Oracle INV Setups 0411

Oracle Apps Manufacturing & Distribution
Author
Jagan Vidyala
Freelance Consultant and Corporate Trainer
ORACLE SCM / MFG / ASCP / EAM Suites
10 Yrs of experience in IT consulting in
addition to 18 Yrs of domain experience in
Inventory Mgmt, Manufacturing, Global
Procurement, Sales & Marketing and
execution of Turnkey Projects.
jvidyala@gmail.com +91-91774-77013
Inventory Setups
1. Define System Items Key Flexfield (R)
2. Define Item Categories Key Flexfield (R)
3. Define Item Catalog Group Key Flexfield (R)
4. Define Stock Locators Key Flexfield (R)
5. Define Account Aliases Key Flexfield (R)
6. Define Sales Orders Key Flexfield (R)
7. Define Locations (O)
8. Define Employees (O)
9. Define Organization Calendar (R)
10.Define Organizations (R)
11.Define Organization Parameters (R)
12.Change Organizations (R)
13.Define Intercompany Relations
14.Define Receiving Options (O)
15.Define Picking Rules (O)
Inventory Setups
16.Define ATP Rules (O)
17.Define Planners (O)
18.Define Unit of Measure Classes (R)
19.Define Unit of Measure (R)
20.Define Unit of Measure Conversions (O)
21.Define Subinventories (R)
22.Define Stock Locators (O)
23.Define Item Attribute Controls (R)
24.Define Categories (R)
25.Define Category Set (R)
26.Define Default Category Sets (R)
27.Define Statuses (R)
28.Define Item Catalog Groups (O)
29.Define Item Types (O)
30.Define Item Templates (O)
Inventory Setups
31.Define Items
32.Define CrossReference Types (O)
33.Define Item Delete Constraints (O)
34.Define Cost Types (R)
35.Define Cost Activities (O)
36.Define Material SubElements (O)
37.Define Material Overheads (O)
38.Define Default Material Overhead Rates (O)
39.Define Freight Carriers (O)
40.Define Organization Shipping Network (O)
41.Define Shipping Methods (O)
42.Define Movement Statistics Parameters (O)
43.Define Economic Zones (O)
44.Define Account Aliases (O)
45.Define Transaction Source Types (O)
Inventory Setups
46.Define Transaction Types (O)
47.Define Transaction Reasons (O)
48.Define Purchasing Options (O)
49.Define Accounting Periods (R)
50.Request Interface Managers (O)
51.Set Profile Options (R)
52.Define Container Types (O)
53.Define Commodity Codes (O)
54.Define Customer Items (O)
55.Define Customer Item Cross References (O)
56.Define Notification List
57.Define Shortage Parameters
58.Define Kanban Pull Sequences
Item Category
Sequence of Steps for Item Category
Define Structure
Define Segment
Define Value Set
Define Value
Define Category Codes
Define Category Sets
Assign Items to Category Codes
List the items belonging to a
particular Category
Assign Default Category Set
Category Set
Master Level: Item assigned to this
category set has the same category
value in all organizations where it is
assigned.
Org Level: Item assigned to this
category set may have a different
category value in each organization
where it is assigned.
Item Category Set
Allow Multiple Item categories Assignment:
Enable this feature, to assign an item to multiple
categories within a category set.
For example, you may define a Hazard category set.
In this case, an item may be assigned to both the
Poison and Corrosive categories.
Enable this feature to create cartonization groups.
Note: For cost mgmt purposes, Oracle recommends
having a separate category set, with this feature
disabled, for costing fixed assets. Costing functionality
does not permit an item to be associated with multiple
categories within a category set.
Item Category Set
Enforce List of valid categories:
If this feature is not enabled, an item can
be assigned to any category defined that
uses the same flexfield structure as this
category set.
If this feature is enabled, an item can be
assigned only to those categories defined
as valid categories for this category set.
The Category sets are displayed as LOV in
Purchasing module while creating a PO in
enter PO window.
Category Set
Category Set
Define Locations
Define names and addresses for the
locations to use within the orgs and
Inventory Organizations.
Inventory uses locations for billing,
requisition, receiving, shipping, and
employee assignment.
Indicate by way of check boxes,
whether the location is a ship-to-
site, office-site, receiving site, bill-
to-site, and internal site.
Define Calendar
A workday calendar defines the valid
working days for manufacturing org,
and consists of repeating days on and
off and exceptions to that pattern.
Specifies start and end dates and the
weekend schedule for each calendar.
Define as many workday calendars
and assign them to any number of
orgs, and any number of orgs can
share a calendar.
Define Calendar
Apply exception to the workday calendar
by specifying individual days, loading
them from an exception template, or
copying a set of exceptions from another
calendar.
Specify any number of shifts to workday
calendar. Each shift can have different
weekend schedule and a list of specific
work interval start and end times. Shifts
inherit workday exceptions and patterns
from the base calendar. Specify exceptions
that can over ride and add to the base
calendar.
Define Employees
In Inventory employee information is
used primarily to record who perform
cycle count and physical inventory
count transaction.
Employee will be defined in HR
module if already implemented,
otherwise could be defined in
Inventory module.
Define ATP Rule
Available to promise rule define supply &
demand sources, time fence parameters and
calculation methods.
Accumulation Available: Determines a
periods excess quantity, and carries forward the
available quantity for future demand.
Backward consumption: ATP checks prior
periods for availability if a period has insufficient
supply for existing demand, and used with
Accumulation Available.
Forward Consumption: Determines if the ATP
calculation can match existing demand to supply
in future periods.
Define ATP Rule
Past Due Days: ATP does not include any demand and
supply orders with a due date before this time fence.
Infinite Supply: Use this time fence to specify the end
of your ATP horizon. ATP considers any demand that
falls beyond this time fence as available.
Cumulative manufacturing lead time
Cumulative total lead time
Item total lead time
Userdefined time fence
Demand Class:
Supply & Demand Source: Choose a supply and
Demand source for ATP Rule, determine which source
to use for calculation. The supply on non-manufacturing
day will be considered available on next working day.
Demand Sources -
Define Picking Rules
Picking rule is assigned to an item to define
the priorities that Inventory uses to pick units
of that item for sales order.
Specify the sources and prioritization for
subinventories, lots, revisions, and locators to
be used when the item is pick released.
Specify none for any of the criterion for
inventory to ignore while picking.
Define unique picking rule for each item, or
use generic picking rule for the org.
Define Forecast Rules
Forecast Methods:
Focus
Statistical
Focus: Uses focus forecasting algorithms, it
test the selected item against a number of
techniques and chooses the best one to
forecast future demand.
Statistical: Uses Exponential smoothing,
trend and seasonality algorithms to forecast
demand.
Define Forecast Rules
Alpha smoothing factor should be between
0-1, 0 indicates more weight to the past
demand and 1 indicates more weight to
current demand.
Trend Model: If this model is selected as
base perform smoothing as upward or
downward trend in demand.
Alpha x Forecast + (1-Alpha) x Actual Demand
Seasonality Model: It produces more even
pattern of seasonal demand from period to
period. Value of 2 indicates the demand will
double in that period due to seasonal
factors.
Define Organization
Inventory Org track inventory transactions
and on-hand balances that manufactures
and distributes parts and products.
Choose an org which has been classified as
an inventory org in order to run any of the
following application: INV, BOM, ENG, WIP,
MS/MRP, CPP, and receiving functions in PO.
Define item in single org as item master
org. Child orgs refer to the item master for
item definition. Once Item has been defined
in the master Org, it can be enabled or
assigned to any of the other orgs.
Define Organization
To define Inventory Org, you need to specify
org name, org type, and three-character
abbreviation for the org. The unique code is
used to identify the org.
Before defining the Organization, you need
to understand item definition process.
Specify which ledger is associated with Org.
Specify which manufacturing calendar is
associated with the Org.
In multi-Org setup you must specify OU
even though it not required.
Organization Parameters
Org Parameters: These are the source for default
inventory, costing, control, and movement for an org.
This section outline some of the areas and associated
parameters data needed to be specified for an
inventory org.
Demand Class: These are defined to group similar
customers or sales orders and these are used as a
means of forecasting different sources of demand
separately.
Move Orders: Requests for the movement of material
with in single org. It allows planners and facility
managers to request movement within a ware house
or facility for the purpose of replenishment, material
relocation and quality handling. It can be handled
manually or automatically depending on source.
Operating Unit/Inventory Org
Telco - KA
Inventory
Org
Telco - TN
Inventory
Org
Telco - AP
Inventory
Org
Telco
South - OU
Telco - KE
Inventory
Org
Item Master
Inventory Org
M3
Inventory Org
M2
Inventory Org
M1
Item Master
V1
Defined at Inventory Org level
M1 Bearing 6210 B-123789
M2 Bearing 6210 B-435210
M3 Bearing 6210 B-890765
Defined at Item Master Org Level
Bearing 6210 B-987654
M1 B-987654
M2 B-987654
M3 B-987654
Item Attributes
Item Attributes count in Oracle Apps
ver. 11 158 Attributes
ver. 11i 177 Attributes
ver. R12 270 Attributes
Item attributes are collection of
information about an item.
Item attributes are grouped and
displayed in tab names in Item Master
and Org Item; Inventory, BOM,
Purchasing, WIP, OM, etc.
Status Attributes
Status attributes indicate the status of item.
and enable and disable the functionality.
Customer Order Enabled
Internal Order Enabled
Purchasable
Invoice Enabled
Process Execution Enabled
Recipe Enabled
Build in WIP
Stockable
BOM Allowed
Transactable
Item Defining Attributes
Identifies the nature of an item.
What designates an item as an
engineering item is the attribute
engineering item, but what controls the
functionality of the item are the collection
of attributes that describe it.
If item defining attribute is enabled, the
item is automatically assigned to the
default category set of the corresponding
functional area.
Item Defining Attributes
Functional Area Item Defining Attribute
Inventory Inventory Item
Purchasing Purchased/Internal ordered
Cost Mgmt Costing Enabled
Engineering Engineering Item
Order Mgmt Customer Order Item
Service Serviceable Product
Item defining and Status attributes are
interdependent.
Item Attributes Control
Controlled at ORG Level
Preprocessing Lead Time Source SI
Processing Lead Time WIP Supply SI
Post Processing Lead Time Sales Account
Fixed Lead Time WIP Supply Locator
Variable Lead Time Expense Account
Cumulative Mfg Lead Time Source Org
Cumulative Total Lead Time Planner
Cost of Goods Sold Account Encumbrance Account
Planning Exception Set Engineering Item
Controlled at Master Level
Base Model
BOM Item Type
UOM - Class
UOM Class Represent groups of UOM with
similar characteristics.
Each UOM defined must belong to a UOM class.
Each class has a base UOM, and is used to
perform conversions between UOM in the class.
Generally one of the smaller unit is considered
as base unit, CFT for Volume.
UOM Class Base UOM Other UOM
Quantity Each Dozen, box
Weight Gram Pound, KG
Time Seconds Minute, Hour
Volume Cubic inch CU.FT, CU.CM
Unit of Measure
UOMs are used by a variety of functions and
transactions to express the quantity of items.
Primary UOM: It is the stocking UOM for an
item in a particular organization, and is an
item attribute that is specified while defining
item.
Dual UOM: if the item is under dual UOM
control, system stores inventory in both the
primary and secondary units of measure.
UOM - Conversions
UOM conversions are numerical factors that
enabled, to perform transactions in units
other than the primary unit of the item
being transacted.
Types:
Standard: A conversion common to any item.
Intra Class: A conversion for a specific item
within a UOM class.
Inter Class: A conversion for a specific item
between UOM classes.
UOM - Conversions
UOM classes, UOM, and UOM conversions
are not organization-specific.
Inventory transactions and on hand balance
supports decimal precision to 5 digits.
WIP supports decimal precision to 6 digits.
Pick UOM: The pick area stores a particular
pack configuration; cases, cartons, units. The
UOM configured for the pack configuration is
know as Pick UOM.
UOM - Conversions
Lot specific conversions:
It is enabled to perform a specific inter-
class conversion for a given lot. This
enables to establish more granular
control over the transactional quantities
of a lot. GL = 15 Pounds
The system creates a lot conversion only
if the item is under Dual UOM control.
Sub-Inventory
Asset SI: Subdivision of an org, represent a
physical storage area by logical grouping of
items, where qty balances and values are
maintained for asset items.
Expense SI: It is a logical receiving location
to receive expense items.
PAR level Planning: [Periodic Automatic
Replenishment] Enable to assign an item to
multiple locators within a SI, each with a
different PAR level. However cannot assign
multiple PAR levels to the same locator.
Min-Max planning cannot be performed if
PAR Level Planning is enabled.
Miscellaneous Transactions
To load all item on-hand quantities at the
start of implementing.
To issue items to individuals, projects or
department; or to issue damaged items
to expense accounts such as scrap.
To perform the receipts for items that
were acquired by other than a PO.
Issue material to research and
development group or an accounting
department.
Serial Number Triggered: Indicate if
inventory information should be defaulted
from the serial number.
Item Relationship
Item relationships are a way of defining
acceptable substitutes for items.
Receive a substitute item if supplier
cannot ship the original item on the PO.
Except in Oracle Purchasing, these
relationships are for inquiry and reporting
purposes only.
To receive a substitute item correctly, you
should ensure that the ordered item and
the substitute item share the same base
UOM.
Define Change Organization
When sign in to inventory transaction,
the system prompts to pick an org,
then associates the transaction to the
inventory org.
When first setup the inventory module
no inventory org is defined. To
associate to correct org either log off
and then log back in pick your org or
perform change org transaction.
Intercompany Relations
Define Intercompany Relations, to
establish relationship between two
operating units (Shipping and Selling
orgs) in a multiorganization
environment.
Define Receiving Options
Specify which receiving options are
applicable when receiving the items
from other organizations.
These are default receiving options for
the organization. However most of
these options can be overridden at the
supplier, purchase order, or item level.
Lead Time Management
Pre-Processing Lead Time
Processing Lead Time
Post Processing Lead Time
Total Lead Time
Cumulative Manufacturing Lead Time
Cumulative Total Lead Time
Pre-Processing Lead Time:
The time required to prepare a purchase
documents to procure an Item.
Processing Lead Time:
The time required to manufacture or
procure of an item.
Post-Processing Lead Time:
The time required to make a purchased
item available in inventory.
Total Lead Time:
[Fixed LT + Order Qty x Variable LT]
Fixed Lead Time:
The time taken to prepare initial set of
assembly or production Line.
Variable Lead Time:
The time taken to manufacture or
assemble an individual item.
Cumulative Manufacturing Lead Time:
The total time required to make an item if
all the raw materials are available in stock
but had to make all subassemblies level
by level.
Cumulative Total Lead Time:
The total time required to make an item if
no inventory existed and had to order all
the raw materials and make all
subassemblies level by level.
Cumulative Lead Time
Sub Assembly: B
Manufactured
Assembly: A
Manufactured
Component : C
Purchased
Cumulative Total Lead Time
Pre - Processing Lead Time
Post - Processing Lead Time
Inter-Org Transfer without ISO
Able to Transfer items between Orgs only
if Shipping Network is defined between the
orgs involved.
Transaction Types: Direct / Intransit
FOB: Receipt / Shipment
Receipt Routing: Direct / Standard /
Inspection Required
Inter-org Transfers
Define Location
Define From and To Orgs
Define Item in IMO
Assign Item to From and To Orgs
Define Subinventory for From and To Org
Verify Interface Manager, Costing Mgr
should be Active
Open Inventory Accounting Period
Setup Receiving Parameters for Receiving
Org
Define Shipping Network between Orgs.
Inter-org Transfers
Ensure on-hand Qty is available in From
Org.
Perform Inter-Org Transfer with Receipt
Routing as Direct
Receive the item in Receiving Org
Verify on-hand quantity
Repeat the transaction with Receipt
Routing as Standard
Repeat the transaction with Inspection
Required as Receipt Routing
Inventory Controls
Describes how individual items or group of
items can be tracked when transactions are
performed. OI is capable of handling four
different types of controls on the items that
are assigned to an Org.
Revision Control
Locator Control
Lot Control
Serial Control
Inventory Controls
Revision Control: Adopted for identifying a
modified item. Change to Revision Control is
not possible when item has on-hand
quantity.
Locator Control: Adopted to find out where
exactly the item is lying in a store. Normally
adopted for items smaller in Size. The
locators are defined as Row, Rack and Bin.
You can customize item Locator Key flexfield
as per client requirement.
Inventory Controls
Lot Control: Adopted to identify a group of
items. Each truck load of Cotton is
considered as one lot.
Serial Control: Adopted when tracking of
individual pieces of an item is required.
Inventory Planning
Min-Max Planning
Reorder Point Planning
Replenishment
Kanban
Min-Max Planning
Min-Max planning is generally adopted for
items, which are regularly purchased. The
consumption of these types of items are
more or less same every month. Minimum
and maximum stock level can be fixed for
these items.
Buy item generates purchase requisition
automatically when item on-hand qty falls
below minimum level.
Make items generates WIP Discrete Jobs
When on-hand qty falls below minimum
level.
Min-Max Planning
Org Level Min-Max Planning
When min-max plan is set at the Org
level, OI looks at inventory balances, POs
and WIP jobs as supply and sales order
and WIP job component requirements as
demand.
SI Level Min-Max Planning
When min-max plan is set at the SI level,
OI looks at inventory balances, PO and
internal order supply, and optionally, sales
order demand for a single SI only.
Min-Max Planning Org Level
Net Quantity on Hand + On Order =
Total Available
Net Quantity on Hand is the sum of the
quantities on hand for the item across all
the nettable SI within an Org.
On Order is the sum of open purchase
orders, requisitions, internal orders and
WIP jobs scheduled for receipt on or
before the Supply Cutoff Date.
Min-Max Planning - SI Level
Total Available = Qty on Hand + On Order
Quantity on Hand is the qty in the SI
specified in the Min-Max Planning.
On Order is the sum of open POs,
requisitions, and internal sales orders
scheduled for receipt to the specified
SI prior on or before the Supply
Cutoff Date.
Min-Max Planning steps
Setup the following attributes for the Item.
Purchasing Tab: Enter List Price
General Planning Tab: Select Min-Max
Planning as Inventory Method, Make or
Buy: Buy, enter Min/ Max Qty, enter Order
Qty, select Supplier as source.
Order Mgmt Tab: Enable Internal Ordered
Lead Time Tab: Enter values for
Preprocessing, Processing, and Post
Processing lead time.
RPP uses demand forecasts to decide when to
order a new quantity to avoid dipping into
safety stock.
Suggests a new order when the available
quantity drops below item's safety stock +
forecast demand during its replenishment.
The order quantity is an economic quantity
that minimizes the total cost of ordering and
carrying inventory.
OI automatically generate requisitions to
purchasing that a replenishment order is
required to supply.
Safety stock:
A floor or base level of inventory from which
Inventory performs all planning. The item is
planned as if the safety stock quantity for the
period is zero inventory balance.
EOQ = 2 x Annual Demand x Order Cost
Carrying Cost % x Unit Cost
Note: RPP is possible only at Org level.
Steps involved in this planning
Set the Required Item Attributes
Define a Forecast Set / Forecast / Assign
the Item to Forecast
Define or Generate Safety Stock
Run the Reorder Point Report
Run Requisition Import from Purchasing
Get Requisition Number from the
Requisition Summary Window with date
Range or Item Name
Replenishment Planning
Used to replenish Expense SI. This feature
can be used for replenish Asset SI also.
Even if perpetual on-hand balances are not
maintained in non-tracked SI, this method
can use the replenishment counting system
to plan your inventories.
This may be ideal for replenishing free stock
items that stored on the production floor, or
office supplies kept in departmental cabinets.
Kanban Planning
Kanban is a means of supporting pull-based
replenishment in manufacturing systems.
It is a self-regulating pull system that leads to
shorter lead times and reduced inventory.
They are typically applied to items that have
relatively constant demand and medium-to-
high production volume.
It represent replenishment signals that are
usually manual and highly visible, such as a
color-coded card that moves with the material,
a light that goes on when replenishment is
required, or an empty bin that is moved to the
supply location to trigger replenishment.
Kanban Planning
The system includes an API that can be called by
external systems, such as bar code readers, to
trigger replenishment signals.
Kanbans can be replenished from an external
supplier or an internal organization.
The four types of kanbans available in the system
trigger transactions that pull material from
different replenishment sources.
Inter Org: Creates internal requisitions.
Intra Org: Triggers material movement from a
SI in the same organization.
Production: Creates a production job (discrete
job, repetitive schedule, or flow schedule).
Supplier: Creates a purchase requisition.
Kanban Planning
Supply Status Code
New: The kanban has just been created and is not
yet part of the replenishment chain.
Empty: The kanban is empty and a replenishment
signal has been generated.
Wait: The kanban is waiting until the minimum
order quantity has been met by the aggregation of
cards.
In-Process: For the Supplier source type, the
purchase order has been approved. For the Inter Org
source type, the internal requisition has been
approved.
In-Transit: Material is in transit from Supplier end.
Full: The kanban has been replenished.
Kanban Planning
Sequence of Steps involved
Define a Kanban Pull Sequence
Select Item, SI, Kanban Size, enter
Qty, enter Kanban Card Qty, Lead Time,
Allocation %, and Safety Stock.
Generate Cards
Choose a Card and Replenish
Run Requisition Import from Purchasing
Query Req. Number from Req.
Summary with Item as reference.
Accuracy
In any Org due to missing or
inaccurate entries of transaction,
there will be differences in the on-
hand and the actual quantities in the
Sub-Inventory.
To correct the differences the items
are physically counted and the on-
hand quantity is corrected
periodically, this is called as stock
taking.
Accuracy
The two types of stock taking are
Cycle Counting
Physical Inventory
Cycle Counting: The periodic counting of
individual items throughout the course of
the year to ensure the accuracy of
inventory quantities and values. High
Value items are placed in this method.
Physical Inventory: Count all the items
physically Half Yearly or Yearly.
ABC Analysis
ABC analysis determines the relative value of a
group of inventory items based on a user-
specified valuation criterion.
"ABC" refers to the rankings assigned to items as
a result of this analysis, where "A" items are
ranked higher than "B" items, and so on.
It is used to compile and drive cycle counts,
where high value (A items) items are very
frequently counted, items of lower value less
frequently, and items of lowest value very
infrequently.
A Class Items 80%
B Class Items 15%
C Class Items - 5%
ABC Analysis
Define a ABC Compile
Define ABC Classes
Define ABC Assignment Groups
Assign Classes to ABC Assignment Group
Assign Items to Various Classes within a
group
Update item assignments
Purge ABC information
Cycle Counting
Define a cycle count
Define cycle count classes
Define cycle count items
Generating Automatic Schedules
Generating Cycle Count Requests
Entering Cycle Count Quantities
Approving Cycle Count Adjustments
Physical Inventory
Define a Physical Inventory
Take a Snapshot of System On-hand Qty
Generate Physical Inventory Tags
Print the Generated Tags
Attach the Tags to its respective item
Count the Actual Quantities and enter
them in the respective tag
Collect all the Tags
Enter the Quantities recorded in the Tag in
the System
Approve the Physical Inventory
Launch Adjustments

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