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INVENTORY

The purpose of Oracle inventory application is to assist an organization in defining and


tracking inventory items or parts. It helps the organization keep track of as how many of a
particular part are on hand and where the parts are located. It provides support for
recording the receipt and disbursement of items as well as the physical and cyclical
counting of those items.
Inventory items within an organization are stored in locations called subinventories. In
these subinventories, you can specify storage locators that can consist of aisles, rows and
bins. You can specify that an item be lot or serial number controlled or have no controls.
The setup process of Oracle Inventory consists of number of steps wherein you define
such things as the structure of your organization and your inventory items. These setup
steps customize the Oracle Inventory application to the unique requirements of the
organization.
Interaction with other modules
General Ledger

Order Entry

Purchasing

MRP

WIP

External Systems

Inventory

General Ledger

Order Entry

Purchasing
Bills of Material
WIP

Receivables Payables/Assets/
Payables

Required Setups : All activities are 1 time during implementation


1. Create calendar / define currency / locations / inv orgs: 1 time
2. Define Organization Calendar and Exceptions
3. Define the locations
4. Define Organization Inventory Parameters
5. Define the system items key flexifield: : 1 time
6. Define the item categories key flexifield: 1 time
7. Define the accounting aliases key flexifield
8. Define the item catalog group key flexifield: 1 time
9. Change to a Valid Organization
10. Define unit of measure classes and units of measure
11. Define subinventories
12. Define stock locators
13. Define Item Attributes
14. Define Categories and Category Sets
15. Define cost types
16. Open accounting periods
17. Set profile options
Creating a Set Of Books
Define the key accounting flexifield structure, segments, segment values and code
combinations. Define the fiscal calendar period types and periods. Enable currencies and
define rate types and conversion rates. Assign the set of books to the site or individual
responsibilities.
Define the System items Key Flexifield
The system items flexifield is sometimes called the item flexifield. This flexifield is an
Oracle Application Flexifield that contains the definition of the structure of your item or
part number field. We need to define whether item number is a single segment or multisegmented field and the length of each segment. To define the system item flexifield we
need to provide how many separate segments your item number has, length of each one
the separate segments and their sequence as well as the segment separator. What are the
segments that will be validated.
Defining the Item Categories Key Flexifield
A category is a logical classification of items that have similar characteristics. A category
set is a way of grouping together categories. We must design and configure the item
categories flexifield before defining the items because all items must be assigned to
categories. The tasks to define Item categories key flexifield are Define the flexifield
structure for the item categories flexifield. Define categories, category sets. Assign
default category sets for each functional area.
Define the item catalog group key flexifield
Oracle inventory enables you to create multiple catalog groups to aid in term
classification. Each catalog group can have its own set of item characteristics, called

descriptive elements. Define as many descriptive elements as necessary to describe the


items and specify whether an entry for the element is optional. Once the items are
cataloged we can search on one or more descriptive elements to assist in locating items
for order entry or group technology purposes.
Defining the Stock Locators Key Flexifield
A Stock Locator is a physical area within a subinventory where you store material such as
row, aisle, bin or shelf.
Define the accounting aliases key flexifield
The account alias flexifield is a key flexifield that allows you to use a shorthand label for
a general account number combination when entering Inventory transactions. This can
reduce keystroke entries as well as the chance of entering the wrong account numbers for
your inventory transactions. In addition to define the structure of flexifield and any
applicable value sets we need to freeze and compile the flexifield definition.
Define the locations
Define names and addresses for the locations we use within the organization as well as
for the location of inventory organization itself. For each location that we are going to use
enter the name, organization, description, address style and all of the address data lines
and fields such as city, state and Zip. We also need to indicate, by way of check boxes
whether the location is a ship-to-site, office site, receiving site, bill-to-site, and internal
site.
Navigation:
Inventory > Setup > Organizations > Locations
Define Organization Calendar and Exceptions
A workday calendar defines the valid working days for a manufacturing organization and
consists of a pattern of repeating days on and off and exceptions to that pattern. Specify
the start and end dates and the weekend schedule for each calendar. Define any member
of workday calendar and assign them to any number of organizations and any number of
organizations can share a calendar. We can apply exceptions to the workday calendar by
specifying individual days, loading them from an exception template, or copying a set of
exceptions from another calendar. For any workday calendar we can also specify any
number of shifts. Each shift can have a different weekend schedule and a list of specific
work interval start and end times.
Navigation:
Template:
Inventory > Setup > Organizations > Calendar Exception Templates
Define Organizations
An inventory organization is an organization for which you track inventory transactions
and on-hand balances and that manufacture or distributes parts and products. Some

examples of organizations are manufacturing plants, warehouses, distribution centers and


sales offices. Before defining the organizations we need to understand the item definition
process in oracle inventory. We define items in a single organization sometimes referred
to as the item master for item definition. Once an item has been defined in the master
organization it can be enabled or assigned to any of the other organizations.
To define the inventory organization we need to specify the organization name, the
organization type and a three character abbreviation for the organization. This unique
code is used to identify the organization with which we want to work. In addition we
have to specify which set of books the organization will be tied to.
Navigation:
Inventory > Setup > Organizations > Organizations > Click on New
Define Organization Inventory Parameters
A number of inventory, costing, control and movement parameters are associated with an
inventory organization. We need to specify various inventory parameters like the master
organization where items will be initially defined. The workday calendar for planning,
scheduling and determining days to perform cycle counts. Indicate whether the negative
inventory balances will be allowed. Choose some of the settings for locator control.
Specify the costing information and the default general ledger accounts to be associated
with this organization. For the revision, lot and serial number parameters specify the
information for some of the areas. Supply ATP, Pick and item sourcing parameters. We
must also provide inter-org information parameters to correctly transfer charges between
organizations when items are moved between organizations.
Navigation:
Inventory > Setup > Organizations > Parameters
Change to a Valid Organization
When we sign into an oracle inventory transaction session, we need to pick an
organization. Oracle then associates the session with this inventory organization. When
we first setup the inventory application there are no inventory organizations defined
Navigation:
Inventory > Change Organization
Define unit of measure classes and units of measures
Oracle inventory provides a flexible way of defining and transacting items in their units
of measure. The process of defining units of measure to use in oracle inventory involves
several steps such as
1. Define units of measure classes and the base unit of measure (UOM) for each
class.
2. Define multiple units of measure for each unit of measure class.
3. Define conversions between units of measure of the same and of different classes.
Navigation:

Inventory > Setup > Unit of Measures > Unit of Measures


Define subinventories
A subinventory is a sub division of an organization, representing either a physical area or
a logical grouping of items. All inventory transaction activity must reference a
subinventory, and all material within an organization must be stored in a inventory. It is
therefore required that you define atleast one subinventory. For each subinventory you
need to define both inventory and accounting information. Some of the inventory
information that we need to provide when defining a subinventory includes
A subinventory name
Whether the inventory is quantity tracked
Whether items are valued as assets
Whether items in this subinventory will be used in ATP calculations
Whether items will be used in available to reserve calculations.
Whether to include on-hand item quantities in the planning progress.
If locator is determined at subinventory level then we have to specify a type of locator
control for the subinventory.
Navigation:
inventory >setup>organization>subinventory
Defining Stock Locators
A stock locator is a physical area within a subinventory where you store material (such as
a row, rack, aisle, bin or shelf). We can turn on locator control for the whole organization,
for a specific subinventory, or for a particular item. Item quantities can be tracked by
locator. We can restrict an item to a specific locator. The tasks in the process to define a
specific stock locator are
1. Enter the locator and its description
2. Enter the subinventory where the locator resides.
Navigation:
Inventory > Setup > Organizations > Stock Locators
Define Item Attributes
Each item has a number of attributes such as lead time, cost, unit of measure, item status,
revision control, and so on. You need to specify for each of these attributes the level at
which oracle inventory will maintain the item attribute, the item master level or at the
item/organization level. We can specify that a particular item attribute such as unit of
measure, be maintained at the item master level.
Navigation:
Inventory > Set Up > Items > Attribute Controls
Define Categories
One of the key strengths of the Oracle Inventory application is the capability to allow the
user to attach several user-defined categories to an item and inquire and report on the

items using these categories. After defining the item categories key flexifield, the next
step in the category definition process is the definition of the names for each one of the
categories. To define a new category, you have to specify both the category flexifield
structure name and a unique category name.
Navigation:
Inventory > Setup > Item > Categories > Category Codes
Define Category Sets
To define the Category sets provide the following information
A unique category set name
A category flexifield structure
A control level of Master Level
A default category, which is the value that Oracle Inventory assigns to an item
when it is initially created.
Indication of whether to enforce a list of valid categories.
A list of valid categories.
Define cost types
Before entering item costs we need to define cost types. A cost type is a set of costs used
for costs for future current, historical or simulation purposes. Oracle inventory comes
predefined with three cost types: frozen, average and pending.
Navigation:
Inventory > Costs > Item Costs
Open accounting periods
An accounting period must be open to be able to perform an inventory transaction. This
means that the inventory transaction must fall within the beginning and ending dates of
the open accounting period. First define the accounting periods in Oracle General Ledger.
Then before entering transactions in Oracle Inventory open an accounting period. Use the
Inventory Accounting Periods window to perform this function.
Navigation:
Inventory > Accounting Close Cycle > Inventory Accounting periods (Check whether
Period in which you are transacting is open)
Set profile options
Each of the oracle application has a set of profile options that allow you to indicate how
the application should access and process application information. In oracle inventory we
can indicate what the application used when creating, processing or transacting an
inventory item.

Defining the Organization Shipping Network


We can use the shipping networks screen to define the accounting information and the
relationships that exist between shipping destination organization. When we define a new
organization, the shipping information we specified in the organization appears by default
on the shipping networks screen. For each organization relationship, we specify an
organization whether it is a shipping organization, a destination organization, or both. We
also specify for each organization whether the shipping type is direct or in-transit.
Transactions:
Material transaction is general terms that represent material movement in a warehouse or
are manufacturing plant.
You can use a single transaction to transfer more than one item.
Inter Organization Transfer:
To move inventory items from one organization to another, you can use either direct or
in-transit shipment. You perform inter organization transfers on the inter organization
transfer form.
Prerequisites for inter organization Transfer:
Items you transfer must exist in both organizations although they can have different
attributes and control level (locator,revision, lot and serial number) settings.
Shipping Network:
The inter-organization shipping network form allows you to define accounting
information and relevant shipping information between inventory organizations.
The
relationship can be two-way or just one-way and these relationships are not item specific.
Direct Shipment:
The source and destination information are required at the time of the transaction. You
cannot perform a direct transfer of items that are not under
revision/lot/serial/number-control in the shipping organization if the destination
organization requires any of controls. If transfer type is direct, inventory is immediately
visible in the destination organization..
Navigation:
Inventory > Transactions > Inter-Organization Transfer
Choose type as Direct
In-transit Shipment:
In-transit shipment is typically is used when transportation time is significant or if you
require separate shipping and receiving steps The delivery location need not be specified
at the time of transfer transaction and only the source and freight information is only
required.
If the FOB (freight on board) point is set to receipt in the shipping network, the desti
nation organization owns the shipment after receiving the items. If it is set to shipment

the destination organization owns the shipment when the shipping organization ships it
and while it is in-transit. You can perform a in-transit transfer of items that are not under
revision/lot/serial/number-control in the shipping organization if the destination
organization requires any of controls.
Navigation:
Inventory > Transactions > Inter-Organization Transfer
Choose type as In-transit
On Hand quantity at the destination doesnt change automatically.For this we should
move to receipt and receive the items specifying the locator at the destination where the
items should be placed.
Sub-Inventory Transfers:
This transactions results in the movement of material between two locations with in the
organization. The locations can be either sub inventories or locators. You can transfer
material within your current organization between subinventories, or between two
locators within the same subinventory. You can transfer from asset to expense
subinventories, as well as from tracked to non-tracked subinventories. If an item has a
restricted list of subinventories, you can only transfer material from and to subinventories
in that list. Oracle Inventory allows you to use user-defined transaction types when
performing a subinventory transfer.
After performing sub-inventory transfers, check the on-hand quantity in both the subinventories using the On-hand quantity form.
Navigation:
Inventory > Transactions > Sub Inventory Transfer
Miscellaneous Transactions:
With a miscellaneous transaction you can issue material to or receive material from
general ledger accounts in your current organization. This allows you to issue material to
groups that are not inventory, receiving, or work in process such as a research and
development group or an accounting department. You can also make manual adjustments
to the general ledger by receiving material from one account to inventory, and then
issuing that material from inventory to another account.
You can use your user-defined transaction types and sources to further classify and name
your transactions. You can use this feature to issue items to individuals, departments, or
projects; or to issue damaged items to expense accounts such as scrap. You can perform
the receipts for items that were acquired by means other than a purchase order from a
supplier. You can also use this feature to load all item on-hand quantities when you start
implementing Oracle Inventory.
Navigation:
Inventory > Transactions >Miscellaneous transactions

Defining Lot and serial Number Information


You can assign either lot or serial number information to your inventory items. For those
items you have specified that your want to be under lot control, when you enter receipt or
issue transactions, you need to specify the lot control information for those items so that
the system will assist you in tracking the lots associated with the items.
Likewise, if you have specified serial number control for any of your items, you need to
specify the serial numbers for those items when you transact those items into and out of
inventory.
You can specify for each of your inventory items that you want the item to be lotcontrolled, to be serial-number-controlled, or to have no lot-or serial-number-control.
Cycle Counting
Cycle Counting is a procedure in which a selected list of items are physically counted to verify
the on-hand quantities of those items. Cycle Counting normally involves continuous counting of a
subset of inventory on a regular cycle, usually prioritized by ABC classification. For example,
you will count youre A items more frequently than your B or C items
The following are the steps followed in cycle counting.
1. Cycle Count Classes:

In this step we will enter cycle count classes in the Cycle Counting Classes form. We
also enter ABC classes to include in our cycle count. We can also enter approval and
hit/miss tolerances for our cycle count classes. For each class that is included in the cycle
count, enter the number of times per year we want to count each item in this class.
2. Including items in the Cycle Count:
We need to load items into our cycle count before we can schedule or count them. You
can either enter the items manually in the Cycle Counts form or automatically include
items based on an ABC group. You specify an ABC group from which to load your items
and all items in the ABC group you choose are automatically included in your cycle
count. The ABC classes for that ABC group are also copied into the current cycle classes
and the classifications of the included items are also retained.
3. Cycle Count Scheduling:
We can schedule Cycle Counts either automatically or manually. The number of items in
each cycle count class, the count frequency of each class, and the workday calendar of
the organization are used to determine the items that need to be included in the scheduled
cycle count. In case of automatic scheduling, the Cycle Count Enabled item attribute
should be set to Yes for the items you want to include in the cycle count, and automatic
scheduling should be enabled when we define our cycle count.
We can also manually schedule counts using the Manual Schedule Requests form.
We can request counts for specific sub inventories, locators, and items. We can manually
schedule specific items or all items in a sub inventory.

4. Count Requests:
After scheduling our counts, the processes Generate Count Requests should be submitted
to generate count requests. This process takes the output of the automatic scheduler and
the manually scheduled entries and generates a count request with a unique sequence
number for each item number, revision, lot number, sub inventory, and locator
combination for which on-hand quantities exist.
5.Cycle Count Approvals:
The Count Adjustment Approval Summary window allows us to approve the count
adjustments that require approvals. We can approve or reject the adjustment, or we might
ask for a recount.
Physical Inventory
Physical Inventory typically counts all the inventory in an organization once a year. In
other words it is a periodic reconciliation of physical inventory with system on-hand
quantity. The following are steps involved in physical inventory

Physical inventory takes a snapshot of inventory on-hand quantities at the beginning of


the process and all adjustments are made against the snapshot quantity.
Physical inventory generates unique tag numbers for recording counts
Physical counts are reviewed, and either accepted or rejected, as a whole.
Physical inventory has no predefined tolerances and it is the users decision to accept or
reject the entire count.

ABC Analysis:
ABC analysis provides us with the ability to rank our items according to a criterion and prioritize
the list of items so that we can establish better material control methods for items with a higher
rank. In order to perform the warehouse control activities such as cycle count , we make use of
this ABC analysis.
Steps followed in ABC Analysis:
ABC Compiles
The ABC analysis it defined in this ABC Compile form.