In oracle cloud, a business unit does not need to perform all business functions. The business unit model allows you to assign only relevant business functions to a business unit, while some other functions can be outsourced to a different business unit.List of cognitive learning strategies examples of business functions are materials management, requisitioning, procurement, payables invoicing etc. Note that not all functions can be outsourced; procurement is a business function that can be.List of cognitive learning strategies A business unit that has a procurement business function assigned is called as procurement business unit.

Many of us have the impression that procurement business units create purchase orders like requisitioning business units create requisitions.List of cognitive learning strategies well, this is just partly true and does not reflect the true essence of this model. In cloud procurement, purchase orders are created in context of legal entities.List of cognitive learning strategies it is true that a purchase order is managed by the procurement business unit but it is issued on behalf of a particular legal entity (which is typically derived from the requisitioning business unit).List of cognitive learning strategies suppliers see the name of the legal entity as the buying organization and not the name of the procurement business unit. In fact, procurement business unit name is not even included in the printed purchase order PDF.List of cognitive learning strategies secondly, all the accounting impact that a purchase order has, is absorbed by the ledger of the requisitioning business unit. Procurement business unit does not even need to have a ledger setup done.List of cognitive learning strategies

Supplier relationship management: A supplier is a global entity, but supplier sites are created in context of procurement business units. A single supplier site, can be leveraged by different business units through site assignments.List of cognitive learning strategies also note that approved suppliers list (ASL) entries are created and maintained at procurement business unit level.

None of these activities have any accounting impact.List of cognitive learning strategies and all of these can be centralized, meaning that a centralized department can offer all these as services to the different business units of the organization.List of cognitive learning strategies moreover if you notice, all of these are strategic business activities on which organizations want their buyers to focus on more aggressively apart from the routine activities such as following up with suppliers for delayed shipments and invoice mismatches.List of cognitive learning strategies

For centralizing procurement, it is advisable to setup a separate (or dedicated) business unit and assign it only procurement business function.List of cognitive learning strategies and then create the service provider relationships with the requisitioning business units which will be able to utilize the services of the centralized procurement business unit.List of cognitive learning strategies it is like plug and play setup; when a new business unit gets configured (for requisitioning) we just need to setup the service provider relationship and then roll out specific agreements or other catalog content as needed.List of cognitive learning strategies

Before closing this article, I will like to emphasize on the fact that a business unit which only has procurement business function does not need any accounting setup (chart of accounts, ledger etc.).List of cognitive learning strategies this means that, for customers who are implementing only sourcing or supplier qualification, there is no need to do any accounting setup at all.List of cognitive learning strategies