Steps involved in setting up and using Advanced Pricing with Oracle Purchasing

Prices can be manually entered or default into purchase orders from the item setup in Oracle Inventory, pricing information in a referenced purchase blanket agreement, or from more complex pricing rules set up in Oracle Advanced Pricing.

Oracle Advanced Pricing is now integrated with Oracle Purchasing and Oracle iProcurement. Oracle Advanced Pricing is a flexible pricing engine capable of addressing complex pricing needs of customers. Using Oracle Advanced Pricing, purchasing professionals can setup complex pricing structures in the form of price lists, price formulas and modifiers. Price lists contain the basic information that associates price and currency with an item, service, group of products or services, or sub-component. Pricing formulas let you model mathematical relationships for product pricing using certain order attributes. Price modifiers allow you to setup discounts or surcharges that can be applied on top of base prices. To price requisitions and purchase orders based on pricing rules setup in Oracle Advanced Pricing, the requisition or purchase order line need simply reference a contract purchase agreement.

What setup is required to enable advanced pricing for Purchasing ?

To enable advanced pricing, the profile option 'QP : Licensed for Product' must be set correctly. For the purposes of this Note, this profile option must be set to 'Purchasing' to enable Advanced Pricing to be used with Oracle Purchasing.

To set the profile, navigate to System Administrator Responsibility : Profiles -> System and then query the profile option 'QP : Licensed for Product' and set it at Site or Application level to 'Purchasing'.

Once done, the setup should resemble the following screenshot :

1 - Basic Requirements :

In order to utilize Advanced Pricing with Oracle Purchasing, there must be an Item defined and this Item must be linked to a Supplier through a Contract. Once this has been done, the Item must be correctly Sourced to this Contract using Sourcing Rules, Sourcing Assignments and Approved Supplier Lists. This setup is detailed below :

i - Item Setup (Purchasing Responsibility : Items -> Master Items) :

The only consideration here is that the item must be purchasable. The following screenshots show the setup for the Item Main and Purchasing tabs :

Please note that no List Price has been assigned to this Item and as such any document referencing the item will not have a price defaulted (if Sourcing or Advanced Pricing are not in effect) 

ii - Contract Creation (Purchasing Responsibility : Purchase Orders -> Purchase Orders) :

To utilize the functionality provided by Advanced Pricing, Items must be linked to a Contract with a Supplier through Sourcing Rules. Create a contract as shown in the following screenshot and then approve it :

iii - Sourcing Setup (Purchasing Responsibility : Supply Base -> Sourcing Rule/Assign Sourcing Rule) :

The Item created must be associated with the same Supplier and Site specified in the Contract through Sourcing Rule and Sourcing Rule assignment.

A Sourcing Rule must first be created specifying the Supplier and Supplier Site as the Buy-From source as shown below :

The Sourcing Rule can be assigned to the appropriate Item through the Assign Sourcing Rules form as shown below :

Please note that the Sourcing Rule must be assigned to the same Assignment Set specified in the profile option 'MRP: Default Sourcing Assignment Set' in order for the Sourcing Rule to be effective. 

iv - Approved Supplier List Setup (Purchasing Responsibility : Supply Base -> Approved Supplier List) :

Once the Item has been sourced to the appropriate Supplier and Supplier Site, the next step is to create an Approved Supplier List entry to link the Item - Supplier/Site to the created Contract.

First the entry must be created in the Approved Supplier List form as follows :

Click on the Attributes button and reference the Contract as shown in following screenshot :

2 - Using Advanced Pricing Price Lists with Oracle Purchasing :

Advanced Pricing Price Lists allow different prices to be stored for Items and then these Price Lists can be applied to specific Suppliers/Revisions/etc through the use of Qualifiers. Price Lists are also very flexible and allow mass changes to Item prices as well as bulk import for Item prices.

i - Price List Creation (Purchasing Responsibility : Advanced Pricing -> Price Lists -> Price List Setup) :

To specify an Item price on a Price List, simply create a new Line under the existing Price List (or create a new Price List as appropriate) and include the Item Number and price on the Price List Line as shown below :

Prices can also be assigned to Categories rather than specific Items if required. In the example shown above, Item 'QP Test Item' has been assigned a price of 10. Since no Qualifiers have been attached in this case, it is to be expected that any document (be it Purchase Order or Requisition) that contains this Item will have a price of 10 defaulted in the document line.

ii - Testing the Price List using a Requisition (Purchasing Responsibility : Requisitions -> Requisitions) :

To test that the Item price defined in the Price List is in effect, create a new Requisition and enter the Item Code.

The Supplier and Site should default automatically as per the defined Sourcing Rule as shown below :

Note that the Requisition line price field is empty. Click on the Source Details tab and select the Contract in the ASL as the Source document for this Requisition as shown below :

Once the Source Contract has been specified, go back to Lines tab and you will see that the Item price has defaulted correctly from the Price List as shown below :

iii - Testing the Price List using a Purchase Order (Purchasing Responsibility : Purchase Orders -> Purchase Orders) :

Verify that the Item Price also defaults correctly on Purchase Orders by creating a new standard Purchase Order. Make sure to specify the correct Supplier and Supplier Site on the document header.

On the Purchase Order line, specify the Item as shown in the following screenshot :

Note that the Item price field is empty. Click on the Reference Documents tab and specify the correct Contract as shown below :

Once this has been done, go back to the Purchase Order line and you will see that the Item Price has defaulted from the Price List as shown below :

3 - Using Advanced Pricing Modifiers with Oracle Purchasing :

Modifiers allow price adjustments to be specified so that discounts can be applied to prices defined in Price Lists. Modifiers can be cumulative or not and Qualifiers can be created to specify the eligibility of different Modifiers.

i - Modifier Creation (Purchasing Responsibility : Advanced Pricing -> Modifiers -> Modifier Setup) :

Modifier lines can be added to an already existing Modifier or a new Modifier can be created as required. In the Modifier Line, the Item can be specified as well as the actual price modification be done. In this example, a discount of 10% is applied to the Item price defined in the Price List. Formulas can also be used to apply complex price calculations if required. Please note that the 'Pricing Phase' field must be set to 'PO List Line Adjustment' for Modifier lines to be effective in Oracle Purchasing. No other values for this field will work.

The below screenshots show an example of a Modifier :

ii - Testing the Modifier using a Requisition (Purchasing Responsibility : Requisitions -> Requisitions) :

To test that the Discount defined in the Modifier is in effect, create a new Requisition and enter the Item Code. The Supplier and Site should default automatically as per the defined Sourcing Rule as shown below :

Note that the Requisition line price field is empty.

Click on the Source Details tab and select the Contract in the ASL as the Source document for this Requisition as shown below :

Once the Source Contract has been specified, go back to Lines tab and you will see that the Item price has defaulted correctly from the Price List and the Discount specified in the Modifier is now in effect as shown below :

iii - Testing the Modifier using a Purchase Order (Purchasing Responsibility : Purchase Orders -> Purchase Orders) :

Verify that the Discount correctly affects the Item price on Purchase Orders by creating a new standard Purchase Order. Make sure to specify the correct Supplier and Supplier Site on the document header.

On the Purchase Order line, specify the Item as shown in the following screenshot :

Note that the Item price field is empty.

Click on the Reference Documents tab and specify the correct Contract as shown below :

Once this has been done, go back to the Purchase Order line and you will see that the Item Price has defaulted from the Price List as shown below :