generate Sourcing Rules to Yes, so that when you are
approving a Blanket Purchase Agreement the system can automatically create blanket purchase sourcing rules
instead of manually creating them every time. Unless you have a business need to manually control source
documents in ASL, consider setting Profile Option PO: Automatic Document Sourcing to Yes to default source
documents automatically based on most current Purchase Agreement or Quotation for an item-supplier
combination. In Purchasing Options, Document Control, set Cancel Requisitions to Always to avoid accidentally
ordering against the original requisition. If you need to recreate the requisition, you can always do so. In terms of
general guidance surrounding Document Security, consider setting Document Security access for all of your
Purchasing Documents as open as your processes allow (at least until you fully assess business impact after going
live), unless SOX compliance or other business policies and procedures dictate otherwise. Since productivity in a
new system is typically challenging in the first few months, whatever can be done to eliminate obstacles to
executing the business process will be helpful.

Summary
Oracle Procurement provides a wide range of functionality surrounding Sourcing Rules, Approved Supplier Lists,
Document Control and Security, and many other areas in order to serve a wide range of industries, companies, and
users. As you become more familiar with the configuration options available to you in these and other areas, and

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how they can work together, you can being to solve the Procurement Mysteries in your organization and unlock
the true potential available in Oracle Procurement.

About the Author

Bill Pick is a PMP-certified consultant and Certified Purchasing Specialist in the Oracle Practice of Fujitsu America
in Minneapolis, Minnesota. He has 32 years of experience in Supply Chain Management, including 19 years of
project management, manufacturing, and supply chain lead experience with Oracle Applications. Bill is the
President of the Twin Cities Manufacturing OAUG GEO, has presented multiple papers at previous OAUG
conferences, and has also been a panel member or panel moderator for Project Management, Manufacturing, and
Upgrade panels for past conferences.

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