Oracle Purchasing provides the line type feature so that you can clearly differentiate orders for goods from those for services or outside processing. In addition, the services related line types support a broad range of service categories including general business services, consulting services, and contingent labor.
Requestors and buyers generally order both goods and services by quantity. You order the number of items you need in a specific unit of measure and at a given price. For instance, a buyer could order 10 computer terminals at a price of $1500 each. Later, the receiving agent records the receipt of one crate of 5 terminals. The accounts payable department receives a bill for 5 terminals, and matches the invoice against the original purchase order. Sometimes, you also need to order services in the same way. For example, you purchase 40 hours of product training at a rate of $40 per hour. You simply record the hours of training ordered and the price per hour. Once you receive the training, you record the hours received.
However, you sometimes order services by amount rather than by quantity. For example, a project manager orders $10,000 of consulting services to install a local area network. In this case, the buyer only needs to record the total amount of the service.
When half of the work is complete, the project manager records a receipt of $5000. The consulting firm may send an invoice for the complete amount of the service, or it may send partial invoices. In either case, the accounts payable department must match the invoice to the original purchase order or receipt by amount.
Purchasing provides you with the features you need to order both goods and services. You should be able to:
Create your own purchasing document line types. For each line type, you should be able to specify the value basis: amount or quantity. If you have implemented Oracle Services Procurement, you have the additional value basis of fixed price or rate. For both amount and quantity based line types, you can specify default values for category, unit of measure, and whether you require receipt. For quantity based lines, you can specify whether the line type is used for outside processing.
Create a purchasing document with any combination of line types you need.
AutoCreate purchase order lines from your requisition lines, grouping requisition lines for the same line type and item onto the same purchase order lines.
Create services purchase order lines by selecting a fixed price or rate based line type, category, description, and amount for the line.
Create amount-based purchase order lines by selecting an amount-based line type, category, item description, and total amount for the line.
The line type governs the type of requisition, purchase order, RFQ, and quotation lines you create. Quantity-based line types let you order and receive and/or invoice based on the quantity of goods or services provided. Amount-based line types let you order and receive and/or invoice based on the value of the service provided.
Use quantity-based line types when you want to specify the quantity, unit of measure, and unit price for the items you are ordering. Purchasing provides Goods as an initial quantity-based line type. You can modify this line type or create new quantity-based line types to satisfy your needs.
If you have implemented Oracle Services Procurement, you can use fixed price-based line types when you want to order general business services or temporary labor services (with Oracle Services Procurement) by a fixed amount. You create an order for fixed price service by selecting a fixed price-based line type, category, item description, and total amount of the service. You can receive and match fixed price services by amount.
If you have implemented Oracle Services Procurement, you can use rate-based line types when you want to order temporary labor services by per unit rate. You can use rate differentials with this line type. You create an order for rate based service by selecting a rate-based line type, category, unit of measure, price, item description, and total amount of the service. You can receive and match rate-based services by amount.
Use amount-based line types when you want to order services and other items by amount. You create an order for a service by selecting an amount-based line type, category, item description, and total amount of the service. You can also receive and match services by amount.
You can use outside processing line types to enter purchasing documents to pay suppliers for outside processing operations. Purchasing provides Outside Processing as an initial outside processing line type, and you can create additional outside processing line types. You cannot use outside processing line types, unless Purchasing, Work in Process, and Bills of Material are installed. See: Overview of Outside Processing.
You can create blanket purchase agreements or global blanket purchase agreements with outside processing (OSP) line type using Buyer Work Center or Purchase Orders window.
Purchasing administrators can select Outside Processing as the default line type in the Document Controls region of the Purchasing Options page for organizations. This default value appears automatically as the line type when buyers create blanket purchase agreement or global blanket purchase agreement using the Purchase Orders window or the Agreement Line Details page in Buyer Work Center.
If you have implemented Oracle Services Procurement, you can use temporary labor purchase basis line types to enter purchasing documents to pay contingent labor (contract labor) providers. See: Setting Up Services Procurement for Temporary Labor
Oracle Purchasing provides initial line types of Goods and Services. If Oracle Work in Process is installed, Oracle Purchasing also provides the line type Outside Processing. If Oracle Services Procurement is installed, Oracle Purchasing also provides Rate Based Temp Labor and Fixed Price Temp Labor line types. You can modify these line types or create new line types in the Line Types window. To define a new line type, you simply provide a name and description for lines types with a value basis of quantity. fixed price, rate, or amount. You can then optionally specify a default category (except for Oracle Services Procurement temp labor line types), whether receipt is required, and unit of measure. The unit price defaults to 1 for amount-based line types but is otherwise optional. You cannot specify a line as outside processing unless the value basis is quantity. You must provide a default unit of measure for rate-based and amount-based line types. You use the unit of measure for amount-based lines as reference information only. Purchasing does not perform any unit conversion for amount based lines. You can create a unit of measure such as AMOUNT for amount based line types to help you determine if you ordered by amount. See: Defining Line Types. See: Defining Units of Measure.
Oracle Purchasing lets you specify whether you are creating a document line for quantity, fixed price, rate, amount, or outside processing depending on your implementation. You simply choose the line type when you create your document line. You enter the item, item description, quantity, unit of measure, and unit price or amount depending on the line type. See: Defining Line Types.
Since you typically use one line type more than the others, Purchasing lets you define a system default line type in the Purchasing Options window. All new purchasing document lines default to this line type. You can override this value when you need to create document lines of another type. You do not have to set up a system default if you use many different line types. See: Defining Default Options.
You can use the AutoCreate Documents window to convert approved requisition lines for items and services into purchase orders and releases. You can gather requisition lines for the same line type and place them onto a single purchase order. You can also place requisitions for different line types onto the same purchase order. Purchasing combines requisition quantity and amount based lines for the same item, line type, unit of measure, and item revision onto a single purchase order line. See: Autocreate Documents Overview
Purchasing prints your document lines according to their line types. For quantity based line types, Purchasing prints the quantity, unit price and total amount for purchase orders and RFQs. Oracle Purchasing prints only the amount for fixed price, rate, and amount based document lines. If Oracle Services Procurement is implemented, note that the temporary labor information is not printed.
The line type feature includes enhanced reporting to differentiate between quantity and amount based orders. Oracle Purchasing prints the line type so you can easily determine the basis of the information. For fixed price, rate, and amount based orders, Oracle Purchasing prints only the total amount of the order.