Fusion Procurement Business Unit Configuration and Service Provider Model

The Procurement in Oracle Fusion is based on the Service Provider Model by outsourcing the procurement business activities.

Requisitioning business unit is responsible to identify the other business units as its outsourced service providers to perform the procurement business function on its behalf. Define your business unit with requisitioning business function as client of procurement business unit with the procurement business function. The procurement business unit is responsible for supplier negotiations, supplier site maintenance, and purchase order processing on behalf of client business units, that is, your requisitioning business unit. Assign your client or requisitioning  business unit to the supplier site maintained by the service providers or procurement business unit, using supplier site assignment.

To understand in detail the service provider or centralized procurement model, please read our earlier post on “Centralized Procurement in Oracle Fusion”. In this article, we focus on creating the Procurement business unit, assigning the required business function and using the service provider model.

Create Procurement Business Unit

To create Procurement Business Unit, Navigate to: Procurement > Define Common Applications Configuration for Procurement > Define Enterprise Structures for Procurement > Define Organization Structures for Procurement > Define Business unit for Procurement > Manage Business Unit

Procuremetn BU

Click on “Manage Business Unit” task

create BU

Click on Create icon

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Input the name of business unit, select default set and Click on save and Close. Procurement Business unit created in the system and now, we need to assign the required business function to this business unit to make it as procurement business unit.

Assign Business Unit Business Function

In Oracle Fusion, a business unit will perform one or many business functions, a blend of Oracle EBS (where operating unit will perform all business function) and Peoplesoft (where each business unit will perform only one business function).

To assign procurement business function, Navigate to: Procurement > Define Common Applications Configuration for Procurement > Define Enterprise Structures for Procurement > Define Organization Structures for Procurement > Define Business unit for Procurement > Assign Business Unit Business Function

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Click on “Assign Business Unit Business Function” task.

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Select the Scope and Click on Apply and Go to task

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Select your business unit and click on Save and Close.

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To make your business unit as procurement business unit, you need to assign all the above highlighted business function.

Understanding Fusion Procurement Service Provider Model

The business unit you created above with all the procurement business function is Client Business unit, that needs various services like negotiating with clients, creating requisiton, PO, making payment to supplier, etc.

First you will go and view your business service clients. Navigate to: Procurement > Define Common Applications Configuration for Procurement > Define Enterprise Structures for Procurement > Define Organization Structures for Procurement > Define Business unit for Procurement > View Service Clients

service client1

Click on “View Service Clients” task, select the scope and click on Apply and Go to Task.

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In “View Service Clients”, you will see the client business unit for Procurement and Payment business functions.

Now, you will go to “manage Service Providers” to view the business unit that provide the procurement and payment business services to the client business unit.

Navigate to: Procurement > Define Common Applications Configuration for Procurement > Define Enterprise Structures for Procurement > Define Organization Structures for Procurement > Define Business unit for Procurement > Manage Service Provider Relationships

Service provider1

Click on task, select Scope and click on Apply and Go to Task.

service provider2

In Service Provider Relationship, fusion allows you to define the business unit that will provide procurement and payment services to the client business unit.

Using the above Service provider relationships, organization will be able to centralize its procurement activities like negotiating with supplier to crack the best deal and at same time payment is controlled by respective client business unit.

 

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