The Transactions Layer

Purpose

The Transactions layer layer describes the commercial agreements that govern the exchange of goods. These exchanges include change of ownership, custody, etc.. of the goods from a legal point of view. These exchanges are not rigidly coupled to physical changes in the goods. For example goods can be bought while siting at the manufacturer’s warehouse, or even before the goods even exist. Even though in Supply Chains transactions mainly refer to physical goods, this may not always be the case. The goods object of the transaction may be intangible like the performance of a service.

The base transaction is that of a Sale or Purchase. A Sale represents a change of legal owner in exchange for currency. A Purchase is just a Sale named from the point of view of the buyer instead of the seller.

Other common language transactions like Leasing, Insuring, etc. can be seen as Sale transactions with a different good underneath. As an example, A Lease transaction is a Sale where the underlying good is the right of use or a particular good.

Supply Chain Activities

The Transactions layer needs to support all the activities of buying and selling goods between a Buyer and a Seller and a Buyer, who are entities with legal agency (able to enter into legal agreements). This includes defining and entering into an agreement between parties, fulfillment of the obligations of the agreement and accrual of the corresponding currency payment obligations. Payments themselves require a different set of activities in the business that manage the traditional Accounts Receivable and Accounts Payable.

Key Concepts

From the description above, we can formulate an initial set of concepts at the center of the Transactions layer. The central concept is that of an Order, it could also be called a Transaction or a Sale. We find the name Order more desirable because it is more evocative of concrete information in the mind of most practitioners like an Order being composed of a set of lines, each of them describing some goods to be transacted, etc.

A Good is the object of the commercial exchange

Class Model

<ClassXX> Details

References

• Investopedia Definition of Sale: Sale