Delivering Value with Oracle EBusiness Suite Advanced

Procurement 12.1 & 12.2

An Oracle White Paper
April 2013

Delivering Value Oracle E-Business Suite

Advanced Procurement 12.1 & 12.2

EXECUTIVE OVERVIEW

Over the last ten years the procurement function has been largely defined by a
transformation from a tactical, cost-oriented component of corporate overhead into
a strategic discipline that is focused on creating value. But in light of the current
economic environment, the need procurement transformation is taking on new
urgency.
As procurement organizations embark on transformation, their focus must extend
beyond basic block-and-tackling of controlling business processes. High
performance organizations are increasingly looking at strategies to boost the
effectiveness of their most important procurement assets -people. Common
strategies include

Equipping buyers with tools to maximize effectiveness

Expanding Procurements oversight into new categories

Increasing focus on suppliers as a source of innovation and market expansion.

The latest release of Oracle Advanced Procurement was created to help

procurement executives drive these strategies. This white paper is intended to help
organizations understand the benefits of upgrading to 12.2. It provides an overview
of the capabilities and the potential benefits that help accelerate organizational
transformation.
INTRODUCTION

During the last 10 years, the market for procurement technologies has been totally
reshaped by a series of innovations. And while most have provided benefit, none
have been created solely to improve the day-to-day end-user experience of the
procurement professional. For example, self-service requisitioning tools do a great
job of streamlining employee requisitioning, but did not fundamentally alter the
end-user experience of procurement professionals. Similarly, sourcing applications
have a solid record of helping to drive cost reductions, but oftentimes sourcing only
accounts for a fraction of a procurement professionals workday. Oracle Advanced
Procurement Release 12.2 will reverse this trend by delivering applications that

Delivering Value with Oracle E-Business Suite Advanced Procurement Release 12.1 & 12.2

Page2

revolutionize the user experience and improve the working lives of buying
professionals.
Together with enhancements in Release 12, Oracle Advanced Procurement 12.2 is
the procurement professionals release. It has been created to meet the changing
needs of procurement professionals by providing:

Improved user shopping experience

Unified work center for all procurement responsibilities

Improved support for complex goods and services

Expanded supplier management and enablement.

The balance of this paper is divided into three sections that summarize the major
enhancements and describe the associated business value.
IMPROVED USER SHOPPING EXPERIENCE

Todays consumer online shopping experience is easy and corporate buying should
be just as easy. Now available with 12.2, with Oracle iProcurement Extensions for
Oracle Endeca you can: easily locate items with searches that span all stores and
catalogs plus do side-by-side comparisons to find the right product at the best price.
Quickly identify the best value

Improve the productivity of requesters and buyers. They can now do a single
search for all purchase types providing a familiar on-line shopping experience which
also eliminates help desk calls. When users can easily find what they need, you
increase savings by expanding use of negotiated prices and you reduce maverick
spending. With Oracle iProcurement Extensions for Oracle Endeca you can:

Locate items easily with a Universal search that spans all stores and catalogs

Find it fast with type ahead search

Filter search results to quickly find the exact product or service

Perform side-by-side comparisons from search results to find the right

product at the best price

Eliminate non-catalog purchase requests for catalog items

The Oracle iProcurement Extensions for Oracle Endeca is an option that will make
everyones job easier.
UNIFIED WORK CENTER FOR ALL PROCUREMENT RESPONSIBILITIES

Buying professionals know that to save the most money, they need to consistently
apply the right methods to all elements of procurement processes. But this is much
easier said than done. In the real world, users juggle multiple projects and day-to-day
tasks that require them to place and chase orders, jump between screens, cut and
paste, and wrestle paper in order to get things done. This creates an environment of
waste, weak compliance, and increases the probability of savings falling through

Delivering Value with Oracle E-Business Suite Advanced Procurement Release 12.1 & 12.2

Page3

cracks. These savings are not small. According to some estimates up to 30% of
negotiated savings never reach the bottom line. Whats more, it creates other
challenges, including lower job satisfaction and lower productivity. Oracle Advanced
Procurement was designed to address these challenges with the introduction of the
Professional Buyers Work Center (PBWC) that consolidates all procurement
responsibilities.
Establish Professional Buyer Command and Control

The latest release provides procurement professionals with new opportunities to

increase focus on strategic functions and improve compliance with the Professional
Buyers Work Center and Two-Way Word Synchronization.
Consolidate Procurement Responsibilities with Professional Buyers Work Center

One of the major enhancements is the Professional Buyers Work Center (PBWC)
that serves as a central launch pad from which professional buyers can assume
command and control. It provides an intuitive web-based UI that puts key
procurement functions at the fingertips in an elegant and consistent layout. For
example, with only a few clicks users can quickly assess the days priorities with
consolidated alerts and to-do lists. Professional buyers can handle urgent
requisitions, and then easily move on to complete requirements definition in
sourcing event. PBWC allows professional buyers to easily:

Understand status at a glance

Process requisitions

Run sourcing events

Create and manage orders and agreements

Confirm service delivery

Manage supplier information.

PBWC represents a major enhancement from earlier releases- especially for heavy
Purchasing users. With minimal training, Purchasing users will experience dramatic
improvements in usability with fewer pop ups, streamlined workflows and fewer
steps to complete tasks.
Improve Contract Compliance with Two-Way Word Synchronization for Oracle
Procurement Contracts

Two-Way Word Synchronization improves compliance to policy and negotiated

contracts by helping users to import the right changes into Oracle Procurement
Contracts. In prior releases, contract drafts could be exported as Word documents
for the purposes of redlining and collaborating with suppliers or legal teams.
The current release goes a step further by also providing the ability to import Word
drafts back into the contracting application. Any modifications to the draft are easily
identified as nonstandard and rules enforce policies for mandatory and protected

Delivering Value with Oracle E-Business Suite Advanced Procurement Release 12.1 & 12.2

Page4

clauses. Offline changes are easily rejected or accepted for faster contract binding
and improved long-term contract enforcement.
Automate Tedious Tasks and Improve User Experience

The latest release automates time-consuming tasks with Tolerance Based AutoApprovals and improves the user experience with Negotiation Styles
Cut Cycle Time & Approval Steps with Tolerance Based Auto-Approvals

Enhanced Auto Approval capabilities eliminate the time-consuming task of

approving minor change requests of purchase orders (PO). By establishing
tolerances that define a minor change (e.g. 1% downward price revision), PO
revisions from requestors and suppliers can be automatically approved without
buyer review. In the event that changes exceed a requisitioners (or a buyers)
authority, embedded workflow drives escalation to the right approval levels. By
reducing the noise of trivial tasks, buyers will be able to focus on major exceptions
or turn their attention to more strategic tasks.
Consistent Rules Administration

The Oracle Approvals Management Engine provides consistent administration of

approval workflow for most areas including purchase orders and agreements.
Match Sourcing Capabilities to Opportunities with Negotiation Styles

Negotiation Styles allow organizations to tailor the Sourcing user interface to match
the needs of different use cases. For example, buying organizations can expose or
hide unneeded features for simple RFIs. In cases of larger, more complex
opportunities, they can enable and display advanced features such as multi-attribute
scoring, cost factors, location-based pricing, and price differentials.
Drive Center-Led Procurement Methods

New capabilities enable procurement organizations to centralize what is common,

while decentralizing unique categories and processes with Multi-Org Access
Control, and Unified Catalog Architecture.
Power Shared-Services with Multi-Org Access Control

Oracle Purchasing leverages the new Multi-Org Access Control (MOAC)

capabilities to support the implementation of center-led procurement in shared
services organizations. Buyers can now process requisitions, agreements, and orders
spanning multiple operating units with just a click. This improves efficiency by
eliminating the need to log out, close windows, switch responsibilities, and log in
again to complete a simple task in another operating unit.
Reduce Maintenance and Improve Security with Advanced Catalog Features

New enhancements introduce a Unified Catalog Architecture that offers improved

content authoring, maintenance, and security. Users can now import catalogs or

Delivering Value with Oracle E-Business Suite Advanced Procurement Release 12.1 & 12.2

Page5

items directly into Sourcing events and export them from Sourcing awards. This is
exceptionally valuable in negotiating complex market-baskets with large numbers of
line items and quickly making them available to requistioners. Catalog authoring is
also enhanced by providing suppliers with the ability to upload and maintain
content. This not only offloads a burdensome task from the procurement group,
but also improves the timeliness of updates, and eliminates back-and-forth e-mail
traffic, and version control issues. The newest release also supports the role of
Catalog Administrators that can be authorized to oversee routine maintenance. The
application can be configured to automatically approve minor changes while using
workflow to route significant changes for approval prior to publishing. It also offers
full audit trail to easily track any changes that are neatly summarized and subject to
the approvals prior to publishing.
IMPROVED SUPPORT FOR COMPLEX GOODS AND SERVICES

Given the need to drive year-over-year improvements, procurement departments

cannot afford to rest on their laurels or tackle the same categories year after year.
The need for continuous improvement is leading procurement organizations to
tackle complex categories that have traditionally lacked formal oversight. In this
regard, services categories are of particular importance because they represent a
historically difficult area to control. Furthermore, services are growing in
importance as suppliers are increasingly bundling (value-add) services with products
as a means to drive differentiation, limit commoditization, or delay the impact of
supplier rationalization efforts.
New enhancements provide improve support for complex goods and services.
From service specification, through contracting, and payment, Oracle Advanced
Procurement has been created to tame complexity and drive auditability.
Improve Sourcing with Better Requirements Specification and
Collaboration

Advancements provide improved requirements definition, accelerated bid

management, and simplified negotiations for complex categories.
Improve Requirements Definition with Advanced Requisitioning & Approvals

Getting better results begins with creating better documentation of requirements.

In the case of complex categories, new support for Complex Approvals helps to
drive timely (and broader) collaboration between purchasing professionals and
requisitioners. New integration with the Oracle Approvals Management provides
improved routing of purchase requisitions. This facilitates:

Parallel Approvals that give the option to speed up the approvals process by
routing a requisition to multiple approvers simultaneously.

Position Hierarchy based approvals that allow organizations to create

approval structures that remain stable regardless of personnel changes

Delivering Value with Oracle E-Business Suite Advanced Procurement Release 12.1 & 12.2

Page6

Support for For Your Information (FYI) notifications to keep key

individuals abreast of buying decisions without requiring any action on their
part.

Accelerate Bid Management

Oracle Sourcing Release 12.1 provided enhanced XML spreadsheet formatting.

Although this might seem to be a straightforward enhancement, the benefits are far
reaching. For example, improved spreadsheet integration helps to promote
collaboration because suppliers benefit from a familiar UI, an easy mechanism for
bid submission, an offline mechanism for compiling responses, and immediate
feedback on their bids based on scoring formulas. In turn, buyers can be assured of
the best possible responses from suppliers and are better equipped to evaluate bids.
For example, the new spreadsheet based formatting provides a familiar look-andfeel for streamlined usability. Spreadsheets provide a single place to download data,
compare bids, as well as the ability to use existing macros for evaluation.
Simplified Negotiations for Complex Categories

New capabilities are designed specifically to drive better communication during

negotiations and contract development for complex categories. Because people
often need to work with hard copies of lengthy documents, Sourcing now provides
an easy way to generate Acrobat (.PDF) copies of negotiation documents. Even
while negotiations are still in draft, Sourcing can generate buyer-specific copies (that
include all information, including invitation lists and cost factors) as well as supplierspecific copies that will include only relevant information (and exclude data like
Invitation Lists). Sourcing managers can now also add complex payment
arrangements to sourcing documents.
Align Supplier Agreements & Payment with Contract Financing

New enhancements provide opportunities to address the subtleties of payment for

services with expanded options for defining, tracking, and completing payment
through Contract Financing.
Streamline Payment Definition & Management with Contract Financing

Complex categories can require more elaborate contracts and more extensive
payment options. Oracle Advanced Procurement can now account for this
complexity by providing procurement organizations with expanded options for
defining, tracking, and completing payment. Included are the following Contract
Financing types:

Advances and Recoupment of advances

Progress Payments based on cost, stage of completion or performance

milestones

Retainage and Retainage Release.

Delivering Value with Oracle E-Business Suite Advanced Procurement Release 12.1 & 12.2

Page7

These are extremely useful in gaining control in categories with complex payment
requirements such as field engineering, facilities management, construction services,
etc.
Improve Control of Payment Advances and Recoupment

Some procurement scenarios require buying organizations to pay advances to

suppliers before any work or product delivery has been performed (e.g. in order to
provide working capital to smaller contractors). With new enhancements, buying
organizations can negotiate contracts that define terms of advances paid to suppliers
before any work is performed. Requests for advances submitted by the suppliers are
verified against the advance limits set forth in the contract. These advance payments
are automatically liquidated or recouped from payment requests.
Drive Compliance with Expanded Sourcing and Payment Options

New enhancements provide procurement professionals with avenues to drive

supplier performance compliance through Progress Payments, Retainage/Release,
and Work Confirmations.
Ensure Compliance with Sourcing Regulations

In some markets, public and private sector enterprises are required to follow formal
two-stage negotiation process in which technical and commercial aspects of
suppliers bids are separately evaluated. In Release 12.1 Oracle Sourcing provided
complete support for this process. Organizations can now evaluate the technical
feasibility and merit of bids while commercial aspects remain sealed. In cases where
the suppliers fail the technical evaluation, the commercial part of the bid remains
sealed. Evaluators can then analyze the commercial aspects (such as price and
delivery terms) of bids that are deemed to be qualified on the basis of technical
evaluation. This helps to ensure a more impartial evaluation because the commercial
aspects of non-qualifying do not exert undue influence.
Create the Right Incentives and Streamline Processes with Progress Payments

Tying payment to performance is a proven method of driving better results. New

enhancements can incorporate a detailed Progress Payment schedule as part of the
contract. Users can establish a payment schedule comprised of pay items that
specify the work component, the dollar amount, and due date for completion. This
provides maximum flexibility in defining pay items based on progress. Options
include payments:

Based on a Milestone that needs to be fully complete before payment can be

claimed by the contractor.

Based on a Rate of work completion. Payments for these can be claimed as

units of work are completed.

Delivering Value with Oracle E-Business Suite Advanced Procurement Release 12.1 & 12.2

Page8

Based on a Lump Sum amount allocated to a portion of work against which

payments can be released. Unlike milestone pay items, contractors can report
partial progress against such pay items and request payments.

Enforce Retainage & Authorize Release of Payments

For services categories that include retainage of funds by the purchasing

organization, sourcing mangers can negotiate and formalize terms with suppliers.
These terms can be captured as part of a contract and include:

Retainage Rate determines the percentage of the amount requested that will
be withheld before releasing payments to the supplier.

Maximum Retainage Amount: Puts a cap on the total amount that can be
withheld from payments released to the supplier.

At the end of the project or when the agreed criteria are met, the withheld amount
can be released upon receipt of a retainage release request from the supplier.
Close the Loop with Work Confirmations

New enhancements streamline the process for suppliers to report progress in the
form of Work Confirmation Requests. Work Confirmation Requests are submitted
by suppliers and routed for approval via a configurable workflow engine. In cases
where the status of completion isnt straightforward, the solution provides for the
online negotiation of the amount of work eligible for payment.
EXPANDED SUPPLIER MANAGEMENT and ENABLEMENT

An old adage tells us that you cant get blood from a stone. Similarly, purchasing
organizations shouldnt expect suppliers to negotiate their profit margins to the
point of no return. Indeed, the strategy of squeezing suppliers margins indefinitely
has proven to carry dire consequences. Notable examples are found in the auto
industry as some manufacturers find themselves at a severe competitive
disadvantage because their suppliers are:

Unable to invest in developing new technology

Unwilling to share ground breaking innovations

Fired customers and sought alternate markets for their goods and services.

Other examples of the consequences of seeking lower unit-costs are abundant as

purchasing organizations often find themselves struggling with excess transportation
costs, taxes, and new supply risks.
High performing organizations are taking a different approach. Instead of
negotiating for margin improvement at the expense of suppliers, they are driving
mutual cost reduction, expanding supplybase management, and improving supplier
performance. The new release includes several enhancements to support these
strategies.

Delivering Value with Oracle E-Business Suite Advanced Procurement Release 12.1 & 12.2

Page9

Drive Mutual Cost Reductions

Procurement organizations can drive mutual cost reduction and eliminate problems
born of information latency through Complex Procurement Collaboration, PO
Lifecycle Tracking, Non-PO Invoices, and Supplier Catalog Authoring.
Leverage Suppliers Internal Cost Drivers

In sourcing scenarios that require multiple bids based on different volume

commitments, pricing tiers submitted by suppliers typically reflect their internal cost
structures. For sourcing teams however, analyzing dissimilar price tiers from
suppliers can be cumbersome, complex, and time-consuming. In Release 12.1, the
process of analyzing dissimilar pricing proposals is streamlined by the use of Oracle
Sourcing Optimization. Oracle Sourcing Optimization analyzes all price tiers
submitted in supplier bids and provides a recommendation on the best award
quantity to each supplier. Award quantities specified in the recommendation can be
used to assign the correct unit price to the resulting purchasing documents.
Extend Payment Efficiencies to Non-Purchase Order Categories

In a perfect world, it would be practical to enforce a no-PO, no pay policy. But in

the real world, there are urgent matters that cant wait for a formal purchase order.
There are also categories like utilities where POs dont always make sense. To
address these requirements iSupplier Portal now supports submission of non-PO
invoices by suppliers. Non-PO invoice submissions by suppliers are subject to
multiple approvals where users can validate amounts and add the right accounting
information.
Improve Supply Base Management

New enhancements enable procurement professionals to develop and execute

supplier management strategies through Supplier Lifecycle Management, Oracle
Contract Management, Clause Usage analysis, and Compliance Analysis.
Supplier Lifecycle Management

Release 12.1.1 introduced a new application- Oracle Supplier Lifecycle

Management- the application that transforms qualification, administration, and
assessment. With Oracle Supplier Lifecycle Management organizations can
streamline registration and review of prospective suppliers with web-based selfservice registration, advanced evaluation and scoring, and configurable approvals
management. It also enables cross functional evaluation by supporting templatized
questionnaires, flexible feedback mechanisms, and visibility into archived supplier
appraisals. Finally it assures effective governance and risk mitigation with extensible
profile management, risk driven supplier segmentation, and ability to integrate with
third-party supplier information services.

Delivering Value with Oracle E-Business Suite Advanced Procurement Release 12.1 & 12.2

Page10

Oracle Supplier Lifecycle Management works together with Oracle Supplier Hub
which is the master data application that unifies and shares critical information
about an organization's supply base. With Oracle Supplier Hub organizations can
consolidate, cleanse, enrich, and share supplier information across silos.
Expand Options for Creating Contracts
With Release 12.1 organizations now have the option of Oracle Contract
Management. It is a user-friendly, stand-alone contract lifecycle management
application for business and legal professionals. Oracle Contract Management offers
intuitive online authoring and negotiation, electronic approvals and signatures, as
well as centralized storage and retrieval. For example, users can quickly and easily
create agreements from scratch for miscellaneous or one-off contracts. But in cases
of greater importance, users can leverage Contract Templates and Terms Library to
create contracts based on corporate standards. This provides users with the
flexibility they require and while ensuring that everyone adheres to standards
necessary for compliance.
Understand your Supplier Agreements with Clause Usage & Compliance Analysis

Expanding supplybase management requires that organizations look beyond

prospective suppliers and tackle opportunities in all phases of procurement. For this
reason, organizations are increasingly undertaking periodic evaluations of contracts
that govern existing supplier relationships. New enhancements simplify the task by
providing users with the ability to find contracts where specific clauses have been
used or have been modified. Searches are flexible and results can be filtered by a
number of criteria, summarized by clause type, clause title, and exported to
Microsoft Excel for analysis. Enhancements also expand the Contract Expert to
enable administrators to set rules that represent corporate policy. Any deviations are
reflected as deviations to ensure proper visibility during review and approvals. All
policy deviations are reported to approvers in the Contract Deviations Report.
Keep Contract Information at Your Fingertips

In Release 12.1 of Oracle Contract Management users can leverage Oracles Secure
Enterprise Search (SES) to help users find whatever information they are looking
for. SES provides flexibility to search for keywords across structured text (e.g.
contract terms) and unstructured text (e.g. paragraphs contained in attached
documents). Search capabilities in 12.1 provide also provide for the use of
additional attributes to further refine results. For example, contract number,
contract name, supplier name, contract status, start date, and end date can all be
used to narrow searching.
Drive Improvements in Supplier Performance

The latest release drives continuous improvement in supplier performance by

delivering timely score carding and increasing supplier self-service.

Delivering Value with Oracle E-Business Suite Advanced Procurement Release 12.1 & 12.2

Page11

Drive Timely Feedback with Supplier Performance Management & Scorecarding

The first step to improving performance is helping suppliers understand their

current performance. Now Oracle Advanced Procurement offers integration
between Oracle Daily Business Intelligence and Oracle iSupplier Portal. This allows
a buying organization publish a quantitative analysis of each suppliers performance
that is updated on a daily basis. An intuitive web based layout makes it easy for
suppliers to slice and dice the information, build a picture of their performance, and
establish a baseline for future improvements.
Boost Portal Usage with Supplier Managed User Management

Procurement organizations can now help suppliers to help themselves by handing

over user account management to authorized administrators within supplier
organizations. Authorized end users at supplier sites can be granted the role of
Supplier User Administrator. They can then take on routine tasks like password
administration, adding user accounts, or altering the security access rights for each
user within their company.
ORACLE PROCUREMENT ON DEMAND OPTIONS
Oracle EBS On Demand

Release 12.1 offers a broad array of benefits to procurement groups in particular

and the enterprise in general. But that doesnt mean that organizations always have
the resources for immediate adoption. But Oracle Procurement On Demand can
help.
Oracle Procurement On Demand is the adaptive solution that enables and
accelerates procurement transformation. With Oracle Procurement On Demand
you can deliver best in class capabilities, reduce time to value, and eliminate IT
inhibitors.
Whether you need a complete overhaul of your procurement infrastructure or a
single module to drive quick wins, Oracle Procurement On Demand makes it easy
for you to use and pay for the latest procurement innovations from Oracle
Advanced Procurement.
Oracle Fusion Procurement Coexistence

There are often cases where augmenting an existing E-Business Suite with Fusion
Procurement offers compelling business value. Organizations may value specific
functionality or the Software-as-a-Service (SaaS) delivery model. However a
wholesale switch may not be practical. By pursuing a coexistence strategy,
organizations can leverage Fusions unique capabilities without major IT
disruptions. After evaluating the technical complexity, speed of deployment, and
potential ROI, Oracle recommends organizations consider augmenting their existing
applications with a combination of EBS and Fusion:

Procurement and Spend Analytics with Oracle Spend Classification

Delivering Value with Oracle E-Business Suite Advanced Procurement Release 12.1 & 12.2

Page12

Sourcing

Procurement Contracts

Oracle Partners

Another On Demand option is to use one of several experienced partners who can
host the solution and bring you up very quickly on one or many modules. Partners
such as Enrich can also provide additional services beyond hosting as well as
subscription based pricing.
CONCLUSION

Procurement transformation is not new, but it does require new approaches to

sustain success. Oracle Advanced Procurement was created to enable procurement
organizations to maximize return on their most important asset- procurement
professionals. Along with Release 12.1, Oracle Advanced Procurement 12.2 is the
Procurement Professionals release and provides organizations with:

A consolidated Work Center for all procurement responsibilities.

Improved support for complex goods and services.

Expanded supplier management and enablement.

In combination, these capabilities provide new opportunities to accelerate

transformation and provide enterprises with sustainable, year-over-year
improvements.

Delivering Value with Oracle E-Business Suite Advanced Procurement Release 12.1 & 12.2

Page13

Delivering Value with Oracle E-Business Suite Advanced Procurement 12.1 & 12.2 April 2013
Author: Dan Ashton
Contributing Authors: Bill Tokheim, Mark Peachey
Oracle Corporation
World Headquarters
500 Oracle Parkway
Redwood Shores, CA 94065
U.S.A.
Worldwide Inquiries:
Phone: +1.650.506.7000
Fax: +1.650.506.7200
oracle.com
Copyright 2013, Oracle. All rights reserved.
This document is provided for information purposes only and the
contents hereof are subject to change without notice.
This document is not warranted to be error-free, nor subject to any
other warranties or conditions, whether expressed orally or implied
in law, including implied warranties and conditions of merchantability
or fitness for a particular purpose. We specifically disclaim any
liability with respect to this document and no contractual obligations
are formed either directly or indirectly by this document. This document
may not be reproduced or transmitted in any form or by any means,
electronic or mechanical, for any purpose, without our prior written permission.
Oracle, JD Edwards, PeopleSoft, and Siebel are registered trademarks of Oracle
Corporation and/or its affiliates. Other names may be trademarks
of their respective owners.