Introduction
Prices for items on blanket agreements can change over the
effective period of an agreement as a result of ongoing negotiations between
the buyer and the supplier. In fact, it is common practice in certain
industries to initiate and execute against an agreement with an interim price.
A firm price may get finalized several months into the life of the agreement.
In these scenarios it is possible that the updated price is applicable
retroactively. Oracle Purchasing allows buyers to make price changes on global
blanket agreements and on blanket agreements.
With 11.5.9, Blanket Releases and Standard Purchase Orders
that have not been received or billed will be updated with retroactive price
change(s) entered on their corresponding Blanket Agreement / Global Blanket
Agreements.
With 11.5.10, Oracle Purchasing can optionally update
prices on orders (Blanket Releases & Standard POs) to reflect the latest
agreement price, even if there has been receiving and invoicing activities
against them.
Additionally, for orders that have been received, Oracle
Purchasing automatically adjusts the accrued liability to reflect the latest
pricing. Finally, for orders that have been invoiced, Oracle Purchasing
automatically generates price adjustment invoices in Oracle Payables. Depending
on the nature of the change, the Payables department can then process either a
payment or a debit memo request against the price adjustment invoice.
Setup
Profile
Option Setup
User Profile Name: ‘PO :
Allow Retroactive Pricing of Pos’
Profile Option Name: PO_ALLOW_RETROPRICING_OF_PO
Possible Values for the Profile option: blank, ‘Never’,
‘Open Releases’, ‘All Releases’
Profile option 'PO: Allow Retroactive Pricing of POs' must
be set to determine if blanket releases and standard purchase orders can be
mass updated with retroactive price change(s) entered on their corresponding
Blanket Agreement. If this profile is not set or is set to ‘Never’, the 'Apply
Retroactive Price Update to Existing PO/Releases' checkbox will be disabled in
the Blanket Agreement Approval window and the 'Retroactive Price Update of
Purchasing Documents' concurrent program will not update any Releases/Standard
POs.
Archive
Mode
In the Document Types Form, the ‘Archive on’ for Standard
POs and Releases must be set to 'Approve'.
If the profile option ‘PO: Allow Retroactive Pricing of
Pos’ is set to 'All Releases', then retroactive pricing will be performed on
all releases (including those which have accrual/liability accounting entries,
accrued receipt, or invoices), if the archive mode for that operating unit is
set to Approve.
Navigation:
Purchasing Responsibility
Setup > Purchasing > Document Types
Retroactive
Price Adjustment Account
In the Receiving Options Form, Retroactive Price
Adjustment Account must be set.
Navigation:
Purchasing Responsibility
Setup > Organizations > Receiving Options
Cumulative
Pricing
Cumulative Pricing with Retroactive Pricing is not
supported.
In the Blanket Purchase Agreement, "Cumulative
Pricing" checkbox under Agreement tab should be disabled.
Encumbrance
Retroactive Pricing is not supported in encumbered
environments. Encumbrance accounting must be turned off. If PO Encumbrance is
on, then:
·
The 'Apply Retroactive Price Updates to Existing
PO/Releases' check box will not be displayed on Blanket Approval window even if
the profile option, PO : Allow Retroactive
Pricing of POs is set to Open Releases Only.
The 'Retroactive Price Update of Purchasing Documents'
concurrent program will not perform any processing.Methods of updating the Retroactive Pricing
Once the Blanket Agreement line has been updated with a
new price, the Retroactive Price Update process will update the associated
Blanket Releases with the new price.
If the Global Blanket Agreement line has been updated with
a new price, then Retroactive Price Update process will update the associated
Standard Purchase Order with the new price.
Retroactive Pricing can be updated using any of the
following method.
·
While approving the Blanket Purchase Agreement,
In approval Window > Additional Options Tab page, by selecting the option
'Apply Price Update to Existing POs and Releases'.
·
By running the concurrent program 'Retroactive
Price Update on Purchasing Documents'.
Retroactive Pricing Cycle
The following steps outline the Retroactive Pricing Cycle
with an Example of Blanket Release. The same cycle is also applicable for the
Standard Purchase Order created based on the Global Blanket Purchase Agreement.
Give Retroactive Price Adjustment Account Value in the Receiving Options
Method
1:
Responsibility: Purchasing Responsibility
Step
1 – Create BPA
Navigation: Purchase Orders > Purchase Orders
§ Create
and approve a Blanket Purchase Agreement.
§ Ensure
that ‘Cumulative Pricing’ under Agreement Tab is disabled.
Step
2 – Create Release
Navigation: Purchase Orders > Releases
§ Create
Release against the BPA
Release: 5894-1
Release: 5894-2
Release: 5894-3
Step 3 – Create Receipt
Navigation: Receiving > Receipts
§ Create
Receipt against the Release 5894-1.
Step
4 – Accounting Details (Informational Step – No Action Taken)
Navigation: Receiving > Receiving Transactions Summary
§ Find
the Receipt 9837.
§ Check
the accounting information for the Receive and Deliver Transactions.
§ Select
the Transaction Type > Choose Tools menu > View Accounting.
Receive Transaction:
§ Receiving
Inspection Account – Debit @ (PO Unit Price *
Received Quantity)
§ Accrual
Account – Credit @ (PO Unit Price * Received
Quantity)
Deliver Transaction:
Responsibility: Inventory Responsibility
Navigation: Transactions > Material Transactions
§ Query
for the Source Document 5894.
§ Check
the Accounting Details for the Deliver Transaction.
§ Material
Valuation Account – Debit @ Standard Cost of the item.
§ Receiving
Inspection Account – Credit @ (PO Unit Price *
Received Quantity)
§ Purchase
Price Variance Account – Credit @ Difference in Price.
Step
5 – Create Invoice
Responsibility: Payables Responsibility
Navigation: Invoices > Entry > Invoices
§ Create
Invoice for the Release 5894-1.
§ Validate
and Create Accounting for the invoice.
Step
6 – Accounting Details (Informational Step – No Action Taken)
Navigation: Invoices > Entry > Invoices
§ Tools
menu > View Accounting
Step 7 – Release Details (Informational Step – No Action Taken)
Responsibility: Purchasing Responsibility
Navigation: Purchase Orders > Releases
§ Query
the Release 5894-1.
§ Check
the Status, Quantity Received & Quantity Billed.
Step
8 – Modify the BPA Price
Navigation: Purchase Orders > Purchase Orders
§ Query
the Blanket Purchase Agreement 5894.
§ Change
the Price. (Changed the Price from 7 to 8)
Step
9 – Approve the BPA
§ Approve
the BPA. While approving the BPA, In approval Window > Additional Options
Tab page, select the option 'Apply Price Update to Existing POs and Releases'
§ BPA
Status is changed to ‘Approved’.
Released amount still shows the same value.
§ The
workflow activity 'Retroactive Update Invoiced Releases/Std POs.' is designed to
run in DEFERRED mode.
Step
10 – Workflow Details (Informational Step – No Action Taken)
Navigation: Purchase Orders > Purchase Order Summary
§ Find
the BPA 5894
§ Check
the Approval Workflow Details.
§ Choose
Inquire menu > View Approval through Workflow.
§ Note
the Workflow Activity ‘Mass Update Releases/Std Pos’ is in Deferred Status.
Step
11 – Run Workflow Background Process
Navigation: Reports > Run
§ Single
Request - execute the request ‘Workflow Background Process’ for the item type
‘PO Approval’ and ‘Process Deferred’ as ‘Yes’.
Step
12 – Check the BPA (Informational Step – No Action Taken)
Navigation: Purchase Orders > Purchase Orders
§ Query
the Blanket Purchase Agreement 5894.
§ BPA
Released amount is changed to new value.
Step
13 – Check the Release Details (Informational Step – No Action Taken)
Navigation: Purchase Orders > Releases
§ Check
the Releases created against the BPA 5894.
§ Release
price for all the 3 releases are changed to the new BPA price.
§ Release
5894-1. Approved Release. Received & Billed.
§ Release
5894-2. Approved Release. Not yet Received / Billed.
§ Release
5894-3. Incomplete Release.
Release: 5894-1
Release: 5894-2
Release: 5894-3
Step
14 – Receipt Accounting Details (Informational Step – No Action Taken)
Navigation: Receiving > Receiving Transactions Summary
§ Find
the Receipt 9837.
§ Check
the accounting information for the Receive and Deliver Transactions.
§ Select
the Transaction Type > Choose Tools menu > View Accounting.
§ Accounting
for Retroactive Pricing got created.
Receive Transaction:
§ Receiving
Inspection Account – Debit for the Changed Amount
§ Accrual
Account – Credit for the Changed Amount.
Deliver Transaction:
§ Retroactive
Account – Debit for the Changed Amount.
§ Receiving
Inspection Account – Credit for the Changed Amount.
§ No
Accounting Entries happen in Inventory Subledger.
Step
15 – Invoice Details (Informational Step – No Action Taken)
Responsibility: Payables Responsibility
Navigation: Invoices > Entry > Invoices
§ Find
the invoice for the BPA 5894
§ No
changes
Step
16 – Run ‘Create Adjusting Documents in Payables Program’
Navigation: Other > Requests > Run
§ Single
Request - Execute the request - ‘Create Adjusting Documents in Payables
Program’ for the BPA 5894.
Step
17 – Invoice Details (Informational Step – No Action Taken)
Navigation: Invoices > Entry > Invoices
§ Find
the invoice for the BPA 5894
§ PO
Price Adjustment invoice is created.
Method
2:
Updating the Retroactive Pricing using the concurrent
program 'Retroactive Price Update on Purchasing Documents'.
Profile option: 'PO :
Allow Retroactive Pricing of POs' is set as ‘Open Releases’
Step
1 – Profile Option Value
Responsibility: System Administrator Responsibility
Navigation: Profile > System
§ Query
the Profile Option 'PO : Allow Retroactive
Pricing of POs'
§ Set
the value as ‘Open Releases’
Step
2 – Modify the BPA Price
Navigation: Purchase Orders > Purchase Orders
§ Query
the Blanket Purchase Agreement 5894.
§ Change
the Price. (Changed the Price from 8 to 8.5)
Step
3 – Approve the BPA
§ Approve
the BPA. While approving the BPA, In approval Window > Additional Options
Tab page, Do not select the option 'Apply Price Update to Existing POs and
Releases'.
§ BPA
Status is changed to ‘Approved’.
Released amount still shows the same value.
§ Check
the workflow to ensure that there is no call related to Retroactive Pricing.
Step
4 – Workflow Details (Informational Step – No Action Taken)
Navigation: Purchase Orders > Purchase Order Summary
§ Find
the BPA 5894
§ Check
the Approval Workflow Details.
§ Choose
Inquire menu > View Approval through Workflow.
§ Note
that the Workflow is completed.
§ Also
the activity ‘Does User want to Mass Update Releases’ is returning the value
‘No’.
Step
5 – Check the Release Details (Informational Step – No Action Taken)
Navigation: Purchase Orders > Releases
§ Check
the Releases created against the BPA 5894.
§ Release
price for the releases are not changed to the new BPA price.
§ Release
5894-1. Approved Release. Received & Billed.
§ Release
5894-2. Approved Release. Not yet Received / Billed.
§ Release
5894-3. Incomplete Release.
Release: 5894-1
Release: 5894-2
Release: 5894-3
Step
6 – Run 'Retroactive Price Update on Purchasing Documents'
Navigation: Reports > Run
§ Single
Request - execute the request 'Retroactive Price Update on Purchasing
Documents' for the BPA 5894.
Step
7 – Check the Release Details (Informational Step – No Action Taken)
Navigation: Purchase Orders > Releases
§ Check
the Releases created against the BPA 5894.
§ Release
price for the Open releases are changed to the new BPA price.
§ Release
5894-1. Approved Release. Received & Billed. Price is NOT changed.
§ Release
5894-2. Approved Release. Not yet Received / Billed. Price is changed.
§ Release
5894-3. Incomplete Release. Price is changed.
Change Order Workflow Setup
The PO Change Order Workflow attribute can be set to
facilitate automatic re-approval of Releases re-priced by the Retroactive Price
Update of Releases concurrent program.
·
Set Header Level Attribute, 'Change Order Header
Auto Approve Retroactively Priced Releases', to Yes to automatically route the
Blanket Releases and Standard Purchase Orders re-priced by the concurrent
program thorough the Change Order Workflow process without subjecting them to
other checks (that are made to determine whether the document needs to be
routed thorough' Change Order Workflow, effectively short-circuiting of these
checks)
·
The default value of the attribute would be set
to No. When the above attribute is set to No, the Open Releases/Standard POs
that were re-priced will be processed by Standard Change Order Workflow
functionality (which includes existing checks made before determining whether
the document will go through manual re-approval or Change Order workflow)
The workflow file involved is poxwfpoa.wft.
·
Open the Workflow file in Workflow Builder.
·
Expand Attributes.
·
Double Click on the attribute 'Change Order
Header Auto Approve Retroactively Priced Releases'
·
Specify the Value as ‘Y’
