Launch of Simplified and Enhanced Purchase Order Closure Process in Oracle ERP for Airtel

Basic Information

Whenever company wants to buy material or take services from any partner, it issues a legal document called Purchase Order (PO) to partner. This document consist of buying quantity, buying price, payment terms, other legal terms and conditions, validity of PO etc. Since it is a legal document, so the partner can sue the company in case of any default, as payment not done etc. Similarly, in accounting books, company take the provision of amount required to pay to partner for upcoming months based on PO values. This is similar to the situation where person takes loan and he/she knows that every month X amount will go into repayment of loan. Therefore, he/she takes the provision to pay the X amount from his/her earning. Thus, in Airtel there was a need to check the control on the provision and PO issued to partners w.r.t the material requirement from time to time.

Problem Statement

Airtel has created the policy that if PO validity ends then they should be closed periodically and reverse the provision taken in book. This is required for smooth partner account reconciliation, actual provision in books, proper inventory planning and system hygiene. PO Closure (it means that Airtel don’t want material or service anymore from partner) & related provision taken in financial book (based on the open PO value issued to partner) was a cumbersome and time-consuming exercise for each month end activity, as team had to analyse high volume (Approx. 6 Lakh+ PO Lines) for non-closure & exceptions. PO consist of multiple PO lines and purchase order lines consist of material/service description along with price and validity.

Earlier, there were different reasons for non-closure and exceptions for PO closure -

(1) Several complex platforms were integrated with the current ERP due to which exception scenarios weren’t handled properly

(2) In case PO lines are closed then program was not closing PO, which in turn don’t reverse the provision in book

(3) Old program works on PO, not on PO lines. In case any line is not eligible for closure then it won’t close any other PO lines and PO

(4) Due to complex and heavy coding in Old program, it was running for too long (4–5 days) and sometime, it get terminated in between the program run

Due to above reasons, different stakeholders in Airtel highlighted it for systematic fix.

Process Flow Chart for PO Closure Process in Airtel

Important Snaps from Rule Book:

• Objective:

• Policy:

Solution: New PO Closure Program (spread over 777 Operating Units (PAN India Circles) across 11 Legal Entities of Airtel)

• We have successfully enhanced the existing PO Closure Process in Oracle to ensure closure/finally closure of Open PO on a predefined period of time and controls, thus strengthening the systemic control on exposure and ensuring accurate financial reporting.

• Due to integration of ERP with multiple platforms, we made this program configurable and flexible to accommodate changes.

• With successful team collaboration across Engineering, SCM-COE, SCM-MM, P2P, GPA and CFR with adoption of agile methodology in development and testing, we were able to deliver the project in an incredible time-period of 3–4 months against 2 years of time consumed in launch of existing process.

• Business have also established RASCI matrix for this enhanced process to ensure smooth operations.

• Also, detailed process flow chart and rule book was established for audit and internal references.

• We have additionally developed a separate exclusion table to include PO Lines for exclusion from program in order to control reversal of provisioning. As an one time activity, we were able to enter 25K PO lines in exclusion table in a short span of 1 day.

• While performing end to end UAT on this program, we were able to identify below, additional improvement areas in related ERP programs:

• Table below shows high-level comparison (along with benefits) between the Existing Vs Modified processes:

Output Analysis from First Run of Program

• Eligible PO Lines were Closed/Finally closed in system (Table 1 and Table 2 shows the summary of action taken by the program at volume and value level respectively)

• Post Alert mails were triggered to buyers/partners/users informing them about closure/finally closure of their respective PO Lines (Sample Buyer mail is shown in Picture 1)

• Through this first time run of program, one-time clean-up of high-aged PO Lines in system was successfully achieved, with final closure of 18K lines (Ordered value of INR 9,916 Cr) of ageing > 5 years.

Picture1: Sample Post Alert mail to Buyer