PURCHASING

1. What is 2-way, 3-way, 4-way matching? Can you give me an example of 2 way mat
ching? [Complexity **]
2-way matching:
2-way matching verifies that Purchase order and invoice quantiti
es must match within your tolerances as follows:
Quantity billed <= Quantity Ordered
Invoice price <= Purchase order price
(<= sign is used because of tolerances)
Often used for services where no receipt is generated.
3-way matching:
3-way matching verifies that the receipt and invoice information
match with the quantity tolerances defined:
Quantity billed <= Quantity received
4-way matching:
4-way matching verifies that acceptance documents and invoice in
formation match within the quantity tolerances defined:
Quantity billed <= Quantity accepted.
(Acceptance is done at the time of Inspecting goods).
2. Tell me difference between Job hierarchy and position hierarchy? What are th
e steps involved in setting up Position Hierarchy? [Complexity ***]
Job hierarchy is used when there is a single approval hierarchy
system in the organization compared to Position hierarchy
which is used if for the same job, multiple positional approvals
are required i.e. Junior buyers requisition needs to be
approved by senior buyer and senior buyers requisition is sent to
Supply Chain manager and then to Finance manager for final approval.
In Position hierarchy, approval might happen between different p
ositions for the same Job.
Setups required:
Use Approval hierarchy must be checked in Finance Options
Jobs must be defined
Position must be defined and mapped to jobs
Position hierarchy must be setup
Position hierarchy must be mapped to Document type
Define and assign Approval groups
Assign employees
Run Fill Employee hierarchy concurrent program
3. What is the difference between bill of distribution and sourcing rule? [Compl
exity *]
Sourcing rule is used to determine the source of particular item
i.e. Suppliers or source organization in an organization.
Bill of distribution is used to determine how the item is distri
buted in an organization i.e. warehouses to which item are to be distributed.
4. A buyer is authorized to approve PO worth 5000 but though the PO is below 500
0, hes not able to approve it? Which setup are we missing? [Complexity *]
There might be restriction on the item, category or account comb
ination that would prevent a particular user not approve a PO.
Check if approval workflow is running
If any changes have been done to position or Job, has the Fill e
mployee hierarchy program been run to update these positions
If Employee supervisor hierarchy is set, is the supervisor a val

id and active employee.

Are multiple users mapped to same employee?
5. We provide ranks and allocations in Sourcing Rules to Suppliers or Inventory
organizations,
what is the use of these ranks and allocations and where is it used? [Complex
ity **]
Ranks and allocations are used by MRP or ASCP modules to create
supply based on the ranks provided.
If a requisition needs to be created for a demand of an item, th
en system checks the sourcing rule
and creates a requisition to the Rank 1 supplier and based on th
e allocation percentage specified.
For example, if demand for an item X, is to be satisfied by crea
ting a requisition, then system looks at the sourcing rule,
if two suppliers are given Rank 1 and allocation as 70% and 30%
then system creates two requisition lines,
one for 70% of supply quantity from supplier 1 and other for 30%
of supply quantity from supplier 2.
Total of allocation for each rank must sum up to 100 for the sou
rcing rule to be planning active.
6. Client requires every Purchase order to have paper based Requisition number e
ntered mandatory in Create Purchase order screen by users
[Client doesnt want to create Requisition in APPS and use Auto-create function
ality in this scenario].
How to handle this requirement? [Complexity **]
Enable a DFF at PO line level and make the DFF mandatory to be e
ntered by user for each line.
7. What is the difference between Blanket Purchase Agreement and Contract Purcha
se Agreement? [Complexity **]
Blanket purchase agreements carry detail of the goods or service
s you plan to buy from a specific supplier in a period,
but you do not yet know the detail of your delivery schedules. Y
ou can use blanket purchase agreements to specify negotiated prices
for your items before actually purchasing them.
Contract purchase agreements are created with your suppliers to
agree on specific terms and conditions without indicating
the goods and services that you will be purchasing. You can late
r issue standard purchase orders referencing your contracts
8. Client requires control over procurement for each department. Is it possible
in EBS to handle such a requirement? [Complexity **]
Yes, Using Encumbrance functionality, Each department can be all
ocated a specific amount and purchasing would honour this
and ensure system doesnt approve PO more than the budgetary amoun
t.
9. What are the types of receipts and their functions in Purchasing? [Complexity
**]
There are no distinct types of receipts as we find in PO documen

ts (Requisition, Quotation, Purchase order etc).

Receipts differ mainly by the method of recording the receiving
transactions.
1) Unordered receiving
2) Blind receiving
3) Express receiving
4) Substitute receiving
10. For an OSP Sub-assembly, when you move transaction to the Queue of an OSP
Operation, Requisition Import is fired which creates an Approved Requisition
and an Unapproved PO. What are the setups that govern creation of PO? [C
omplexity **]
Sourcing Rule needs to be defined for the item. The sourcing rul
e needs to be mapped to item and organization under an assignment set.
11. When does a Purchase order or requisition goes into Pre-Approved status? [Comp
lexity *]
A person with the final authority to approve the document approv
es it, but then forwards it to someone else for additional approval,
thus changing its status to PreApproved.
Your organization uses encumbrance (reserves funds for documents
), and the document is authorized for approval but funds have not
yet been reserved for it. Even if someone with sufficient appr
oval authority approves the document,
its status may still be PreApproved if funds were not able to b
e reserved at the time of approval.
Once funds are reserved for the approved document, the documen
t changes its status to Approved.
12. If the prepare of purchase requisition is not authorized to Approve that req
uisition then
what set-up should be performed in the system to achieve this? [Complexity *
]
In document type, set Owner can approve flag to No
13. How do I ensure if Purchase order is cancelled then corresponding requisitio
n is also cancelled? [Complexity *]
In Purchasing Option, Set Cancel requisition to Optionally or Alway
s
14. What is the functionality I am achieving by setting Receipt close % as 100 %
? [Complexity *]
Receipt close % ensures that PO line ordered quantity is closed
up to that specified percentage.
If Receipt close point is set as 60% and if Order quantity is 10
0 then if PO receipt is made for 40 quantities then PO line would be moved
to closed status automatically,
15. Client wants each requisition auto created in the system to be grouped by Bu
yer, how to achieve this in EBS? [Complexity *]
In Purchasing option, Set requisition group by parameter to Buyer