Oracle SCM - Oracle Purchasing Basics

What is 2-way, 3-way, 4-way matching?
2-way matching:
2-way matching verifies that Purchase order and invoice quantities must match within your tolerances as follows: 
Quantity billed <= Quantity Ordered 
Invoice price <= Purchase order price 
(<= sign is used because of tolerances) 
Often used for services where no receiver is generated. 
3-way matching:
3-way matching verifies that the receipt and invoice information match with the quantity tolerances defined: 
Quantity billed <= Quantity received 
4-way matching: 
4-way matching verifies that acceptance documents and invoice information match within the quantity tolerances defined: 
Quantity billed <= Quantity accepted. 
(Acceptance is done at the time of Inspecting goods).

  1. Difference between Job hierarchy and position hierarchy?  What are the steps involved in setting up Position Hierarchy?
Job hierarchy is used when there is a single approval hierarchy system in the organization compared to Position hierarchy which is used if for the same job, multiple positional approvals are required i.e. Juniorbuyer’s requisition needs to be approved by senior buyer and senior buyer’s requisition is sent to Supply Chain manager and then to Finance manager for final approval. 
In Position hierarchy, approval might happen between different positions for the same Job.
Setups required:
    • Use Approval hierarchy must be checked in Finance Options
    • Jobs must be defined
    • Position must be defined and mapped to jobs
    • Position hierarchy must be setup
    • Position hierarchy must be mapped to Document type
    • Define and assign Approval groups
    • Assign employees
    • Run Fill Employee hierarchy concurrent program

  1. What is the difference between bill of distribution and sourcing rule?
Sourcing rule is used to determine the source of particular item i.e. Suppliers or source organization in an organization. 
 Bill of distribution is used to determine how the item is distributed in an organization i.e. warehouses to which item are to be distributed.
4.If ranks and allocations are provided in Sourcing Rules to Suppliers or Inventory organizations, what is the use of these ranks and allocations and where is it used?
Ranks and allocations are used by MRP or ASCP modules to create supply based on the ranks provided. 
If a requisition needs to be created for a demand of an item, then system checks the sourcing rule and creates a requisition to the Rank 1 supplier and based on the allocation percentage specified.
For example, if demand for an item X, is to be satisfied by creating a requisition, then system looks at the sourcing rule, if two suppliers are given Rank 1 and allocation as 70% and 30% then system creates two requisition lines, one for 70% of supply quantity from supplier 1 and other for 30% of supply quantity from supplier 2.
Total of allocation for each rank must sum up to 100 for the sourcing rule to be planning active.

5.What is the difference between Blanket Purchase Agreement and Contract Purchase Agreement?
Blanket purchase agreements carry detail of the goods or services you plan to buy from a specific supplier in a period, but you do not yet know the detail of your delivery schedules. You can use blanket purchase agreements to specify negotiated prices for your items before actually purchasing them.
Contract purchase agreements are created with your suppliers to agree on specific terms and conditions without indicating the goods and services that you will be purchasing. You can later issue standard purchase orders referencing your contracts

  1. How can a Budgetary control over procurement for each department be achieved in Oracle EBS
  2. Using Encumbrance functionality, each department can be allocated a specific amount and purchasing would honor this and ensure system doesn’t approve PO more than the budgetary amount.

  1. What are the types of receipts and their functions in Purchasing?
There are no distinct types of receipts as we find in PO documents (Requisition, Quotation, Purchase order etc). Receipts differ mainly by the method of recording the receiving transactions.
1) Unordered receiving
2) Blind receiving
3) Express receiving
4) Substitute receiving

  1.   For an OSP Sub-assembly, when you move transaction to the 'Queue' of an OSP Operation, Requisition Import is fired which creates an Approved Requisition and an Unapproved PO. What are the setups that govern creation of PO?
Sourcing Rule needs to be defined for the item. The sourcing rule needs to be mapped to item and organization under an assignment set.

  1.  When does a Purchase order or requisition goes into ‘Pre-Approved’ status?
• A person with the final authority to approve the document approves it, but then forwards it to someone else for additional approval, thus changing its status to Pre–Approved.
• Your organization uses encumbrance (reserves funds for documents), and the document is authorized for approval but funds have not yet been reserved for it. Even if someone with sufficient approval authority approves the document, its status may still be Pre–Approved if funds were not able to be reserved at the time of approval. Once funds are reserved for the approved document, the document changes its status to Approved.

  1.  If the preparer of purchase requisition is not authorized to Approve that requisition then what setup should be performed in the system to achieve this?
In document type, set Owner can approve flag to No

  1.  How to ensure if Purchase order is cancelled then corresponding requisition is also cancelled
In Purchasing Option, Set Cancel requisition to ‘Optionally’ or ‘Always’

Source of the Document is bases on My Working Knowledge and Reference from Various Documents.