Integration Between Purchasing and
Advanced Pricing in Oracle
Applications Release 11.5.10
Tina Mitchell & Arwen Hawes
BIAS 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 price breaks
• Difficult to manage time sensitive promotions
• Difficult to manage
purchasing prices based on
attributes of the item being
purchased
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 Ups
Required
• Profile Options
• Item and/or
Purchasing Category
• Contract Agreement
Optional
• Price List
• Modifier
• Approved Supplier
Demonstrations
1. Price changes when the purchasing contract is
referenced
2. Price changes when different volumes are
ordered
3. Price changes when different grades are ordered
4. 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.
Conclusion
Integration 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