3

Cost Management Cloud

Supply Chain Financial Orchestration

Sreeni Devireddy
Director, Product Management
Safe harbor statement

The following is intended to outline our general product direction. It is intended for information purposes
only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or
functionality, and should not be relied upon in making purchasing decisions. The development, release,
timing, and pricing of any features or functionality described for Oracle’s products may change and remains
at the sole discretion of Oracle Corporation.
Statements in this presentation relating to Oracle’s future plans, expectations, beliefs, intentions and
prospects are “forward-looking statements” and are subject to material risks and uncertainties. A detailed
discussion of these factors and other risks that affect our business is contained in Oracle’s Securities and
Exchange Commission (SEC) filings, including our most recent reports on Form 10-K and Form 10-Q under
the heading “Risk Factors.” These filings are available on the SEC’s website or on Oracle’s website
at http://www.oracle.com/investor. All information in this presentation is current as of September 2019 and
Oracle undertakes no duty to update any statement in light of new information or future events.

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Agenda

• Why SFO?
• How does it work?
• How to configure?
• End-to-End Demo Flow

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Why SFO? : Global Operations

Global Operations

US Ledger • Internal Transfer

UK Ledger
• Global Procurement
• Global Sales Order Shipments
US1 Legal Entity US2 Legal Entity UK Legal Entity
• Global Supplier Drop Ships
Below Legal Entity = Yes Below Legal Entity = Yes Below Legal Entity = Yes
Inventory Profitability Tracking &
Legal Requirements
US1 Business Unit US2 Business Unit UK Business Unit
• Intercompany Invoicing
✓ Material Management ✓ Material Management ✓ Material Management
✓ Requisitioning ✓ Requisitioning ✓ Requisitioning • Transfer Pricing
✓ Purchasing ✓ Purchasing ✓ Purchasing
✓ Invoicing ✓ Invoicing ✓ Invoicing • Transfer of Ownership
✓ Payments ✓ Payments ✓ Payments
Profit ✓ Sales Profit ✓ Sales Mgmt ✓ Sales
Mgmt Profit
Center Mgmt
BU Center BU Center
BU BU
BU BU Trade Agreements
• Between Profit Center BUs
US1 INV Org US2 INV Org UK INV Org

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Why SFO? : Intracompany Operations

US Ledger
Inventory Profitability Tracking &
US Legal Entity Legal Requirements
• Intercompany Invoicing
Below Legal Entity = Yes Below Legal Entity = Yes • Transfer Pricing
• Transfer of Ownership
US1 Business Unit US2 Business Unit

✓ Material Management ✓ Material Management Challenges

✓ Requisitioning ✓ Requisitioning
✓ Purchasing ✓ Purchasing • Business Units Maintainability
✓ Invoicing ✓ Invoicing
Payments ✓ Payments
✓
✓ Sales ✓ Sales
• Configuration Overhead
Profit Mgmt Profit Mgmt
Center Center BU
BU
BU
BU
• Master Data Duplication

US1 INV Org US2 INV Org

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Enterprise Structure Model

US Ledger

US1 Legal Entity US2 Legal Entity

Below Legal Entity = Yes Below Legal Entity = Yes

Below Legal Entity = Yes Below Legal Entity = Yes

US1 PCBU US2 PCBU US3 PCBU US4 PCBU

Profit Profit
✓ Material Management ✓ Material Management ✓ Material Management
Center ✓ Material Management Center
Default LE BU BU
(Below Legal
Profit Profit
Entity = No)
Center Center
US1 INV US11 BU
US2 INV Org US3 INV Org BU
US4 INV Org
Org INV Org
Mgmt Mgmt Mgmt
Mgmt Mgmt
BU BU BU
BU BU

✓ Requisitioning ✓ Requisitioning
✓ Purchasing ✓ Purchasing
✓ Invoicing Shared Services BU ✓ Invoicing
✓ Payments ✓ Payments
✓ Sales ✓ Sales

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Enterprise Structure Model : InFusion Corp

US Ledger UK Ledger InFusion UK

Reporting
Currency (USD)
InFusion UK
InFusion US1 LE InFusion US2 LE
MFG LE InFusion UK
(101) (102)
(201) Secondary
Ledger
Mgmt
✓ Requisition BU
CA BU PC BU CA INV TX INV PC BU TX BU ✓ Procurement UK INV
(10) (20) US2 BU ✓ Requisition UK BU
Org Org ✓ Invoicing
✓ Invoicing Org
Profit Center BU Profit Center BU ✓ Payments PC BU
only MM enabled only MM enabled
✓ Requisition
Mgmt ✓ Purchasing Mgmt ✓ Purchasing
Default BU ✓ Invoicing BU ✓ Payments
LE ✓ Payments

SSC BU (Centralized Procurement)

Purchasing Services

Global Procurement Services

Global Procurement Services

China Ledger
InFusion China
LE China BU
(301)

Global Procurement Center (no physical inventory)

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SFO – Orchestration Flow

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SFO Flow: Internal Transfer

Shipping BU Receiving BU Supply Chain Orchestration Flow – Internal Transfer

CA PCBU TX PCBU

• Business Process Type = Internal Transfer

I/C AP AR Invoices
$120 USD • Shipping BU = CA PCBU
CA INV Org TX INV Org • Receiving BU = TX PCBU
• Transfer Price = 20%

Item Cost = $100 USD

• Transfer of Ownership = Shipment / Receipt
• Track Profit in Inventory = Yes
Issue Receipt & Put Away
I/C COGS & Inventory = $100 USD Inventory & I/C Accrual = $120 USD • Intercompany Invoicing = Yes

Intercompany AR Invoice Intercompany AP Invoice

I/C Receivable & I/C Revenue = $120 USD I/C Accrual & I/C Payable = $120 USD

Profit Item Cost References

$120 - $100 = $20 USD $100 (Material) + $20 (PII) = $120 USD ✓ Cost Accounting Events and Distributions
✓ Cost Accounting Examples

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 SFO Flow: Global Procurement

Receiving BU I/C AP AR Invoices Sold To BU

$120 USD Logical Receipt & Issue
Requisition Purchase Order I/C COGS & Accrual = $100 USD
(US PCBU) (China PCBU)
Intercompany AR Invoice
Receipt & Put Away I/C Receivable & I/C Revenue = $120 USD
Supplier PO
Inventory (Dest Charge Account) & I/C Accrual = $120 USD
$100 USD
Supplier AP Invoice
Intercompany AP Invoice Goods Shipped Accrual & Liability = $100 USD
I/C Accrual & I/C Payable = $120 USD US INV Org Supplier
(in China)
Profit
Item Cost $120 - $100 = $20 USD
$100 (Material) + $20 (PII) = $120 USD

Supply Chain Orchestration Flow – Procurement

• Business Process Type = Procurement

• Receiving BU = US PCBU
• Sold To BU = China PCBU References
✓ Customer Connect: Replay
• Transfer Price = 20% (on PO price) ✓ Review of Distributions
• Transfer of Ownership = Receipt ✓ Cost Accounting Events and Distributions
✓ Cost Accounting Examples
• Track Profit in Inventory = Yes
• Intercompany Invoicing = Yes
Physical Route

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SFO Flow: Global Sales Order Shipment / Internal Drop Ship

Logical Receipt & Sales Issue

DCOGS & I/C Accrual = $120 USD Item Cost = $100 USD

Intercompany AP Invoice Sales Issue

I/C Accrual & I/C Payable = $120 USD I/C COGS & Inventory = $100 USD
Supply Chain Orchestration Flow – Shipment

Customer AR Invoice Intercompany AR Invoice

Receivable & Revenue = $150 USD I/C Receivable & I/C Revenue = $120 USD • Business Process Type = Shipment

Profit Profit
• Shipping BU = UK PCBU
$150 - $120 = $30 USD $120 - $100 = $20 USD • Selling BU = US PCBU
• Transfer Price = (20% on Cost) or (-20% SO Price)
• Transfer of Ownership = Shipment
Selling BU I/C AP AR Invoices Shipping BU
$120 USD • Track Profit in Inventory = Yes
Sales Order UK PCBU • Intercompany Invoicing = Yes
(US PCBU)

AR Invoice
$150 USD
References
UK INV Org ✓ Customer Connect: Replay
Customer
Goods Shipped ✓ Cost Accounting Events and Distributions
✓ Cost Accounting Examples

Physical Route

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SFO Flow: Supplier Drop Ship

Logical Receipt & Issue

DCOGS & Accrual = $100 USD Supply Chain Orchestration Flow – Drop Ship
AP Invoice
Accrual & Liability = $100 USD • Shipping BU = UK PCBU

AR Invoice • Selling BU = US PCBU

Receivable & Revenue = $140 USD • Transfer Price could be on PO or SO price (in case of multi-node)
Profit • Transfer of Ownership = Supplier ASN / Invoice
$140 - $100 = $40 USD
• Track Profit in Inventory = Yes
• Intercompany Invoicing = Yes
Purchase Order

US PCBU Supplier

AP Invoice
References
$100 USD
AR Invoice ✓ Cost Accounting Events and Distributions
$140 USD Sales Order ✓ Cost Accounting Examples

Customer
Goods Shipped

Physical Route

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SFO Flow: Non-shippable Orders
Sales Orders

Selling BU I/C AP AR Invoices Fulfillment BU

Global Purchase Orders $120 USD
Sales Order UK PCBU
(US PCBU)
• Service Items with Expense Destinations
• PO Lines without item number Customer AR Invoice
$150 USD
• Fixed Price Services – Amount Based
Services Provided
• Ownership Change Event = Receipt
Customer
• Accrue on Receipt only
• Transfer Price
• Business Process Type = Non-Shippable
• Static PO Price Markup
• Ownership Change = Sales Order Line Closed
• Pricing – for PO lines with Item
• No Cost Distributions or Trade Events
• Transfer Pricing (Sales Order price - 20%)
• Fulfillment BU Identification
• Based on Warehouse (or)
Replay: Financial Orchestration for Non-Shippable Orders
• Qualifiers (for ex, order type)
• Specify Charge Account for I/C AP Invoice

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Configuration

• Transfer Pricing • Profit Center Party Relationships

– Static Mark Up (Cost Basis / Source Document Basis) • Qualifiers
– Pricing Strategy • Cost Elements (Manage Cost Elements task)
– Third Party Pricing Service
• System Options
• Documentation and Accounting Rules – Calculate Tax for Trade Receipt Accruals
– Currency Option
• Financial Orchestration Flow
– Track PII

– Intercompany Invoices

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Internal Transfer - Demo

Shipping BU Receiving BU

CA PCBU TX PCBU

CA INV Org TX INV Org

CM53000

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Global Procurement - Demo
Global Purchase Order
• Charge Account
• Accrual Account
• Variance Account
• Destination Charge Account
• Destination Variance Account

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Global Sales Order Shipment - Demo

Global Sales Order

• Business Unit
• Selling Profit Center BU
• Warehouse

* XFR Price can be based on Cost or Sales Order Price

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References

• Demystifying Trade Accounting - Replay

• Cost Management and Financial Orchestration Cloud - Overview of Recent Updates

• Transfer pricing options in Supply Chain Financial Orchestration

• Financial Orchestration for Non-Shippable Orders

• Profit Center and Intercompany Deep Dive

• Intercompany Drop Ship Flows

• Global Procurement

• How to stop tax calculation for intercompany invoices

• Understanding Period Close Process in Cost Management

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Financial Orchestration: New Features (20A – 21A)

• Document Sequencing Support for I/C Payables Invoices (21B)

• Use OTBI Reporting to Review In-Process Financial Orchestration Transactions

• Use Ship-From Location for a Drop Shipment Intercompany AR Invoice

• Validation of Profit Center Business Unit Changes in Inventory Organizations

• Use Transaction Organization as Item Validation Organization in Supply Chain Financial Orchestration

• Use External Ship-to Locations and Internal Ship-from Locations in an Intercompany AP Invoice

• Use Location of Final Discharge in an Intercompany AP Invoice

Complete list of new features are at Oracle Cloud Release Readiness

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