Sourcing Rules

Sourcing rules define inventory replenishment methods for either a single organization or all
organizations in your enterprise. Time-phasing in a sourcing rule determines when each group of
shipping method - ship org combinations is in effect, as in this example:

In the first phase of SR-C01, SAC is replenished equally by AUS and NYC. From 01-JUL-1997,
AUS no longer supplies SAC, which receives all transfers from NYC: (mrp_suprulex.if)

This sourcing rule can apply to one org (SAC, in this example), or to all your organizations.
However, you cannot choose a single organization in one phase and all organizations in another
phase. That would require two sourcing rules, with consecutive effectivity dates. If you assign
the sourcing rule to one receiving organization (SAC in this example), it is a local sourcing rule;
if you assign it to multiple organizations, it is a global sourcing rule.

You cannot apply sourcing rules and bills of distribution (make them Planning Active) until the
sum of the allocation percentages equals 100. Secondly, sourcing rules and bills of distribution
do not take effect until they are assigned to a part or a range of parts. (See: Assigning Sourcing
Rules and Bills of Distribution.)

Bills of Distribution

Bills of distribution define the sourcing strategies of several organizations. In other words, a bill
of distribution is library of sourcing strategies. For instance, the sourcing strategy described in
SR–C01 could apply to different organizations at different periods. You cannot do this with
sourcing rules because you have to apply the strategy to one organization or all organizations.

In another example, an item is made in a manufacturing center and supplied to a distribution

center, which in turn supplies three sales offices. Instead of using five different local sourcing
rules, you could set up a three-level replenishment hierarchy with a bill of distribution for the
item. This bill would specify how the item is sourced at each level.

Both sourcing rules and bills of distribution have effective dates, periods during which the
scheme is valid. For each period, you can specify a list of sources, type, allocation percentage,
rank, shipping method, and intransit time.

You cannot apply sourcing rules and bills of distribution (make them Planning Active) until the
sum of the allocation percentages equals 100. Secondly, sourcing rules and bills of distribution
do not take effect until they are assigned to a part or a range of parts. (See: Assigning Sourcing
Rules and Bills of Distribution.)

Example - Sourcing Rule/Bills of Distribution

In the following scenario, distribution centers SFD and NYD receive finished goods from
manufacturing plan SAC:
Sourcing rule SR-C02 describes the replenishment of SFD by SAC. Since no other plants supply
the part (which is assigned to this rule separately), the allocation is 100%. SR-C02 is a local
sourcing rule because it applies to SFD only. Similarly, SR-C03 describes the replenishment of
NYD by SAC.

The bill of distribution (BR–E01 in this example) can define a specific set of receiving
organizations, and for each organization it can define any number of shipping organizations -
each with its own allocation percentage, ranking, and shipping method. Bills of distribution are
more flexible than sourcing rules because, for each organization you list in the bill, you define a
range of dates and a sourcing strategy to apply within those dates. Sourcing rules can only define
the dates and strategy for one organization or all the organizations in your enterprise.

The following scenario illustrates this flexibility:

As the demand from NYD expands and exceeds SAC's capacity to meet the demand, the
enterprise decides to build a new plant, called NYC. While NYC is brought online, SAC
continues to meet 100% of demand from NYD. From 1-JUL, however, NYC begins to supply a
small percentage of this demand, taking some of the burden away from SAC. The planning
process can quickly and easily support this transition. Sourcing rule SR-C04 can define the dates
during which the transition will occur, include NYC, and split the demand replenishment
between it and SAC. Bill of distribution BR-E01 can accomplish this as well, but the bill can
incorporate it into an enterprise–wide sourcing strategy.

Defining Sourcing Rules

You can define sourcing rules that specify how to replenish items in an organization, such as
purchased items in plants. Sourcing rules can also specify how to replenish all organizations, as
when the entire enterprise gets a subassembly from a particular organization.

If there are conflicts in Sourcing, a predetermined hierarchy will resolve the sourcing conflict.
For instance, if you assign a bill of distribution to an organization AUS that tells it to source the
part from another organization NYC, you can still define a local sourcing rule at organization
AUS to source the part from yet another organization SAC. In this case, the local sourcing rule
overrides the bill of distribution.
The planning assignment set holds information for:

 Sales order global distribution

 Organization-to-organization sourcing

Watch for conflicts between sourcing rules for external demands and sourcing rules for internal
demands. For example:

 External demand for an item is sourced globally from either organizations M1 or M2. The
sourcing rule is Transfer from with M1, M2. assigned at the item level

 Internal demand at organization M1 is sourced from organization M3. The sourcing rule
is Transfer from with M3 assigned at the item/org level. The item/org assignment tells the
planning engine that this sourcing rule applies to the sourcing for internal demand and not
for the external demand.

 If you assign a sourcing rule for external demand at the item level, then you cannot assign
a sourcing rule for internal demand at that level.

Ship methods apply to Buy from and Transfer from sourcing rules. To create the ship methods:

 Navigate to Oracle Inventory > Shipping Networks

 Navigate to the detail region
 Navigate (M) Tools> Shipping Methods

To define a sourcing rule

1. Navigate to the Sourcing Rule window.

2. Enter a unique sourcing rule name.

3. Indicate whether this sourcing rule is used for all organizations (global) or a single
organization (local). If the sourcing rule is local, you must enter an organization name;
otherwise, your current organization will be the receiving organization.

4. Choose Copy From to copy the effectivity dates and shipping organization from another
sourcing rule into this one.

5. Enter effectivity dates. You must enter a start date, but entering an end date is optional.

6. For each range of effectivity dates, you can include multiple shipping organizations. For
each shipping organization you want to include, select a sourcing type to specify whether
you make, buy, or internally transfer the item. You can also copy a list of shipping
organizations from an existing sourcing rule. If you enter a customer organization as the
receiving organization, then you cannot select a supplier organization as the shipping
organization.
 7. Enter an allocation percentage for each shipping organization. Allocation percentage
includes the number of planned orders issued to the part for the entire the planning
horizon. Your total allocation may not exceed 100. If the allocation percentage for all the
shipping organizations included within a range of effectivity dates equals 100, Planning
Active is checked. If the sourcing rule is not planning active, the planning process will
not use the rule to assign planned orders.

8. Enter a numeric rank value to prioritize each sourcing type. If you have two sources with
the same allocation percentage, planned orders are sourced from the highest rank first.

9. Select a shipping method, such as FEDEX, UPS, or rail. (See: Defining Shipping
Methods, Oracle Inventory User's Guide.

10. Save your work.

To copy shipping organizations from an existing sourcing rule

This feature allows you to include long, previously defined lists of shipping organizations
without manual entry.

1. Select a sourcing type to specify whether you make, buy, or internally transfer the item.

2. Choose Copy Shipping Orgs From.

3. In the Find window, select a sourcing rule that includes the shipping organizations you
want to duplicate in this new sourcing rule.

4. Choose OK.

To purge a sourcing rule

1. Select a sourcing rule name.

2. Choose Purge.

Defining Bills of Distribution

You can define bills of distribution that specify a multilevel replenishment network of
warehouses, distribution centers, manufacturing centers (plants), and trading partners.

To define a bill of distribution

1. Navigate to the Bill of Distribution window.

2. Enter a unique bill of distribution name.

 3. If the allocation percentage for this bill of distribution equals 100, Planning Active is
checked. (See Step 7.)

Note: You cannot set the allocation percentage to less than or greater than 100 for
sourcing rules that are already assigned in assignment sets

4. Choose Copy From to copy the receiving and shipping organization information from
another bill of distribution into this one.

5. Enter the effectivity dates for each receiving organization in this bill of distribution.

6. For each receiving organization, you can enter a number of shipping organizations. For
each shipping organization, select a sourcing type to specify whether you make, buy, or
internally transfer the item. You can also copy a list of shipping organizations from an
existing bill of distribution.

Note: Suppliers and supplier sites must be predefined in Oracle Payables. See: About
Suppliers, Oracle Payables User's Guide

7. Enter an allocation percentage for each shipping organization. Allocation percentage

includes the number of planned orders issued to the part for the entire the planning
horizon. Your total allocation may not exceed 100. If the allocation percentage for all the
shipping organizations included within a range of effectivity dates equals 100, Planning
Active is checked. If the sourcing rule is not planning active, the planning process will
use the rule to assign planned orders.

Note: For bills of distribution that are already named in assignment sets, you cannot set
the allocation percentage to less than or greater than 10

8. Enter a numeric rank value to prioritize each sourcing type. If you have two sources with
the same allocation percentage, planned orders are sourced in rank order.

9. Select a shipping method, such as FEDEX, UPS, or rail. See: Defining Shipping
Methods, Oracle Inventory User's Guide.

10. Save your work.

To copy shipping organizations from an existing bill of distribution

This feature allows you to include long, previously defined lists of shipping organizations
without manual entry.

1. Select a sourcing type to specify whether you make, buy, or internally transfer the item.

2. Choose Copy Shipping Orgs From.

 3. In the Find window, select a bill of distribution that includes the shipping organizations
you want to duplicate in this new bill of distribution.

4. Choose OK.

To purge a bill of distribution

1. Select a bill of distribution name.

2. Choose Purge.

Assigning Sourcing Rules and Bills of Distribution

Once you have defined your sourcing rules and bills of distribution, you must assign them to
particular items and/or organizations. These assignments are grouped together in assignment sets.
This is where your various sourcing strategies define a particular supply chain network.

Each assignment set to represents selection of organizations and/or items you want planned. To
influence the planning process, you must include an assignment set in your plan options.

In an assignment set can assign your sourcing rules and bills of distribution at different levels, as
follows:

 Item-Instance: An item across all organizations. If the Item field is empty, use the Reduce
Criteria Window to restrict the selection.

 Item-Instance-Organization: A single item in an inventory organization

 Instance-Organization: All items in an inventory organization

 Category-Instance: Categories of items

 Category-Instance-Organization: Categories of items in an inventory organization

 Instance: All organizations

These levels allow you to assign a replenishment rule to as many or as few items as possible. For
example, a category of items could be defined as packaging material, and a sourcing rule that
identifies the suppliers could be assigned.

When you specify a customer in an assignment:

 You cannot specify an organization in the same row

 The planning engine does not split planned orders by customer. If you want the planning
engine to split planned orders by customer, use project manufacturing. Create one project
per customer so all of the sales orders for each customer peg to one project.
To assign a sourcing rule or bill of distribution

1. Navigate to the Sourcing Rule/Bill of Distribution Assignments window.

2. Enter an assignment set name and description.

Note: The assignment specified in profile option MRP: Default Sourcing Assignment Set
is the only one used by Oracle Purchasing for its processing

3. Select an Assigned To type.

Note: You can assign a sourcing rule or bill of distribution to a category only if you have
updated the profile option MRP:Sourcing Rule Category Set. See: MRP:Sourcing Rule
Category Set

4. Enter an organization name, if the Assigned To type requires one.

Note: You cannot assign customers modelled as organizations to a global sourcing rule

5. Enter the name of the customer to which you want to assign a sourcing rule or bill of
distribution.

6. Enter the specific site to which you want to assign a sourcing rule or bill of distribution.

7. Enter an Item/Category if you selected Item or Item-Org as the Assign To type.

8. Enter the sourcing rule or bill of distribution as the Type.

9. Enter the name of the sourcing rule or bill of distribution.

10. Enter Condition if the source is Repair at or Transfer fromfective and usable items in
asset intensive planning. It is the condition of the repairable at he end of the process.

11. Save your work.

To purge a sourcing rule or bill of distribution

1. Select an assignment set name.

2. Choose Purge.

Assignments Hierarchy

In the following table, rows below override rows above them. Columns on the right override
columns on the left.

A global sourcing rule has an unspecified receiving organization.

 Sourcing Rules vs. Bill of Distribution Assignments
Global Sourcing Local Sourcing Bill of
Assignment Scope
Rule* Rule Distribution
Global Yes No Yes
Organization No Yes No
Category of Item Yes No Yes
Category of Items in an No Yes No
Organization
Item Yes No Yes
Items in an Organization No Yes No

Since not all assignment types are valid for both sourcing rules and bills of distribution, the effect
of the Sourcing Rules vs. Bill of Distribution Assignments table is illustrated in a linear hierarchy
in the following table. The rows below override rows above them.

Assignment to Levels
Assignment Scope Sourcing Mechanism
Global Global Sourcing Rule
Global Bill of Distribution
Organization Local Sourcing Rule
Category of Item Global Sourcing Rule
Category of Item Bill of Distribution
Category of Items Local Sourcing Rule
in an Organization
Item Local Sourcing Rule
Item Bill of Distribution
Items in an Organization Local Sourcing Rule

Viewing Sourcing Rules

You can quickly and easily retrieve sourcing rules for reference. After retrieving a sourcing rule,
you can display it in a convenient, hierarchical representation, or you can locate the assignment
sets in which it is assigned.

To view sourcing rules

1. Navigate to the View Sourcing Rule or Sourcing Rule window.

 2. Place your cursor in the Name or Description field and select Find or Find All from the
query menu.

3. Choose View to launch the Object Navigator and display the graphical view of your
sourcing rule.

With the Object Navigator, you can display your sourcing rule in a visual hierarchy. Each
element in the sourcing rule is displayed in a rectangular node, with connecting lines that
depict the nodes' relationships to each another (known as the data flow). The nodes are
also color-coded for easy identification, and other aspects of the data flow can be changed
to meet specific requirements.

To view assignments for your sourcing rules

Sourcing rules govern replenishment of specific items in your enterprise based on the rule's
assignment. Sourcing rules can be assigned to an item, and item in an organization, an
organization, a category of items, a category of items in an organization, or to all items.

When modifying or viewing a sourcing rule, you can quickly refer to all the assignment sets in
which the rule participates. You can also refer to the assignment level assigned to the rule. For
more information about assignment sets, see: Assigning Sourcing Rules and Bills of Distribution.

1. Navigate to the View Sourcing Rule or Sourcing Rule window.

2. Place your cursor in the Name or Description field and select Find or Find All from the
Query menu.

3. Choose Assignment Set. The list that appears includes all sets in which the current rule
participates.

For each Sourcing Rule and Bill of Distribution in the Assignment Set, you can review the
following information:

 Assigned to: Each Sourcing and Bill of Distribution can be assigned:

o A single item (across all organizations)

o An item in a specific organization
o All items in a specific organization
o A category of items
o A category of items in an organization
o All items in all organizations (globally)

Note: You can assign a sourcing rule to a category only if you have updated the profile
option MRP:Sourcing Rule Category Set. See: MRP:Sourcing Rule Category Set
  Organization: Rules or bills assigned to an organization, a category of items in an
organization, or an item in an organization will also display the name of that organization.

 Customer and Customer Site: Rules or bills associated with a customer will also display
this information.

 Item/Category: Rules or bills assigned to an item or an item in an organization will

display with the associated item or category of items (if the profile option has been
updated to include categories).

Viewing Bills of Distribution

You can quickly and easily retrieve bills of distribution for reference. After retrieving a bill of
distribution, you can display it in a convenient, hierarchical representation, or you can locate the
assignment sets in which it is assigned.

To view bills of distribution

1. Navigate to the View Bill of Distribution or Bill of Distribution window

2. Place your cursor in the Name or Description field and select Find or Find All from the
Query menu.

3. Choose View to launch the Object Navigator and display the graphical view of your bill
of distribution.

With the Object Navigator, you can display your bill of distribution in a visual hierarchy.
Each element in the bill is displayed in a rectangular node, with connecting lines that
depict the nodes' relationships to each another (known as the data flow). The nodes are
also color–coded for easy identification, and other aspects of the data flow can be
changed to meet specific requirements.

To view assignments for your bills of distribution

Bills of distribution govern replenishment of specific items in your enterprise based on the bill's
assignment. Bills of distribution can be assigned to an item, and item in an organization, an
organization, a category of items, a category of items in an organization, or to all items.

When modifying or viewing a bill of distribution, you can quickly refer to all the assignment sets
in which the bill participates. You can also refer to the assignment level assigned to the rule. For
more information about assignment sets, see: Assigning Sourcing Rules and Bills of Distribution.

1. Navigate to the View Bills of Distribution or Bill of Distribution window

2. Place your cursor in the Name or Description field and select Find or Find All from the
Query menu.
 3. Choose Assignment Set. The list that appears includes all sets in which the current bill
participates.

For each Sourcing Rule and Bill of Distribution in the Assignment Set, you can review the
following information:

 Assigned to: Each Sourcing and Bill of Distribution can be assigned:

o A single item (across all organizations)

o An item in a specific organization

o All items in a specific organization

o A category of items

o A category of items in an organization

o All items in all organizations (globally)

Note: You can assign a sourcing rule to a category only if you have updated the
profile option MRP:Sourcing Rule Category Set. See: MRP:Sourcing Rule
Category Set

 Organization: Rules or bills assigned to an organization, a category of items in an

organization, or an item in an organization will also display the name of that organization.

 Customer and Customer Site: Rules or bills associated with a customer will also display
this information.

 Item/Category: Rules or bills assigned to an item or an item in an organization will

display with the associated item or category of items (if the profile option has been
updated to include categories).

Viewing Sourcing Rule and Bill of Distribution Assignments

Once you have defined your sourcing rules and bills of distribution, you must assign them to
particular items and/or organizations. These assignments are grouped together in assignment sets.
This is where your various sourcing strategies define a particular supply chain network.

You can quickly view your assignment sets to review particular sourcing schemes, locate
particular assignments of sourcing rules or bills of distribution, or view the supply chain bill for a
particular assignment set.

To view sourcing rule and bill of distribution assignments

 1. Navigate to the Sourcing Rule/Bill of Distribution Assignments window.

2. Place your cursor in the Assignment Set or Description field and select Find or Find All
from the Query menu.

3. Select an assignment set from the list.

For each Sourcing Rule and Bill of Distribution in the Assignment Set, you can review the
following information:

 Assigned to: Each Sourcing and Bill of Distribution can be assigned:

o A single item (across all organizations)

o An item in a specific organization

o All items in a specific organization

o A category of items

o A category of items in an organization

o All items in all organizations (globally)

Note: You can assign a sourcing rule to a category only if you have updated the
profile option MRP:Sourcing Rule Category Set. See: MRP:Sourcing Rule
Category Set.

 Organization: Rules or bills assigned to an organization, a category of items in an

organization, or an item in an organization will also display the name of that organization.

 Item/Category: Rules or bills assigned to an item or an item in an organization will

display with the associated item or category of items (if the profile option has been
updated to include categories).

To view details of a particular rule or bill

When viewing an assignment set, you can quickly retrieve full details on any sourcing rule or bill
of distribution named in the set.

1. In the Assignments region, place your cursor in any field on the row containing the rule
or bill you want.

2. Choose View Sourcing Rule/BOD