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Setup – Approval Hierarchies in Oracle Purchasing Position & Supervisor

Purchasing setup of approval hierarchies

There are two most commonly known methods to route documents for approval.
1. Approval Hierarchies (uses position hierarchies)
2. Employee/Supervisor Relationships (use employee/supervisor relationship)
* Third method of Advanced Approval Support for Requisitions (Release 12 use integration with Oracle Approvals Management) . However in this article, focus here is set on above two most commonly used methods.

1. Position Hierarchies

Position Hierarchies are hierarchies that have a position relationship. Purchasing utilizes positions as a roadmap to determine how and where documents will be routed once the approval process has been initiated. It is first necessary to have created all positions that are going to be used in the system. Once all positions have been created, it is necessary to build the position hierarchy. Each position has approval limits, so when a purchase order exceeds the limits of the position, the purchase order is forwarded onto the next position in the Hierarchy. The hierarchy for positions is defined on the Position Hierarchy form. When this is complete or is changed, the Fill Employee Hierarchy concurrent program must be run for the new hierarchy to come into effect. You must set up Positions if you plan to use either security or approval hierarchies. If you are using Shared HR navigate, Purchasing: Setup: Personnel: Position Hierarchy. Otherwise, if you are using a full install of HR then navigate, Human Resources: Work Structures: Position: Hierarchy.

2. Employee/Supervisor Relationships

This type of hierarchy does not use the Approval Hierarchy form, but is defined by the employee/supervisor relationship. The supervisor of an employee is defined on the Assignment region of the Employee form. If the purchase order entered by the employee exceeds the approval limits, the purchase order is forwarded onto the employees’ supervisor, as defined on the Employee form.

To implement this form of approval routing, you need only to define jobs. The job will then serve as the tie to the Approval group, and based on the approval limits from the Approval Group, the Document will either be Approved or Forwarded to the Employees’ Supervisor. If no Supervisor is able to be located and the job assigned to the employee does not have Approval Authority, then the Approving employee must enter a Forward-to person, or the Document will be returned to an Incomplete status and a notification will be sent to the Approving employee, stating – ‘No Approver Found – Please Select a Forward-To Employee’.

Selecting an approval routing method

There are two forms that determine the route that an approval will take:
1. Financial Options (Purchasing: Setup: Organizations: Financial Options)
2. Document Types (Purchasing: Setup: Document Types)

1. Financial Options
The Human Resources zone on the Financial Options form has an option called Use Approval Hierarchies. This option determines which type of hierarchy is used for the approval process. When checked, the Position Hierarchy is used and when unchecked the Employee/Supervisor relationship (i.e. Jobs) is used.

2. Document Types

There are three attributes on this form that determine the approval path of the document:
a) Forward Method
b) Default Hierarchy
c) Transaction Type (for Requisitions only)
* Each of these 3 options are described in some details below

a) Forward Method
This field has two options that apply regardless as to whether you use a Position Hierarchy or an Employee/Supervisor relationship.

– Direct: the document will pass to the next position or supervisor in the hierarchy who has enough authority to approve the document.
– Hierarchy: the document will pass to the next person in the hierarchy regardless to whether that position or supervisor has enough approval authority to approve.

b) Default Hierarchy
The Default Hierarchy option will only appear on the Document Type form if the option Use Approval Hierarchies is checked on the Human Resources zone on the Financial Options screen. The Default Hierarchy field has a LOV. This list is derived from the hierarchies created using the Position Hierarchy form.

The Default Hierarchy is the one that will be used by the approval process unless the person who submits the document for approval changes it in the Approval Modal form. But, the hierarchy can only be changed on the Approval Modal form if the attribute Can Change Approval Hierarchy is checked on the Document Type form – and this attribute is only enabled if the Use Approval Hierarchies is checked.
When choosing the action of ‘Approve’ for a document, if a Forward-To person is not defined and the person taking action does not have sufficient approval authority, the default hierarchy will first be searched for the employee attempting the approval. This default hierarchy is defined on the Document Types form:

Purchasing: Setup: Purchasing: Document Types

Thus, it is imperative that the low-end users (those with little approval authority) be present in this default hierarchy so the next Forward-To approver can be found. Alternatively, the checkbox Can Change Approval Hierarchies should be selected on the Document Types form. With this checkbox enabled, the user has the option to specify an alternate approval hierarchy; provided that the user belongs to one or more additional hierarchies (i.e. the Approval Hierarchy list of values in the Document Approval window will only contain the hierarchies that this user belongs to).
If the low-end user is not part of the default hierarchy specified in the Document Types form and chooses to approve the document, the end result will be a notification to the user stating ‘No Approver Found’.
A similar scenario of ‘No Approver Found’ will result if the ‘Owner Can Approve’ checkbox (on the Document Types form) is disabled and the person attempting to approve the document is not in the Default Hierarchy. When the Approve button is clicked, this setting is validated and enforced; it is at this time that the requisition and purchase order approval workflows will look to the default approval hierarchy, searching for the current approver’s position in the hierarchy in order for the next approver in line to be located.

c) Transaction Type
For requisitions only, selects the Approval Transaction Type. If you have implemented Oracle Approvals Management, this selection associates the transaction type with the requisition document type. Leave the field blank to use the standard Oracle Purchasing approval logic

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Inventory Basic Setup steps

This section contains an overview of each task you need to complete to set up Oracle Inventory.

 Step 1 Define Inventory Flexfield (Required)

  • System Item
  • Item Categories
  • Item Catalogs
  • Stock Locators
  • Accounting Aliases
  • Sales Order
  • Service Item
Step 2 Define Your Locations (Optional)
Step 3 Define Your Employees (Optional)
Step 4 Define Your Organization Calendar (Required)
Step 5 Define Your Organizations (Required)
Step 6 Define Your Organization Parameters (Required)
Step 7 Change Organizations (Required)
Step 8 Define Your Intercompany Relations
Step 9 Define Your Receiving Options (Optional)
Step 10 Define Your Picking Rules (Optional)
Step 11 Define Your ATP Rules (Optional)
Step 12 Define Your Planners (Optional)
Step 13 Define Your Unit of Measure Classes (Required)
Step 14 Define Your Units of Measure (Required)
Step 15 Define Your Unit of Measure Conversions (Optional)
Step 16 Define Your Subinventories (Required)
Step 17 Define Your Stock Locators (Optional)
Step 18 Define Your Item Attribute Controls (Required)
Step 19 Define Your Categories (Required)
Step 20 Define Your Category Set (Required)
Step 21 Define Your Default Category Sets (Required)
Step 22 Define Your Statuses (Required)
Step 23 Define Your Item Catalog Groups (Optional)
Step 24 Define Your Item Types (Optional)
Step 25 Define Your Item Templates (Optional)
Step 26 Define Your Cross-Reference Types (Optional)
Step 27 Define Your Item Delete Constraints (Optional)
Step 28 Define Your Cost Types (Required)
Step 29 Define Your Cost Activities (Optional)
Step 30 Define Your Material Sub-Elements (Optional)
Step 31 Define Your Material Overheads (Optional)
Step 32 Define Your Default Material Overhead Rates (Optional)
Step 33 Define Your Freight Carriers (Optional)
Step 34 Define Your Organization Shipping Network (Optional)
Step 35 Define Your Shipping Methods (Optional)
Step 36 Define Your Movement Statistics Parameters (Optional)
Step 37 Define Your Account Aliases (Optional)
Step 38 Define Your Transaction Source Types (Optional)
Step 39 Define Your Transaction Types (Optional)
Step 40 Define Your Transaction Reasons (Optional)
Step 41 Define Your Purchasing Options (Optional)
Step 42 Open Your Accounting Periods (Required)
Step 43 Request Your Interface Managers (Optional)
Step 44 Set Profile Options (Required)
Step 45 Define Your Container Types (Optional)
Step 46 Define Your Commodity Codes (Optional)
Step 47 Define Your Customer Items (Optional)
Step 48 Define Your Customer Item Cross References (Optional)
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Purchasing Basic setup steps

Step 1 Set Up System Administrator (Required)
Step 2 Set Up Key Flexfields (Required)
Step 3 Set Up Calendars, Currencies, and Set of Books (Required)
Step 4 Set Up Organizations (Required)
Step 5 Set Up Units of Measure (Required)
Step 6 Set Up Items
           Define item attribute controls. (Required with defaults)
           Define container type QuickCodes. (Required with defaults)
           Define status. (Required with defaults)
           Define item type QuickCodes. (Required with defaults)
Step 7 Set Up Personnel (Required)
           Define employee QuickCodes. (Required with defaults)
           Define supplier and employee numbering. For this step,  Defining Financial
           Options. (Required)
           Define employees. (Required)
           Define jobs. (Required)
           Define positions. (Optional)
           Define position hierarchies. (Optional)
Step 8 Set Up Oracle Workflow (Required)
Step 9 Decide How to Use the Account Generator (Required)
Step 10 Define Manufacturing System and User Profiles (Required)
Step 11 Open Inventory and Purchasing Accounting Periods (Required)
Step 12 Define Subinventory Locations (Optional)
Step 13 Set Up Cross-Reference Types
            Tax Names, and Location Associations (Optional)
Step 14 Set Up Approval Information
            Define approval groups.(Required)
            Assign approval groups.(Required)
            Fill employee hierarchy.(Optional)
            Define document types.(Required with defaults)
Step 15 Set Up Lookups and Classes. (Required)
            Define Purchasing lookups.(Required with defaults)
Step 16 Define Standard Attachments (Optional)
Step 17 Set Up Purchasing Flexfields (Required)
Step 18 Define Purchasing Options (Required)
Step 19 Define Buyers (Required)
Step 20 Define Items (Optional)
Step 21 Set Up Document Controls (Required with defaults)
Step 22 Set Up Financial Options (Required)
Step 23 Set Up Receiving Options (Required)
Step 24 Set Up Transaction Managers and Resubmission Intervals. (Required)
             Start the following transaction managers.(Required)
             Receiving transaction manager
             Document approval manager
Step 25 Define Suppliers (Required)
Step 26 Start “Send Notifications for Purchasing Documents” Process (Required)
Step 27 Set Up Document Creation Options (Required with defaults)
Step 28 Set Up Approval Timeout Feature (Optional)
Step 29 Start Workflow Background Process (Optional)
Step 30 Modify Change Order Workflow Options (Optional)
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AR Invoices with Rules

Invoices with Rules

Invoicing and accounting rules let you create invoices that span several accounting periods. Accounting rules determine the accounting period or periods in which the revenue distributions for an invoice line are recorded. Invoicing rules determine the accounting period in which the receivable amount is recorded. You can assign invoicing and accounting rules to transactions that you import into Receivables using AutoInvoice and to invoices that you create manually in the Transactions window.

Accounting Rules

Use accounting rules to determine revenue recognition schedules for your invoice lines. You can assign a different accounting rule to each invoice line. Accounting rules let you specify the number of periods and the percentage of the total revenue to recognize in each period. You can also specify whether the accounting rules are of Fixed or Variable Duration. Accounting rules of Fixed Duration span a predefined number of periods. Accouning rules of Variable Duration let you define the number of periods during invoice entry.

Invoicing Rules

Use invoicing rules to determine when to recognize your receivable for invoices that span more than one accounting period. You can only assign one invoicing rule to an invoice. Receivables provides the following invoicing rules:

    • Bill In Advance: Use this rule to recognize your receivable immediately (see Figure 1 – 19 below).
    • Bill In Arrears: Use this rule if you want to record the receivable at the end of the revenue recognition schedule (see Figure 1 – 20 below).

Attention: With Cash Basis Accounting, you only recognize revenue when payment is received. Invoices with rules are therefore not applicable for this method of accounting, as they are designed to distribute revenue over several periods before receipt of payment. If you import invoices into a cash basis accounting system, lines with associated invoicing and accounting rules will be rejected by AutoInvoice.

Account Sets

Account sets are templates used to create revenue and offset accounting distributions for individual invoice lines with accounting rules. These account sets enable you to split revenue for a line over one or more revenue or offset accounts. You can change account sets from period to period to meet your business requirements. For example, you have an invoice with revenue that you want to recognize over a twelve month period, and the cost center of one of the accounts changes during the twelve months. You can update the account sets to the new cost center account for all of the revenue distributions still to be created. AutoAccounting creates the initial revenue and offset account sets for your invoice.

Revenue Recognition

The Revenue Recognition program identifies all transactions with rules within a given period or range of GL dates and creates the revenue distributions for those transactions. The distributions are created for the current period only, using the rules associated with the transactions.

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Order Management (JSW) Basic Setup steps

Step 1 Flexfields. (Required)
Step 2 Multiple Organizations. MOAC (Required)
Step 3 Inventory Organizations. (Required)
Step 4 Profile Options. (Required)
Step 5 Shipping Parameters. (Required)
Step 6 Invoicing. (Required)
Step 7 Salespersons. (Required)
Step 8 Tax, Tax Categories. (Required)
Step 9 QuickCodes. (Required)
Step 10 Workflow. (Required)
Step 11 Document Sequences (Order Numbering) (Required)
Step 12 Order Import Sources. (Required)
Step 13 Units of Measure. (Required)
Step 14 Item Information. (Required)
Step 15 Define Items & Assign to Organization. (Required)
Step 16 Configurations. (Required)
Step 17 Pricing. (Required) 
Step 18 Customer Classes. (Required)
Step 19 Customers (Required)
Step 20 Item Cross References (Optional)
Step 21 Sourcing (Optional)
Step 22 Order Management Transaction Types (Order and Line Types) (Required)
Step 23 Cost of Goods Sold (COGS) (Required)
Step 24 Processing Constraints (Required)
Step 25 Defaulting Rules (Required)
Step 26 Credit Checking (Optional)
Step 27 Holds (Optional)
Step 28 Attachments (Optional)
Step 29 Freight Charges and Carriers (Required)
Step 30 Shipping (Required)
Step 31 Start Workflow Background Process (Optional)
Setp 32 Request set OM – AR Porting
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