What kind of legal issues you are trying to nullify. Your option 2 mentioned above will be able to fulfil the requirement. Just establish appropriate Segregation of duties to setup required access restrictions fir X and Y.
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Thank you Pranit for your reply.
But if we do segregation of duties, then we are involving client "Y" employee as well. But in this situation they("Y") have contracted us("X") for their operations and "X" doesn't want to involve "Y" on any sourcing/procurement process.
So base line is "Y" doesn't want to involve in any of these processes and then have contracted "X" for those activities.
"X" doesn't want to implement Oracle Adv procurement solution because they are not directly paying the vendors and they don't want to have any entry in EBS because of this reason.
Ideally we are trying to find out a solution that "X" will do all the procurement activities in EBS and the AP liabilities are nullified by some process( May be AR invoice like that)..
So please advise
In Procurement, we have three kinds of models
a) Center led Procurement (Sourcing and Negotation Done by One Organization - Utilized By another)
b) Centralized Procurement (Sourcing, Purchase & Receipt Done by One Organization - Receiving by another Organization, and subsequent intercompany transfers)
The Nullification you are talking about is the case of Centralized Purchasing and you need use a combination of Inter-company Transaction flows (in Inventory)and GBPA setup to achieve this.
But rather taking simplistic view, your seems to be a classic case of Center Led Procurement.
Can you please enlighten what is the basic SCM Structure and relationship between X & Y in above context and I am sure, we can propose a solution which fits.
The Third model btw is decentralized Procurement model, not relevant to this discussion.
Hi Abhi, Thank you for your reply.
The basic relationship is "X" is contracted to do what "Y" requires.
Say, Y requires 100 man service hours for their projects, then they request "X" to do sourcing activities for a best bid .
"X" does every thing and receipt is done in "Y" location and payment is made by "Y".
Note:- Both are not in ERP, they are using some custom process.Now we are trying to map this business scenario into oracle .
The only problem with this requirement is One Organization cannot issue a purchase order (X)which will be invoiced by another (Y). PO and Invoice must be done within the same OU, receipt however can be done in an Inventory Organization belonging to a different OU all together.
Inter company transaction flows and centralized procurement model is an answer to your question my friend.
Thank you Abhi!
Could you please point out some setup documents regarding the Inter company transaction flows and centralized procurement model? I'm new to this and your help is highly appreciated.
Once basic question on the centralized procurement model. Please advise.
Scenario :- Two OU(OU1- Requesting OU and OU2- Purchasing OU) Scenaio:-
1 Purchase Requisition in OU1 2 AutoCreate PO in OU2 3 Approve PO in OU2 4 Receive the material in INV1 of OU1 5 Supplier sends the invoice to OU2 6 Cost the transactions 7 Run ‘Create Intercompany AR invoices in OU2 8 Run ‘Auto Invoice Master Program in OU2 9 Run ‘Create Intercompany AP invoices in OU1 10 Run ‘Expense Report Import in OU1
1. After step 5(Supplier sends the invoice to OU2) who will do the payment for supplier and what's the process?
2. I could see the intercompany invoice process in further steps which creates invoices, but not sure on how supplier payments are paid.
In which step the paymens(Supplier, Intercompany) are processed.
I am glad I could point you in the right direction. Below is my point of view on this process:
OU2 - Will Enter and Pay a simple AP Invoice, as any other PO
Technically OU2 as a Vendor in OU 1's books.
When the receipt is created and inter-company accounting process run, The Liability will be shifted from OU2 to OU1 and The Revenue will be acquired in the books of OU2 from OU1.
Now, with this the following transaction happens
(Pays Regular Invoice)
OU2 ----> Vendor (Receives)
(Receives Inter-company Payment and Sends Inter-Company AP Invoice )
| [On Transfer Price, can include markup]
OU1 --------< Material
(Receives, Inter-company Payable Invoice and Material)
Payment to Supplier Happens based on Negotiated payment terms and aging as required by business.
"Accounting" if inter-company receivable and payables happens when you run the Intercompany process.
Payment/ Receipt - to be decided by Business as it will be like a regular invoice, except it would be created automatically and not entered by the user.
Thank you Abhi!
Question on your above comment:-
1. "OU2 - Will Enter and Pay a simple AP Invoice, as any other PO"
- PO is created in OU2 for the supplier which is in the PO Header and supplier Invoice is created in OU2 for the same supplier(PO Header supplier) and payment also done to Supplier (PO Header) from OU2 as other standard payment to the supplier is what you are trying to tell in this statement right?
2. And the other transactions are only to relieve the balances between OU1 and OU2 right?
Thats about right.
Thank you Abhi. So through this central procurement process also the payment is done by procuring OU on behalf of requesting OU.
But our scenario is that payment should be directly done by requesting OU not the procuring OU.
Is it possible? Please advise!
In conventional supply chain process, material procured by one unit (like corporate) may be received by another (like factory) but payment (bill to address) must always be to the OU raising the PO. AFAIK, the Invoicing cannot be done by a unit which has not created the PO itself, it defies logic.
The above process is the only answer. PO - AP must be in the same OU.
Thank you Abhi!