sourcing at a glance

Moustafa Abdulrahman

Oracle Fusion SCM Consultant, Egypt

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Introduction:

This white paper was made to give a full global introduction about “Sourcing” and give a better

understanding of each function and what it exactly does. If you have anything you want to add to

that paper, please don’t hesitate to E-mail me. Special thanks to Oracle development team whom

have helped us partners to understand it.

The first step where sourcing starts is identifing the opportunity you have so we’ll convert our PRs into

negotiations, so from the requisition pool area you convert into a PO or a negotation, so your

requisitions are nothing but opportunities.

Let us say you will procure phones for CEOs and those phones are for multiple employees so those are

called “Opportunities”.



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So after that you specifiy from whom you want to procure your phones or services, you’ll define a

strategy and approve that event and you’ll start inviting suppliers and approve that event (Events has it’s

own approval cycle).

What is conducting an event?

You will send invitations and receive responses and then evaluate these responses from your suppliers.

During the process of evaluation you can analyze all the suppliers responses. Once you are satisfied with

one or more responses, you can award these suppliers respectively.

When you make a decision to award a certain supplier you can make a decision upon it and also an

approval cycle will start for that specific decision.

So there are two places where you can have approvals:

1-In the case of creating an “Event” or negotiations (RFI,RFQ,Reverse Auction)

2-when you award business to a certain supplier and when it happens documents get automatically

created.

What are the different kinds of negotations you can create?

When you negotitate with a supplier you can create:

1- RFQ: Which means that you have a requirement for products and services like phones so I want

to invite suppliers on a bidding process.

2- Auction: It’s only when you have a very limited timeline, like for instance you want to have a

particular product within a certain timeline and you want the suppliers to respond on a

competitive nature. NOTE:oracle supports only reverse auction not forward auction where you

sell your things.

3- RFI: In such a negotiation your intent is not to buy but you just want to inquiry about certain

details about the supplier in order to decide whether to have future business with him or not.

Demo:

Purchasing - Negotiations Task List Create Negotation

Go ahead and create a negotiation from scratch



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Negotations are BU based

Type:Previously explained

Negotation Style: You can specify the style and upon that certain features are going to be enabled or

disabled upon your selection,it’s a configuration that we’ll see as a apart of the setup (FSM: Manage

Negotation Styles”).

Negotation Template: if you have created one then apply it so the details gets applied within these

negotations (Task List Manage Negotiation Templates).

Outcome:

Once you approve the negotation what do you want to happen?

Click Create..

https://rws-fap0687-prc.oracledemos.com/procurement/faces/FndOverview?fnd=%3B%3B%3B%3Bfalse%3B256%3B%3B%3B&fndGlobalItemNodeId=itemNode_procurement_negotiations&_afrLoop=2075829781891542&_afrWindowMode=0&_afrWindowId=kqxwh3zjl&_adf.ctrl-state=2rz9jxb6i_1



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A lot of sections on the top will appear and all these sections comes from the style which is created

(FSM Manage Negotation Styles):

Each section will have data related to it’s function,depending on your scenario you can enable or disable

these sections.

1-Cover page

For example your organization wants to send a business case with generic business requirements or

company’s terms and conditions agreed upon. It’s a free text area so you can do what ever in it.

You can include in your “Cover Page” area the so called “Variables”

What are variables?



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Variables are Placeholders of data. For detaulting and reusability purposes.

Its noteworthy to mention that there’s a vast of seeded embedded variables within your system. User

defined variables are not supported yet so you have to use the seeded ones. Oracle development team

have paid attention to all kinds of business cases and included everything for you.Something also to add

that variables avoids data disruptncy. Sourcing is also social enabled as you can see there is a “Message”

icon.

Preview your “Cover Page”after you are done.

2-Overview:

-General:

Put a title for your negotations to make things simpler for you.

It is a total free text area and you can configure a lot of features of your negotiation and it’ll show how

your negotation will behave and what kind of info is visible for your suppliers.



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--Schedule:

Close date is the date when you won’t accept anymore responses from your suppliers.

Preview Dates

You can choose to set a preview date for your negotiation. During the preview stage, suppliers can view the negotiation but not enter any responses.

Open Dates

You can choose to open the negotiation immediately, as soon as you publish it, or you can choose a future date on which the negotiation opens for responding. If approvals are enabled for your environment, you can select a specific date, or a set number of days after the open date.

Close Date

You must specify a close date. Once the close date is reached, no more responses are accepted. If the negotiation is an auction, you can optionally choose to enable the autoextend or staggered closing feature.

Award Date

You can specify an award date for the information of the suppliers. Award dates are not enforced by the application. You can award the negotiation at any time after closing it.



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--Negotation Controls:

It determines how suppliers can see responses of other suppliers or not, if it’s “Sealed” then they can

see responses of others, if it’s “Blind” then they can’t but they can see the best value.

Response visibility

Response visibility controls when suppliers can see information from competing responses.

o Open - in an open negotiation, suppliers can see competing response information while the negotiation is active.

o Blind - in a blind negotiation, suppliers can only see the best bid value (if allowed).

o Sealed - in a sealed negotiation, buyers cannot see any responses until they are unlocked, and suppliers cannot see any competing response information until the responses are unsealed.

Two stage negotiations are supported within Fusion,mostly in Middle East a negotation will have two

sections one technical and one financial, you don’t want the financial terms to be seen by other team

members and vice versa so in this case we use “Sealed”.



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Also choose your layouts that will be created within your BI.

--Requirements:

You want to do business with an eco supplier or have black laptops with 2gb ram etc etc.

Enable Weights:if your requirements play a great role in choosing a supplier then choose it.

Disply scoring criteria to suppliers: if you want a supplier to work on something he’s missing display it to

him.

Rank indicator: how you want the responses of the suppliers.

Ranking method: if it’s only on price will be the first.if it’s on multiple then it’ll take the price and

requirements.



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--Response Rules:

Restrict to invited suppliers: Only those suppliers can see this particular negotation.if you are not

restricting who ever has an isupplier account and associated to the BU can see the event.

Allow suppliers to select lines on which to respond: If it’s a very big negotation and you are having 50

lines let’s say the supplier might not provide all the producs and services so you can allow him to choose

certain lines to choose from.

Display best price to suppliers: What is the least price if you want to display it to suppliers.

Allow multiple responses: Once they submit the response they can’t modify it.



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-Terms:

It’s a total free text area with variables also.

--Business Terms:

Because the documents gets automatically created you need to specify these things.



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--Collaboration Team:

A person will creae the negotation and his manager will be automatically added. If you want to increase

the number of people you can simply add and also select what kind of access and create tasks for

others. For example someone who will do a research on the supplier and come back with a potential list.

You can then send notifications.

3-Requirements:

Also a free text and you specify your generic requirements, you can create a requirement from scratch

or use a predeifned or previously created requirement.

Go ahead and create a requirement from scratch and make values and scores for your requirements the

system will do decisions upon the weight of your requirements and will recommend a certain supplier.



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Specify a weight for this requirement and also the knock out score for it so when the supplier for

instance says none you knock him out of your event.

It’s noteworthy to mention that the weight doesn’t have to deal with the score as if you are a certified

it’ll give you a weight upon on the whole requirements not this specific requirement.

Add a value with a target and specifiy as a target.

3-Lines:

It’s the heart and most important of your negotations



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If you converted your requisitions into negotations then all your requistions will come here, but also if

you want to add extra lines you may be able to do it through the “Actions” also you can import lines

through a spreadsheet as well which is a strong integration method in Fusion.

There are 3 place holders for the price, base price to do the comparsion from”Current Price” and

“Start price”, so if I am looking for a laptop which is 2000 so don’t go under. Target price is obviously the

price that I want.

You can press on edit and look at the line and it’s additional info:

The most important here is the “Cost Factor”:

When ever you are negotationing with your supplier there might be hidden costs with your supplier for

example there are two suppliers who are providing the items with different prices so you are happy with

one of them and when the actual thing came to me additional costs were added like insurance and

shipping etc. So it became more than the suggested, if you don’t want to get into this whole hassle then

specify these factors.



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4-Contract Terms:

If you have it licensed and you want to associate these contracts you can simply search and add it.

5-Suppliers:

To whom you want to send this event so you can choose between a previously created supplier or if it’s

not registered you can simply create it from there.



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If you are enabling certain supplier qualifications you can search it from there:

Once you make the adding of your suppliers hit continue.

5-review:

Review a very final draft of your event then publish it. When published it will have the status of

“Draft”once published It’ll go through an approval cycle and the status will become “Active” once

“Active” it’ll be sent to suppliers and they’ll see the entire negotations there if they don’t you can email

it and enter responds manually on the system “Surrogate Responses” the feature is called.

If you have a requirement to edit the event, you can withdraw it and modify it and re publish it and the

new one will be re sent to the suppliers to approve..

Log in with the user assigned to the supplier and navigate to the “Supplier Portal”



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This is how your supplier portal will look like:

If you want more info about the event, you can use the messaging feature..you can also include the

suppliers within OSN feature.

Go and click on any negotation and click on “Revise Response”

You can see the details and requirements and lines and then do a final review for it..

Best response is based upon the functioanlity of displaying the best price or not.



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If there are multiple lines and it’s too much you can respond by spread sheet so you export the spread

sheet.

After you are done save your document and upload it again, then you can review the “Changed Lines”

from the “Review” under “Changed

Lines”



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Go back to your application and check the responses and also review the “Monitor” feature and show

check out some of the graphs and analytics.

You can close or extend an event through the same step:

Now after you received all negotations you award a certain supplier by clicking on “Actions” then

“Award negotations”. It’ll give you a lot of analytics proving how good of a decision you have

made..choose “Award by spreadsheet” to show an attractive excel file to your client.

If you have the “knock out” criteria enabled then you can simply kick out some suppliers, it’s a strong

system feature so use it!!



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You can see what documents are already created if you click on the negotiation number:

Under actions—view—purchasing document:

Then you will see the created document..



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Then you can see the document..if you have approvals for such documents then it’ll be submitted for

approvals..

That is why the status is incomplete..if it’s a PO then it’ll get automatically created..

-Surrogate Responses:

Go under any “Active” negottions and click on “Actions”

Means if you are not licensed with “Supplier Portal” you can do the job of the supplier and enter

responses yourself.

Round 1,2,3 is an upcoming feature on Fusion application and it’s on the road map.

You can have sourcing as a standalone module and integrate with EBIZ or peoplesoft etc..

(Define Sourcing Configuration) Task List..

Negotation Styles:



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Go on “Manage Negotation Styles”

You can specify what kind of documents you will specify so..there are controls like using a cover page or

general etc..

“Manage Cost Factors”

Put all your possible cost factors or use already created or create a new one.

sourcing at a glance

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