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Presents: PeopleSoft Contracts

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1 Presents: PeopleSoft Contracts
State Farm Insurance Presents: PeopleSoft Contracts

2 Overview of State Farm Purchasing
State Farm Purchasing has the authority and responsibility for purchasing or renting all items and services required by the Companies with the exceptions of real estate, advertising, agency publications and awards, computer hardware and software, and legal council. The Replacement Service is a unit in Property & Casualty Claims. The State Farm Replacement Service buys consumer products in support of Fire Claims’ claim settlement activities. Administrative Services’ purchasing authority is highly centralized, with most being done at corporate. Purchasing handles most computer products and services acquisition in coordination with the Systems department. Purchasing and Replacement Service are the operational areas that fall within the PeopleSoft Purchasing segment of the ERP solution. Purchasing policies, procedures and processes were developed, and the PeopleSoft purchasing application selected and modified to support the responsibility to acquire this wide variety of products and services.

3 Users and Roles: Replacement Service, Claims - approximately 180 users in U.S. Purchasing – approximately 300 General Purchasing employees Avg. Monthly Numbers (based on data from 7/1/ /31/05) Replacement Service/Purchasing Total: Almost 6,000 Purchase Orders requesting over $85.5M of goods each month Number of Items: Purchasing is responsible for a variety of items: computer products and services, office supplies, furniture and equipment. 428,000 items 39,738 active for Purchasing 47,633 active for Replacement Service 83,146 Description only items (one time use, built in the transaction, not present on the item master table in PS)

4 Setting up PeopleSoft contracts
Contract Use A contract is an agreement between two parties which, to be enforceable, should be in writing. Vendor contracts for all areas of Purchasing are maintained by Contract Administration in a Contracts Library. Setting up PeopleSoft contracts The contract process allows purchasing to create a PeopleSoft contract that mirrors an external supplier agreement. The PeopleSoft contract can be referenced on all purchase orders that are generated within the application, and discounts and other contract terms can be applied to those orders. At State Farm the PeopleSoft contract does not dispatch to the vendor. Contract functionality allows for purchase orders to be generated directly from a contract in what is called a release. Order releases, for items to be ordered on a recurring basis, are queued up for future dates, and the application automatically generates a purchase order when the release date arrives. Master contracts are used to group contracts that are similar in nature with one supplier

5 Purchase Order Contracts:
Types of contract Purchase Order Contracts: Use the Purchase Order Contracts to create order contracts that establish pricing terms and conditions that may offset or supplement regular pricing agreement with suppliers. Release to Single PO Only Contracts: Use the Release to Single PO Only contracts process option to indicate that the contract is a Release to Single PO Only contract. General Contracts: Use the General Contract to indicate that a contract is general in nature. If the contract does not fall under the above two options, then general should be selected. State Farm does not use general contracts at the time. PO – Contracts -When a purchase order is created for a supplier with a contract, the contract id and pricing conditions are reflected on the purchaser order. You can generate order contract releases that use the contract for their terms and conditions. These contracts could have been established by the awarding of a request for quote (RFQ) response to a contract. In turn, this RFQ may have been created from a requisition. When a contract originates from a requisition, the purchasing releases carry the requisition keys to the PO. Single PO only Contracts - Select to use one PO for the life of the contract. You define the PO on the Maintain Contracts - Header page. Once the contract is saved, a PO is reserved for this contract and this option cannot be cleared. In the PeopleSoft system, order contracts functionality provides support for blanket orders by enabling you to associate a contract with a PO by assigning one PO to be used for the life of the contract. All transactions that reference this contract add lines or schedules to the assigned PO. State Farm does not use blanket contracts at this time. General contracts can be used when creating an purchase order release and voucher release for the same contract.

6 Types of contracts (continued)
Fixed item Contracts: Use fixed item only for purchases that specifically reference the items identified on the contract. Open item contracts: Use Open Item contracts for agreements that apply to any item (adhoc or defined items) purchased from the supplier while the contract is in effect. Note: Open item contracts are sometimes used to set up a percentage-off list price that applies to all items (whether adhoc or specific items) purchased from the supplier or to make sure a contract is referenced on the purchase order. Fixed item and open item agreements can be established on the same contract. Open item contracts only apply to order contracts.

7 For State Farm’s purposes the contract process is to:
Suppress the printing of purchase order terms and conditions while referencing the contract number on the purchase order. Apply price adjustments to Open Item procurements by using a discount % Apply price adjustments to Specific Item procurements by using a discount % or dollar amount Schedule releases of specific items over a specified time period. Allow for the tracking of: Price adjustments Minimum and maximum order quantities Purchases made to date Cumulative quantity price adjustments Advance notification to the buyer of contract expiration

8 Open Item Contract Adding a contract Step 1 - Adding a contract
Set Id = PUR01 Contract ID – Legal Agreement Referenced Contract Process Option - Purchase Order

9 Contract Header Step 2 – Contract Header: Vendor: N/A
Vendor ID: Select vendor from look-up (Vendor name will default) Begin Date: Defaults to current date, but may be backdated Expire Date: Expiration date of contract entered Primary Contact: Select from look-up (Contact info will print on dispatched PO) Vendor Contract Ref: Additional notes regarding contract (Do not print anywhere) Description: Description of contract (Ex. Use contract type) Allow multicurrency PO: De-select (defaults as checked) Allow Open Item Reference: Selected for open item contract IL Contract Elements: Select if contract is for software being purchased for the state of Illinois Price can be changed on order: Select yes (Allows price to be overridden at a transaction level) PO Open Item Pricing: Select if entering price adjustment information (discounts for all items purchased from vendor) – See screen shot for step 3

10 PO Open Item Pricing Step 3 – PO Open Item Pricing Select GNRL Adj
Adjustment method defaults to percent Adjust Percentage – Enter vendor discount as a negative

11 Contract Thresholds Step 4 – Contract Thresholds
Notify on expired/exceeds max (Two options – choose either expire date and exceed amount, or choose one) Expire date defaults from contract header – choose number lead time days notification should be sent Maximum amount Notification – Enter either dollar figure less than max or percent less than max Amount Summary – Max amount defaults from contract header Total line released amount is calculated from item specific purchase orders created based from a release Open Item Amount Released – All contract dollars not associated to a release Total Released Amount – Total line released + Open Item amount released

12 Specific Item Contract
Contract Header Step 1 - Adding a contract Same as Open Item Contract Step 2 – Contract Header Differences: Allow open item reference is deselected Line items are added to create specific item contract

13 Price Adjustments Step 3 – Price Adjustments
Select price adjustment specific to each line Select price location Select UOM Match Complete Price Adjustment Details Adjustment method – Select either percent or amount based on master vendor contract Adjust percentage – enter as negative amount for discount (can be positive amount to reflect surcharges)

14 Releases Releases Specific Item Contract must be set up
Include for releases defaults as checked, deselect if item should not be included in release

15 Release Defaults – All fields default
Release Dates - The Start Date defaults with the current date. Change this date to the date of the first scheduled release Frequency - Select an Interval from the drop down list. This represents how frequently orders should be released against this contract. Select a value that identifies the day of the month the purchase order should be created. Only use this field if you chose weekly or monthly under intervals. Select a value that represents the time frame of when the purchase order should be created. Duration - Select a value that identifies the duration of the releases you are establishing. Until: Specify an end date. For: Specify the number of days, weeks, months or years that this schedule should last. Times: Specify the number of times this release schedule should occur. Populate - The Release Template section will be populated with all scheduled release dates. Stage – Default or Override Default: Select default when creating order releases to use the PeopleSoft Purchasing default hierarchy, instead of using values entered on the PO Distributions page and the PO Defaults page. Override: Select override when creating order releases to use the defaults set on the PO Distributions page. If values are not selected for the business unit on the PO Distributions page, they appear by default from the PO Defaults page. For example, if you generate a release for business unit PUR01 and an entry exists in the PO Distribution defaults, the system copies all of the distributions exactly as they are defined on the PO Distribution page. The Review Releases tab is populated and you can review staged releases from the hyperlink.

16 PO Date – Select link to review a specific release
Review information includes, but is not limited to: Buyer, PO Date, Monetary Amount, Release Comments, Ship To, Due Date, Qty Scheduled, etc.

17 Access the Events Inquiry page.
Type: Displays whether the contract event is for a voucher, PO release, or a requisition. Status: Displays the status of the PO, voucher, or requisition transaction Reference: Displays the text from the PO Ref (purchase order reference) field on the PO Header Details page. This field appears for PO event types only. Release: Displays the release number for the release. A release is the transaction for the contract. For example, a one-year lease contract with monthly payments would have 12 releases. This field appears for PO event types only. Amount: Displays the amount on the PO or voucher contract release or requisition. Maximum Amount: Displays the maximum amount for the contract. Additional releases are not generated once the maximum amount is reached. Released: Displays the amount on the contract that has been released to date. Remaining: Displays the amount remaining on this contract. This field appears only if the maximum amount for the contract is greater than 0.

18 Access the Contract Lines Inquiry page (PO-related).
PO Release Events - Contract Info Amt Only: (amount only) Identifies an amount-only contract line. Line: References the contract line. Milestone Nbr: (milestone number) If applicable, identifies the milestone number associated with the release line. Release Line: Identifies the release line associated with the referenced contract line Description: Displays the description defined for the item ID on the release line. When an item ID is not specified, the description is the ad hoc text entered to describe the goods purchased.

19 PO Release Information
Remaining Rcpt Qty: (remaining receipt quantity) Displays the quantity remaining to be received against the release line.

20 Access the Receipt Details inquiry page (PO-related).
Receipt Information Sched: Displays whether the Receipt schedule number. BU Recv: Displays the Receipt business unit Receiver Id: Displays the Receipt ID Line: Displays the receipt line number Status: Displays the current status of the receipt Qty Received: Displays the quantity received on the Receipt Vndr Accept Qty: Displays the quantity the vendor invoiced. Remaining: Displays the quantity remaining on this receipt. This field appears only if the maximum amount for the contract is greater than 0.

21 Access the Matching Details inquiry page (PO-related).
PO Matching Info Sched (schedule) Displays the voucher line schedule number. BU AP: Displays the voucher business unit Voucher ID: Displays the voucher id Line: Displays the voucher line number Qty Matched: Displays the voucher quantity matched Amt Matched: Displays the voucher amount matched

22 Sourcing information: Finds a contract
If no contract is specified on the transaction and the transaction source is a requisition the PO Calculations process attempts to find the most recent effective contract for the already determined vendor. If the contract does not meet minimum or maximum requirements, the PO Calculations process goes to the next most recent effective contract. The contract maximums are checked at the line level. If you have multiple lines on a PO with the same item ID, the sum of those line quantities and amounts is checked against the contract line maximums. The contracts that the PO Calculations process reviews are restricted to the specified business unit when the contracts are set up in the system by business unit. If a contract is specified through online requisition or a contract release, the PO Calculations process ensures that the contract is still effective, and that the maximum amounts and quantities have not been exceeded. If the contract is not still effective or the maximum amount or quantity is exceeded, the PO Calculations process rejects the transaction. The system looks for a contract that is assigned to a specific purchase order if: The contract price and UOM match the transaction price and UOM. If the transaction does not meet these requirements, the PO Calculations process goes to the next most recent effective contract. Because the PO Calculations process has not calculated the price at this point, it uses the item or vendor base price when editing against minimum or maximum requirements. If a contract ID is specified, the PO Calculations process will not search for a different contract. Note. The contract is referenced on the Purchase Order Line Details with the contract setid, contract id, and the number of times this contract has been released to a purchase order.

23 The PO Calculations process updates the contract release amounts..
Calculates the price The PO Calculations process updates the contract release amounts.. If you select the calculate price option, the PO Calculations process recalculates the price. The process begins with the price from the item. If it finds a contract or if a contract is specified, and the contract indicates to use the contract base price, the PO Calculations process uses the contract base price as the starting price instead of the item price. If there is no contract, or if the contract does not indicate to use the contract base price, and PO Calculations process finds an item vendor price, it uses the item vendor price as the starting price instead of the item price. Once the PO Calculations process has the starting price, it then applies contract and vendor price adjustments as indicated by the pricing rules. The process also creates value adjustments to show the starting price and each price adjustment. If Calculate Price is not checked then the process will not even look for a contract. When the PO Calculations process runs for a requisition and the process finds a blanket PO to use to fulfill the request, the PO Calculations process reserves the blanket PO. Note PO Calculations process will use a contract that allows open items for both description-only and item ID lines. When finding an item vendor price, the PO Calculations process searches the item vendor prices in the following order, and stops at the first place that it finds a price: Item vendor price for the transaction unit of measure and transaction currency. Item vendor price for the transaction unit of measure and vendor location currency (the PO Calculations process converts it to the transaction currency). Item vendor price for the default unit of measure and transaction currency (the PO Calculations process converts it to the transaction unit of measure). Item vendor price for the default unit of measure, and vendor location currency (the PO Calculations process converts it to transaction unit of measure and transaction currency). The item price.

24 Above is a requisition that has been created
Above is a requisition that has been created. This illustrates that an item vendor relationship exists with the vendor that has an existing PeopleSoft contract.

25 The PeopleSoft contract can be added at the requisition if it is known
The PeopleSoft contract can be added at the requisition if it is known. Otherwise, if this field is not populated the PO CALCULATION process will look to associate a contract for the purchase order that will be created from this requisition. If a contract is not manually added to the requisition the PO CALCULATION process will not go back and update the requisition with the appropriate contract id.

26 This slide demonstrates that the Calculate price box must be checked in order for the PO CALCULATION process to look for a valid contract.

27 On the purchase order, the contract id and release number can be viewed in multiple places. This page in on the purchase order header page, under the contract tab.

28 The contract id and release number can also be seen on the purchase order line details page by expanding the contract section.

29 Questions? Contact Information: Jennifer Dalrymple Administrative Services – Administration Phone (309) Shawna Theison Administrative Services – Purchasing and Distribution Phone: (309)

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