Purchase order (PO) in Oracle

Steps to create a Purchase order (PO) in Oracle Apps

A Purchase order is a commercial document and first official order issued by the buyer to the supplier, indicating types, quantities, and agreed prices for products or services the supplier will provide to the buyer.

Basically, there are four types of Purchase Orders, viz

Standard Purchase Order	Used for One-time purchases for goods and services. Here you know the item, price, payment terms an delivery schedule
Planned Purchase Order	Created when you have long-term agreement with the supplier. You must specify the details of goods and services, payment terms and the tentative delivery schedule
Blanket Purchase Agreement	Created when the details of items and services, payment terms are known but not specific about the delivery schedule
Contract Purchase Agreement	Created when the terms and conditions of a purchase are known but specific goods and services are not.

Let’s create a Standard Purchase Order.

Here, we will Auto Create a Purchase Order based on Approved Requisition.

Navigation: Purchasing>> Auto Create

Enter requisition number and click Find to navigate to Auto Create documents window

Find Requisition lines

Auto Create Document

Select your Requisition Line by ticking the check box next to the Requisition Line

Action:                             Create

Document Type:              Standard PO

Grouping:                        Default

Click Automatic button and click create button in the New Document form. By clicking Automatic button, a standard PO is created based on the details provided in the Purchasing requisition.

You can select Supplier either in the New Document form or in thePurchase Order form

New document

Auto Create to PO

Status represents the status of the document. Incomplete is the default status for all purchase orders until they are submitted for the first time for approval.

Click Shipments button.

Shipment number, Org, Ship-to, UOM, Quantity and Need-by-date are shown by default. These fields can be edited as needed. You can split the lines and can change the ship-to Organization, quantity of items to be shipped and delivery date.

[you can request the supplier to supply some of the quantities to be supplied by the need-by date you provided and rest of the quantities (to the same ship-to address or a different address) to a different need-by-date]

Shipments

Click More tab. The default values are generated

Shipments

Receipt Close Tolerance (%) determines when this line will close for receiving

Invoice Close Tolerance (%) determines when this line will close for invoicing

A Purchase Order has three main close points: Closed for Receiving,Closed for Invoicing (these two relate to a specific line) and Purchase Order itself has a closed status.

The entire order will not close automatically if all the lines are not closed for both receiving and invoicing. A tolerance of 0% indicates that it will close when the total amount received or invoiced equals the amount on the order, whereas a close tolerance of 100% indicates that no receipts or invoices are required for this order, which will close the lines for receiving as soon as the order is approved. Reviewing these default close tolerances on a regular basis is a good idea to ensure orders are properly controlled and closed with minimal intervention by the purchasing agent.

Select an option at Match approval Level

This determines the close point for an order.

2-way determines Purchase Order and Invoice quantities must match with in the tolerance before the corresponding invoice can be paid.

Quantity Billed = Quantity Ordered

Invoice Price = Purchase Order Price

3-way determines Purchase order, receipt, and invoice quantities must match within tolerance before the corresponding invoice can be paid.

Quantity Billed = Quantity Ordered

Invoice Price = Purchase Order Price

Quantity Billed = quantity Received

4-way determines Purchase order, receipt, accepted, and invoice quantities must match within tolerance before the corresponding invoice can be paid.

Quantity Billed = Quantity Ordered

Invoice Price = Purchase Order Price

Quantity Billed = quantity Received

Quantity Billed= Quantity Accepted

Select an Invoice Match Option

The Invoice Match Option determines whether the invoice will be matched to the Receipt or the PO when using 3-Way matching

Select PO when using 2-way and select PO or Receipt for 3-Way.

Enter the Receiving control information by clicking Receiving Controlsbutton

Receiving Controls

Enter distributions for the shipments by clicking Distributions button

Distributions

Click on More tab. The Requisition number from which this Purchase Order has been created is shown by default.

Distributions

Click Terms to enter terms, conditions, and control information for purchase orders.

Terms

Click Currency button to enter and change currency information

Save your work and click Approve button for Approval process.

Approve Document

Click OK and check the status in the Purchase Order