Oracle Cloud ERP :Supplier Model

Oracle Supplier Model: A Structured Approach for Manufacturing

The Oracle Supplier Model treats a supplier as a global entity, meaning once a supplier is defined, it is accessible across your entire enterprise. This centralized approach simplifies management and prevents data duplication. However, the true operational relationship with a supplier is established through Supplier Sites, which are linked to specific Procurement Business Units within your organization.

This model allows for granular control over how your manufacturing procurement operations interact with each supplier.

Core Entities of the Supplier Profile:

For every supplier, Oracle captures information across four main groups of attributes, each crucial for different aspects of your supplier relationship:

1. Supplier Header (Global Entity)

   • Description: This is the highest level of information, representing the legal entity of your supplier. It's global and not tied to any specific business unit.
   • Examples in Manufacturing:
     • Legal Name: "Global Steel Solutions Inc." (your raw material provider)
     • Tax Identifiers: Employer Identification Number (EIN) or VAT ID
     • Registration Details: Company registration number
     • Products and Services: High-strength steel coils, custom fabricated components, specialized industrial machinery maintenance.
     • Business Classifications: Small Business, Minority-Owned, ISO Certified (e.g., ISO 9001 for quality management relevant to manufacturing).
   • Onboarding Relevance: Establishes the foundational, legally recognized entity.

2. Addresses

   • Description: A supplier can have multiple addresses for different purposes (e.g., ordering, remitting payments, shipping from). Each address can have associated details.
   • Examples in Manufacturing:
     • Ordering Address: "123 Industrial Park, Main Street, Anytown, USA" (where you send purchase orders for raw materials).
     • Remit-To Address: "P.O. Box 789, Financial District, Big City, USA" (where you send payments).
     • Ship-From Address: "456 Fabrication Plant, South Industrial Zone, Othertown, USA" (a specific plant location from which components are shipped to your factory).
   • Associated Attributes at Address Level:
     • Contacts: "John Doe - Sales Manager (for Ordering Address)"
     • Bank Accounts: "Account #123456 at First National Bank (for Remit-To Address)"
     • Tax Registrations: "State Sales Tax ID for the manufacturing facility at the Ship-From Address."
     • Descriptive Flexfields (DFFs): Custom fields like "Primary Warehouse Code" for a Ship-From Address.
   • Onboarding Relevance: Critical for operational communication (where to send POs), financial transactions (where to send payments), and logistics (where goods originate).

3. Sites

   • Description: A Supplier Site defines the relationship between a specific Supplier Address and a Procurement Business Unit within your organization. This is where internal controls and transaction rules are applied.
   • Examples in Manufacturing:
     • Site Name: "Global Steel Solutions - East Region BU Site" (linking their "123 Industrial Park" address to your "East Region Manufacturing BU").
     • Business Functions: This is vital. For a single supplier, you might have multiple sites, each configured for specific business functions:
       • Purchasing: Allows your "East Region Manufacturing BU" to create Purchase Orders.
       • Pay: Allows your "Central Finance BU" to process payments to this site.
       • Receiving: Allows your "Main Plant Operations BU" to record receipts against POs for this site.
       • Sourcing: Allows your "Procurement COE" to include this site in sourcing events.
       • Supplier Self-Service: Enables the supplier to manage their profile and transactions via a portal.
     • Transaction Controls:
       • Payment Terms: "Net 30"
       • Freight Terms: "FOB Destination"
       • Invoicing Currency: "USD"
       • Receiving Controls: "Match Approval Level: 3-Way (PO, Receipt, Invoice)"
       • Supplier Site Level DFFs: "Preferred Shipping Carrier: FedEx"
     • Bank Accounts: Bank accounts specifically for payments to this site (overriding address-level if needed).
     • Site Assignments: Specifying which of your internal Business Units (e.g., "East Region Manufacturing BU", "West Coast Assembly BU") can utilize this specific supplier site for their procurement activities.
   • Onboarding Relevance: This is the operational heartbeat of the supplier relationship. It governs how your manufacturing BUs interact with the supplier, ensuring compliance with internal procurement policies, payment terms, and receiving procedures.

4. Contacts

   • Description: Individuals associated with the supplier. They can be linked to a specific supplier address or managed globally.
   • Examples in Manufacturing:
     • Global Contact: "Sarah Lee - Account Manager (for all matters related to Global Steel Solutions Inc.)"
     • Address-Specific Contact: "Mark Johnson - Shipping Coordinator (at the '456 Fabrication Plant' Ship-From Address)."
   • Associated Attributes at Contact Level:
     • Contact Address: The address associated with the contact (e.g., Mark Johnson works at the Fabrication Plant address).
     • User Account: If the supplier contact needs to access your Oracle Supplier Portal for self-service functionalities (e.g., submitting invoices, checking PO status, updating their profile), a user account can be created for them.
     • Descriptive Flexfields (DFFs): "Preferred Communication Method: Email," "Emergency Contact Number."
   • Onboarding Relevance: Essential for communication, issue resolution, and enabling supplier self-service.

Miscellaneous Information:

Beyond the structured entities, Oracle allows for the capture of other critical information:

• Bank Accounts: Global bank accounts for the supplier (if not tied to a specific address or site).
• Tax Registrations: Global tax identifiers (if not tied to a specific address).
• Products and Services: Detailed listing of items or services the supplier provides (e.g., specific grades of steel, types of machining services). This is crucial for sourcing.
• Business Classifications: Certifications or classifications like "Minority Business Enterprise," "Environmentally Certified Supplier," or industry-specific quality certifications (e.g., AS9100 for aerospace manufacturing).
• Descriptive Flexfields (DFFs): Custom fields at the supplier header level for unique information like "Supplier Tier (A/B/C)," "Strategic Supplier Indicator," or "Annual Contract Renewal Date."

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Functional Consultant's Solution for Manufacturing Supplier Onboarding:

For your manufacturing industry, a well-defined supplier onboarding process leveraging the Oracle Supplier Model is crucial for:

1. Streamlined Procurement: Quickly bring new component or raw material suppliers online.
2. Compliance: Ensure all necessary tax, banking, and certification information is captured upfront.
3. Risk Mitigation: Verify supplier credentials and establish appropriate transaction controls.
4. Operational Efficiency: Provide clear channels for purchasing, receiving, and payment.

Onboarding Steps (leveraging Oracle Supplier Model):

1. Initial Supplier Request: A business user (e.g., Production Manager, Sourcing Specialist) identifies the need for a new supplier, initiating a request.
2. Supplier Registration (Internal or Self-Service):
   • Internal: Your procurement team creates the Supplier Header record, capturing basic global information.
   • Self-Service (Recommended): The supplier registers themselves via the Oracle Supplier Portal, populating their own addresses, contacts, bank accounts, and business classifications. This offloads data entry and ensures data accuracy from the source.
3. Profile Enrichment & Due Diligence:
   • The supplier provides detailed Addresses (e.g., main office, multiple shipping points for different product lines).
   • They register Contacts for various functions (e.g., sales, technical support, invoicing).
   • They upload relevant Miscellaneous Information like quality certifications (e.g., ISO 9001, IATF 16949 relevant for automotive manufacturing), safety certifications, product catalogs, and business classifications.
   • Your procurement team performs due diligence, verifying financial stability and compliance.
4. Site Creation and Configuration:
   • For each of your Procurement Business Units that will transact with this supplier, a Supplier Site is created, linking a specific supplier address to your BU.
   • Crucially, this is where transaction controls specific to your manufacturing operations are defined:
     • Are receipts required before payment? (e.g., 3-way matching)
     • What are the payment terms for raw materials vs. MRO supplies?
     • Which shipping methods are allowed?
     • Are there specific invoice numbering rules?
     • What are the default expense accounts for non-inventory purchases?
5. Site Assignment: The newly created site is assigned to the relevant purchasing and paying business units within your manufacturing enterprise.
6. Supplier Activation: Once all mandatory information is captured, verified, and sites are correctly configured, the supplier is activated and ready for transactions.

By meticulously utilizing each facet of the Oracle Supplier Model, your manufacturing organization can ensure that every supplier relationship is established on a foundation of clarity, control, and efficiency, directly contributing to your supply chain's reliability and resilience.