1 © 2009 Oracle Corporation – Proprietary and Confidential

Purpose:
This document provides an overview of features and enhancements included in Oracle E-Business Suite Release
12.1. It is intended solely to help you assess the business benefits of upgrading your existing Oracle Products to
Release 12.1, or implementing completely new Oracle developed products, and planning your I.T. Projects.
Disclaimer:
This document in any form, software or printed matter, contains proprietary information that is the exclusive
property of Oracle. Your access to and use of this confidential material is subject to the terms and conditions of
your Oracle Software License and Service Agreement or other applicable contract with Oracle, with which you
agree to comply. This document and information contained herein may not be disclosed, copied, reproduced or
distributed to anyone outside Oracle without Oracle’s prior written consent. This document is not part of your
license agreement nor can it be incorporated into any contractual agreement with Oracle or its subsidiaries or
affiliates.
 
This document is for informational purposes only and is intended solely to assist you in planning for the
implementation and upgrade of the product features described. This is not a commitment to deliver any material,
code, or functionality, and should not be relied upon in making purchasing decisions. The development, release,
and timing of any features or functionality are always at Oracle’s sole discretion. This document is not
considered part of the applicable program documentation.
 
Due to the nature of the product architecture, it may not be possible to safely include all features described in
this document without risking significant destabilization of the code.

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Oracle E-Business Suite Release 12.1.2 Transfer of Information

Functional Overview: Implement and Use
Oracle Process Manufacturing Financials and Costing

Oracle Process Manufacturing – Landed Cost Management

 Agenda

• New and Changed Features for Oracle Process

Manufacturing Financials and Costing
• Oracle Process Manufacturing – Landed Cost Management
• Feature Overview
• Implementation Overview
• Additional Resources

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Feature Overview

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 OPM– Landed Cost Management
Description- Overview

• Landed Cost (LC) is calculated in order to accurately measure the

corporation’s costs and profitability by the good/item, product line, lot,
business unit, organization, etc. They play a significant role in actual
costing, evaluating on-hand inventory, as well as setting sales prices
and revenue forecasting. Oracle Process Manufacturing Cost
Management will use these landed costs when calculating the value
of an item.
• It is a completely new feature to Process Manufacturing Customers
and they can migrate from Acquisition Costing to Landed Cost
Management(LCM)

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 OPM– Landed Cost Management
Description- Features
• OPM Costing supports landed costs for
• Receiving Transactions, Receiving Corrections & Return to Vendors
• Landed Cost Support for OPM Actual Costing
• New LC adjustment Import process to populate LC adjustments in
OPM
• LC Adjustments support in Actual Cost Process
• LC Adjustments Support in OPM Lot costing
• LC Adjustments Support in OPM Accounting Pre-Processor
• Modified OPM costing forms and reports for LC adjustments
• View LC information detailed by adjustment number
• View cost factor details in LC view pages

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 OPM– Landed Cost Management
Business Value
Market & Sell
Plan & Budget
• Better contract negotiations
• Optimized fulfillment
• Additional revenue
networks
opportunities
• Better pricing models
• More accurate product Enables Organizations
profitability reporting • Maximize Profits
• Increase Competitiveness
• Improve Financial
Visibility into Supply
Chain
• Enhance Financial
Sourcing Reporting Confidence and
Payment
• More accurate total Compliance • Linked invoices with
cost comparisons supply chain event
• Better contract • Authenticated cost
negotiations declarations

Acquisition
• More accurate record of
outstanding liabilities
• Regulation compliance

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 OPM– Landed Cost Management
Example: Inbound Shipment Issue PO: 123

Customer

Shipment HK Port Vessel Carrier US Port Kansas City

to HK

China
Manufacturing Buyer

Intnl. Intnl. Intnl. Intnl. Broker Domestic

Freight Freight Freight Freight Duties Fees Freight

$100 $2 $3 $5 $20 $3 $2 $5 $140

PO: 123 Item A
Item A Cost Total Landed
Cost
An additional 40% is added on to the purchase price of the item

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 OPM– Landed Cost Management
Product Map & Information Flow

PO Information
Purchasing Payables

Landed Cost Management

VAT Calculation Charge Mgt. Invoices

EB Tax
Duty
Product Cost
LC Calculator Actual Variances
Dashboard
Charges,
Advanced Freight,
Pricing Insurance Estimated
Landed Receipts
Cost

Process
Estimated
Receiving Manufacturing
Landed Cost Costing

10 © 2009 Oracle Corporation – Proprietary and Confidential

 OPM– Landed Cost Management
Process Flow- LCM as a Service
Supplier / Receiving Clerk
Buyer Payables Clerk LCM Clerk
Carrier
User Actions

Enter Invoices Review Actual

Create PO Ship Goods Receive Calculation Process
Goods in
receiving

RCV LCM Payables LCM

Integrated with Capture Estimated Validate Invoices Invoice details
LCM Charges from QP
Automated Actions

Calculate Estimated Calculate Actual

Landed Cost Accrual Reversal / Landed Cost
Accounting

Create LCM Cost

Create Receiving Create Landed
Adjustments by
Transactions Costs by RCV
receipt transaction
transactions

OPM Costing OPM Costing

Calculate Periodic OPM Cost Cost & Accrual

and Generate LC Journals Adjustment

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 OPM– Landed Cost Management
Process Flow- LCM as Pre-Receiving
Supplier / Receiving Clerk
Buyer Compliance Clerk Payables Clerk LCM Clerk
Carrier
User Actions

Create PO Ship Goods Enter LCM Receive Goods in Enter Invoices Review Actual
Shipments Receiving Calculation Process

LCM RCV Payables LCM

Interface LC
Capture Estimated Information to Validate Invoices Invoice details
charges from QP receiving as LCM
Automated Actions

shipments
Calculate Actual
Accrual Reversal / Landed Cost
Calculate Estimated
Receive Goods by Accounting
Landed Cost
LCM shipment
Create LCM Cost
Adjustments by
Create Landed Costs Create Receiving receipt transaction
by RCV transactions Transactions

OPM Costing
OPM Costing
Calculate Periodic OPM Cost Cost & Accrual
and Generate LC Journals Adjustment

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 OPM– Landed Cost Management
Process Flow- Corrections and Returns
Receiving Clerk
User Actions

Corrections
or Returns

RCV LCM

Capture Parent LC
Automated Actions

from LCM

Create Landed
Create
Costs by
return/correction
Return/correction
Transactions
transactions

OPM Costing

Calculate Periodic OPM Cost

Considering LC History

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 Accrue Charges at Receipt
Actual Costing Example
• Purchase Order • Receipt
• Item DT1: • 100 each @ $10
• 100 each @ $10 • Estimated Freight @$1= $100
• Estimated Insurance @$1= $100

• Estimated Landed Cost = $12.00

Accounting Entries at Receiving :

Event Account Average Costing Landed Costing

(LCM Enabled Organization)
Debit Credit Debit Credit
Receipt Receiving Inspection a/c $1,000 $1,200
Landed cost Absorption a/c N/A N/A $200
AP Accrual a/c $100 $1000
Delivery Receiving Inspection a/c $1,000 $1,200
Material Valuation a/c $1,000 $1,200

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 Adjust Cost at Actual LC Calculation
• Invoice
• 100 each @ $12 , $1200
• Freight/Insurance = $200
• Actual Landed Cost = $14.00
• LC Cost Adjustment
• On-hand Balance = 100 each
• LC Variance = $200
• LC Var. Allocated to Inventory =
• Unit LC Variance = $2.00 $200
• LC Variance = $0

Accounting Entries at Landed Cost Adjustment:

Event Account Average Costing Landed Costing
(LCM Enabled Organization)
Debit Credit Debit Credit
Landed Cost Receiving Inspection a/c N/A $200
Adjustment
Landed cost absorption a/c $200
Receipt*
Landed Cost Receiving Inspection a/c N/A $200
Adjustment
Landed cost absorption a/c $200
Delivery*
Landed Cost Landed cost absorption a/c N/A $200
Adjustment
Inventory Valuation a/c $200
Valuation*
Landed Cost variance a/c -

* New seeded Event Types in OPM Financials

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 OPM– Landed Cost Management
Process Flow Demonstration- Actual Costing
Scenario using LCM as Service

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Implementation
Overview

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 OPM– Landed Cost Management
Setup Flow
Other Applications Setup Steps OPM Setup Steps

Define Profile Option

Define LCM Accounts Define Profile Options Define Cost Factors (GMF: Landed Cost
Adjustments)

Define Inventory Org Set Advanced Pricing Configure SLA Rules

[Check LCM & Process Define LCM Options
Profile Options for new event types
Mfg Enabled]

Define Shipment
Define Receiving Line Types
Options

Define Shipment
Types

18 © 2009 Oracle Corporation – Proprietary and Confidential

 OPM– Landed Cost Management
Setup – Set Key Profile Options
• GMF: Landed Cost Adjustments Transfer Method to Inventory
in Actual Costing
• This profile option lets you specify the method in which you want
to transfer the landed cost adjustments to inventory in Actual
costing

Profile Value Description

To consider adjustment as in period
Apply whole LC adjustments
adjustment and apply the whole adjustment
to Inventory
amount to calculate average cost calculation
Apply LC Adjustments
If you want to derive the prorated amount and
based on the Period
include it in cost calculations.
Opening Balance

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 OPM– Landed Cost Management
Setup Flow Demonstration

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 OPM– Landed Cost Management
Dependencies and Interactions
• Landed Cost Management(LCM)
• Required: LCM determines the estimated and actual landed costs that are sent to
process costing as adjustment entries
• Inventory Receiving (RCV)
• Required: highly integrated with Receiving, the Landed Cost Management relies on
the Receiving transactions to calculate the landed costs
• Purchasing (PO)
• Required: Creation of Purchase Orders (and agreements) that are base information
for LC calculation
• Creation of Cost Factors, that are used by LCM on charges definition. This is a
Sourcing page that is shared with PO.
• Accounts Payables (AP)
• Required: AP Invoices provides the actual information that supports the Actual
Landed Costing in LCM
• Advanced Pricing (QP)
• Optional: Advanced Pricing provides the LCM the capability of automatic Charge
Lines generation

21 © 2009 Oracle Corporation – Proprietary and Confidential

 OPM– Landed Cost Management
Dependencies and Interactions
Purchase Order
Purchasing PO

SUPPLIERS

Goods
Receiving RCV
Shipment
Information

Landed Cost
Management
Charges Estimation QP Charges Management LCM
Charge
Lines Charge Lines

Landed Cost Estimation LCM

Estimated LC

Invoices AP Actual Landed Cost Calculation LCM

Actual Prices

Actual LC Estimated LC

Actual Landed Costing CST

22 © 2009 Oracle Corporation – Proprietary and Confidential

 OPM– Landed Cost Management
Implementation Tips & Best Practices

• Use Qualifiers to precisely define estimated charges

in Advanced Pricing
• Schedule Landed Cost Adjustments Import Programs
at higher frequency to achieve near real time Actual
cost updates
• Define LCM accounts as Accrual accounts for
accurate measurement of liability
• Landed Cost is always in Primary Unit of Measure

23 © 2009 Oracle Corporation – Proprietary and Confidential

 OPM– Landed Cost Management
Troubleshooting Tips
• Landed Cost Adjustments Import Program ends in
warning or doesn’t creates cost adjustment records:
• Check the charges setup in Purchasing. Cost Component
classes and Analysis codes are required for a charge

• Estimated Charges are not defaulted Properly :

• Check Oracle Advanced Pricing profile setup

• LCM Shipments not created properly :

• Check LCM Profiles as suggested in the setup

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Additional Resources

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 OPM- Landed Cost Management
More Information
• Functional Transfer of Ownership Presentations
• EBS 12.1.1 Oracle Landed Cost Management Overview
• EBS 12.1.1 Oracle Landed Cost Management Setup
• EBS 12.1.1 Oracle Landed Cost Management Pre-
Receiving

• Oracle Landed Cost Management FAQ

• Oracle Landed Cost Management User Guide
• Oracle Landed Cost management Accounting
whitepaper

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 Additional Resources

• For more release information on MetaLink

• https://metalink.oracle.com/metalink/plsql/ml2_documents.showDocu
ment?p_database_id=NOT&p_id=403259.1
• For more information about Oracle Applications
• http://www.oracle.com/applications/home.html
• For more information about Education
• http://www.oracle.com/education/index.html
• For more information about Support
• http://www.oracle.com/support/
• For MetaLink information
• http://metalink.oracle.com/
• For Oracle Product documentation:
• http://www.oracle.com/technology/documentation/applications.html

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