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IR & ISO - Internal Sales Order Cycle with Setup Steps in R12.

Defini on:

Internal Requisi on/Internal Sales Order provide the mechanism for reques ng and transferring material from one inventory organiza on to
other inventory organiza on.
Below is the process flow which has to be followed in each module in order to execute Internal Sales Order:

Mandatory Setups:

Inventory Setups:

1. Create two different Loca ons

2. Create two Inventory Organiza ons
3. Link the Inventory Organiza ons into Internal Loca ons
4. Create at least one Sub-inventory in each of the Inventory Organiza ons
5. Define Shipping Networks
6. Create Internal Item - Enable the A ributes "Internal Ordered" and "Internal Order Enabled"

Purchasing Setups:

1. A ach the Internal Order Type in Purchasing Op ons

2. Define Document Types for Internal Requisi ons
3. Define Approval Hierarchies for Internal Requisi ons
4. Define Approval Groups and Approval Assignments
5. Define the Receiving Op ons for the Des na on Organiza on

Order Management Setups:

1. Create Internal Transac on Type

2. Define the Document Sequence / Assignments
3. Create Internal Customer
a. A ach the Order Type, Internal Loca on and Organiza on into Customer Ship To site
4. Define Shipping Parameters

Let’s see each step in detail,


Let’s create two Inventory Organiza ons and two different Loca ons first.
(You can also perform copy org from previously created org by invoking Inventory → Setup → Organiza on → Organiza on Copy → Maintain
Or create a new inventory from Inventory → Setup → Organiza on → Organiza on
Here we have created 2 Inventory Organiza ons
First Inventory Org Name : FIRST INVENTORY Sub-Inventory Name: Good Down
Second Inventory Org Name : SECOND INVENTORY Sub-Inventory Name: Store Room
If you are crea ng new inventory organiza on then make sure you are providing all the details in Receiving Informa on, Inventory informa on,
Accoun ng Informa on and Shipping Networks. If you copy the Inventory Organiza on from an exis ng Organiza on then system will copy all
these details automa cally as like as the model organiza on.
Open the Periods in Inventory, Purchasing, and General Ledger for the current month.

Now let’s add the inventory to the loca on created by clicking on other details as below.

Invoking: Inventory → Setup → Organiza on → Loca on

Item Crea on
Invoking: Inventory → Items → Master Items

Name: ITEM 1
Unit Price: $15
Purchasing template applied
Internal Ordered Check box enabled in Order Management.
Assigned to all inventory
Shipping Networks
Inventory → Setup → Organiza on → Shipping Networks

Now let’s input the Source and Des na on Inventories to transfer the items.


From & To inventories to be men oned

Internal Order Required Checked
Primary Accounts number

Save and exit the dialog box, now switch to Order Management Responsibility.


Here let’s create a separate transac on type

Invoking: Order Management → Setup → Transac on Type → Define
Sales Document Type: Sales Order
Fulfillment Flow: Order Flow generic
Here I have a ached Line Type from the one I previously created and assigned (Int_Sales_Transac_Line).
Validate the Workflow
Document Sequence & Assign

Let’s create a new document sequence by Invoking: Order Management → Setup → Documents →Define

Here Sequence name is New SEQ and Sales Order # will be generated star ng from 3600.
And assign the sequence by selec ng Order Management → Setup → Documents →Assign


Create a new Customer by selec ng Order Management → Customers → Standard

I have created a new customer as PAYPAL below by filling up the Legal Address.
Make sure you create the customer type as Internal not External
Query again the customer and follow the below steps.

Click on details from below.

Click on details again,

Select Business Purpose tab

Click on details which indicate both Ship to & Bill to Op on you created before.

Now under here in order type select the transac on type you created and fill in the Internal Loca on and Internal Organiza on respec vely as

Save the page and switch the responsibility to Purchasing.


Document Types:

Before proceeding further let’s make sure the document type is perfect.
Invoking: Purchasing → Setup → Purchasing →Document Types
Select the line Requisi on Internal
And enter the below informa on correspondingly.

The default Hierarchy is the one which you created before for purchasing setup.

Crea ng Requisi on:

Let’s create a REQ, Invoking: Purchasing → Requisi on → Requisi ons

Enter the item which we created before
Quan ty # 6
Fill up the Source and Des na on inventory as below.
Req # generated 4019
Approve the Requisi on and query the REQ in Requisi on Summary as above, a er making sure the REQ has been approved run the report
Create Internal Orders from View → Request → Submit a New Request → Create Internal Orders.

STEP 4: Order Import & Perform O2C Cycle

Now let’s switch the responsibility to Order Management and perform Order Import

Invoking: Order Management →Orders, Returns → Import Orders → Order Import Request
Select the respec ve Opera ng Unit
Order Source as Internal
Order Reference # 4019 (Req created before)
This process will run two concurrent programs and we have to make sure if the program "Order Import Child Req 1" is completed successfully by
viewing the output.
Here No of orders found is 1, Imported 1, Failed 0

Now query the Internal Sales Order number in Order organizer with Order Source as Internal and Order Source Reference as "Internal Requisi on
Number" from Orders, Returns > Order Organizer as below.
Below the order number is generated with sequence 3600, as we updated while Document Sequencing.

In case, if error emerges and unable to pull the order number through order organizer do correc on by
Invoking: Order Management →Orders, Returns → Import Orders → Correc on
Men on the request ID from which the program ran and select find, the dialog box will prompt the error and follow the instruc on for solu on.
Now query the order number in sales order and perform O2C cycle.

Now if you check the On hand quan ty for the First Inventory it will be displayed as below.
A er performing receiving in Purchasing or Inventory responsibility, if you check the On hand quan ty in SECOND INVENTORY it will be displayed
as below.


Hence the item from the First Inventory has been transferred to the Second Inventory respec vely.
The other method of transferring is use of "Inter Organiza on Transfer" Feature & the reason why we are using this is,
IR and ISO provide us with a way to transfer material where we can introduce an approval mechanism for ordering material, and also
track the transac on through documents. These features are not available in the Inter Organiza on Transfer u lity.