oracle inv setups 0411

Oracle Apps – Manufacturing & DistributionAuthor

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.

[email protected] +91-91774-77013

mailto:[email protected]

Oracle Apps – Manufacturing & DistributionInventory 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)


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)


31.Define Items 32.Define Cross–Reference Types (O)33.Define Item Delete Constraints (O)34.Define Cost Types (R)35.Define Cost Activities (O)36.Define Material Sub–Elements (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)


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 Parameters58.Define Kanban Pull Sequences

Oracle Apps – Manufacturing & DistributionItem 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

Oracle Apps – Manufacturing & DistributionCategory 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.

Oracle Apps – Manufacturing & DistributionItem 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.

Oracle Apps – Manufacturing & DistributionItem 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.

Oracle Apps – Manufacturing & DistributionCategory Set

Oracle Apps – Manufacturing & DistributionDefine 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.

Oracle Apps – Manufacturing & DistributionDefine 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.

Oracle Apps – Manufacturing & DistributionDefine 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.

Oracle Apps – Manufacturing & DistributionDefine 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.

Oracle Apps – Manufacturing & DistributionDefine ATP Rule

Available to promise rule define supply & demand sources, time fence parameters and calculation methods.

Accumulation Available: Determines a period’s 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.

Oracle Apps – Manufacturing & DistributionDefine 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 User–defined 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 -

Oracle Apps – Manufacturing & DistributionDefine 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.

Oracle Apps – Manufacturing & DistributionDefine 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.

Oracle Apps – Manufacturing & DistributionDefine 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.

Oracle Apps – Manufacturing & DistributionDefine 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.

Oracle Apps – Manufacturing & DistributionDefine 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.

Oracle Apps – Manufacturing & DistributionOrganization 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.

Oracle Apps – Manufacturing & DistributionOperating Unit/Inventory Org

Telco - KAInventory

Org

Telco - TNInventory

Org

Telco - APInventory

Org

TelcoSouth - OU

Telco - KEInventory

Org

Oracle Apps – Manufacturing & DistributionItem Master

Inventory Org M3

Inventory Org M2

Inventory Org M1

Item MasterV1

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 LevelBearing 6210 B-987654

M1 B-987654

M2 B-987654

M3 B-987654

Oracle Apps – Manufacturing & DistributionItem Attributes

Item Attributes count in Oracle Apps

ver. 11 158 Attributesver. 11i 177 Attributesver. 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….

Oracle Apps – Manufacturing & DistributionStatus 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

Oracle Apps – Manufacturing & DistributionItem 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.

Oracle Apps – Manufacturing & DistributionItem Defining Attributes

Functional Area Item Defining Attribute

Inventory Inventory ItemPurchasing Purchased/Internal orderedCost Mgmt Costing EnabledEngineering Engineering ItemOrder Mgmt Customer Order ItemService Serviceable Product

Item defining and Status attributes are interdependent.

Oracle Apps – Manufacturing & DistributionItem 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

Oracle Apps – Manufacturing & DistributionUOM - 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

Oracle Apps – Manufacturing & DistributionUnit 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 theprimary and secondary units of measure.

Oracle Apps – Manufacturing & DistributionUOM - 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 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.


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.

Oracle Apps – Manufacturing & DistributionSub-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.

Oracle Apps – Manufacturing & DistributionMiscellaneous 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.

Oracle Apps – Manufacturing & DistributionItem 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.

Oracle Apps – Manufacturing & DistributionDefine 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.

Oracle Apps – Manufacturing & DistributionIntercompany Relations

Define Intercompany Relations, to establish relationship between two operating units (Shipping and Selling orgs) in a multi–organization environment.

Oracle Apps – Manufacturing & DistributionDefine 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.

Oracle Apps – Manufacturing & DistributionLead 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: BManufactured

Assembly: AManufactured

Component : C Purchased

Cumulative Total Lead Time

Pre - Processing Lead Time


Post - Processing Lead Time

Oracle Apps – Manufacturing & DistributionInter-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

Oracle Apps – Manufacturing & DistributionInter-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.

Oracle Apps – Manufacturing & DistributionInter-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

Oracle Apps – Manufacturing & DistributionInventory 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


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 flexfieldas per client requirement.


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.

Oracle Apps – Manufacturing & DistributionInventory Planning

Min-Max Planning

Reorder Point Planning

Replenishment

Kanban

Oracle Apps – Manufacturing & DistributionMin-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.

Oracle Apps – Manufacturing & DistributionMin-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.

Oracle Apps – Manufacturing & DistributionMin-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.

Oracle Apps – Manufacturing & DistributionMin-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.

Oracle Apps – Manufacturing & DistributionMin-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.

Oracle Apps – Manufacturing & DistributionReorder Point Planning

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 CostCarrying 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

Oracle Apps – Manufacturing & DistributionReplenishment 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.

Oracle Apps – Manufacturing & DistributionKanban 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.


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.


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.


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.

Oracle Apps – Manufacturing & DistributionAccuracy

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.

Oracle Apps – Manufacturing & DistributionAccuracy

The two types of stock taking are

Cycle CountingPhysical 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.

Oracle Apps – Manufacturing & DistributionABC 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%

Oracle Apps – Manufacturing & DistributionABC 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

Oracle Apps – Manufacturing & DistributionCycle 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

Oracle Apps – Manufacturing & DistributionPhysical Inventory

Sequence of Steps involved 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

oracle inv setups 0411

Documents

category codes

category set r26

hazard category set

item types o30

different category value

category sets assign

value set

default category sets