Hexaware Oracle Process Costing Solution (1)

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Hexaware Oracle Process Costing Solution (1)

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  • Oracle Process Costing Solution

    Industry : Manufacturing

    Product : Oracle Process Manufacturing

    Date: 11/13/2013

    Hex 2151

    Presenter: Sachin Utage

  • 2 Hexaware Technologies. All rights reserved.

    Agenda

    Objective

    OPM High Level Integration

    General Concept

    Process Costing Solution

    Process Manufacturing Costing Flow

    Cost Logic

    Production Variance

    Account Creation & Period Closing

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    Objective

    Understand the Process costing Solution

    Use Sub-ledger Accounting and Processes in Process Costing

    Leverage Process Costing Solution

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    OPM High Level Integration

    Integrated

    Intelligence Cost

    Analysis Productivity

    Planning

    Planned Orders Schedule Changes Material Substitutes Resources

    Substitutes

    Product

    Lifecycle Mgmt

    Warehousing /

    Transportation

    Service

    Asset

    Maintenance

    Demand Schedules Sequencing Configured Order

    Lot / Serial Genealogy Tracking, Electronic Signatures

    Quality Management

    Discrete Flow

    Process Lot-Based

    Mixed Mode

    Production Status Material Availability Mfg Capacity Schedules/Changes Ship Notices Invoices/Payments

    Enterprise

    Shop Floor Customer

    Partner

    Collaboration

    Subcontractors

    Real-Time

    WIP Visibility

    Subcontractors Model

    Shop

    Floor

    Suppliers

    Suppliers

    CTO

    ETO

    MTS

    MES APIs,

    Direct

    Access

    Analyze Adjust Sample

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    Process Manufacturing Blocks

    Costing

    Analysis

    Inventory

    Quality

    Product

    Development Process

    Execution

    Regulatory

    Management OPM MES

    Process

    Planning

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    Process Costing

    Costing

    Analysis

    Inventory

    Quality

    Product

    Development Process

    Execution

    Regulatory

    Management OPM MES

    Process

    Planning

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    Process Costing Solution

    Enables you to :

    Optimize profits and margins

    Capture precise product costs

    Facilitate proactive cost management

    Assure proper accounting of resources & materials

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    Key Features

    Support Multiple Simultaneous costing methods

    Flexible costing elements

    Transfer from Process to Discrete

    Unlimited costing:

    Calendars

    Periods

    Classes / Types

    Analysis codes

    Co-product & Byproduct costing

    Costing engine independent of, but tightly linked to the General Ledger

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    OPM Costing Flow

    Cost Setup Calculate Cost Store Costs SLA Oracle GL

    Oracle

    Inventory Purchasing GMD, GME

    Order

    Management

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    Organization Structure Changes

    Inventory Org

    Ledger

    Legal Entity

    Locator

    Subinventory

    Operating Unit

    Release 12

    OPM

    Warehouse

    Locator

    Plant or Lab

    OPM Company

    11.5.10

    Parent

    Company

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    OPM Industry Standard Terminologies

    11i Terminology 12 Terminology

    PM Batch Detail (Actual cost

    transaction view)

    Production Batch

    Burdens Overheads

    Percentage Burdens

    Percentage Overheads

    Cost Method

    Cost Types

    PCO account

    COGS account

    Cost Component Class Usages:

    Cost Detail FM Route - Burdens Material Resource - Overhead

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    OPM Costing

    Indirect Acquisition Overhead Resource Material

    Actual Lot Standard

    Cost

    Development Monitoring Allocation Analysis Valuation

    PWAC PMAC LAC PPAC

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    Actual Cost Averaging Algorithms

    P-n P-2 P-1 Current

    Period (P)

    Period Moving Average (PMAC)

    Perpetual Weighted Average (PPAC)

    Period

    Weighted

    Average

    (PWAC)

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    Actual Costing Logic - PWAC

    The PWAC cost is calculated based on this logic:

    [Batch costs + Value of Incoming Transfers+ Value of Receipts+ Cost Adjustment Value + GL Expense Allocations]

    [Product Yield +Transfers + Receipts +Average Cost Adjustment Quantity]

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    Actual Costing Logic - PMAC

    The PMAC cost is calculated based on this logic:

    [(Prior Period Cost * Prior Period Closing balance) +Batch costs + Value of Incoming Transfers+ Value of Receipts+ Cost Adjustments Value + GL Expense Allocations]

    [Prior Period Closing Balance + Product Yield +Transfers + Receipts +Average Cost Adjustment Quantity]

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    Actual Costing Logic - PPAC

    The PPAC cost is calculated based on this logic:

    [(Prior Period PPAC Cost * Prior Period PPAC Quantity) +Batch costs + Value of Incoming Transfers+ Value of Receipts+ Cost Adjustments Value + GL Expense Allocations]

    [Prior Period PPAC Quantity + Product Yield +Transfers + Receipts +Average Cost Adjustment Quantity]

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    Actual Costing Logic Last Invoice & Transaction

    Last Invoice

    Cost from most recent invoice in the period for the raw material

    Last Transaction

    Cost from the most recent invoice or receipt in the period for the raw material

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    Simultaneous Multiple Cost Methods

    Effectively compare costs by using various methods

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    Costing Definition

    Ability to define different

    Cost types

    Ability to define different

    type for Raw Material &

    Products

    Lot Cost Type

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    Cost Component Classes

    The unit cost of an item is usually broken down into several buckets that can be attributed to the various sources that form the basis of the

    cost, for detailed tracking and analysis purposes.

    Cost Component Classes are used to identify the individual buckets or component costs that make up the total cost, for example, direct

    material costs, freight costs, labor costs, production or conversion

    costs and so on. They are classified into elements or usage

    Material

    Resource

    Overhead

    Expense Allocation

    Standard Cost Adjustment Type

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    Cost Analysis Code & Component Group

    Cost Analysis Code

    Cost component class can be further broken down using cost

    analysis code for more granular

    tracking

    Used to group component costs from multiple cost component

    class types to provide an

    alternate view of the total cost

    Eg: define direct or indirect analysis codes for each cost

    component

    Component Group

    Lets you collect specific material or resource component costs for

    category grouping

    Eg: material cost, resource cost

    Can also be used for custom reporting and Analysis

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    Cost Granularity

    CW

    2013/ACT/BUD/WHAT IF/FUTURE

    Q1/DAY 1/WEEK 1/YEAR

    MATL/PKG/RESOURCE

    VALUE-ADD

    Item

    Organization

    Period

    Cost Type

    Calendar

    Element

    Analysis

    Code

    STND/ACT/LOT

    999A

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    Production Batches Accounting Flows

    Production batch has 4 steps

    Release

    Step completion (resources)

    Completion (materials)

    Close

    Accounting entries:

    Release: Inventory to WIP

    Step completion: RCA (absorption account) to WIP

    Completion: WIP to inventory

    Close: variance calculation

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    Production Variances - Material

    Usage Variance (USG) occurs when the actual ingredient quantity is

    different from the cost formula scaled quantity

    Substitution Variance (SUB) occurs when actual ingredients used

    and the cost formula ingredients are different

    Yield Variance (YLD) occurs

    If product quantity is different

    If new products are yielded

    If some product yields missing

    Closing Variance (CLS) is used to clear out the WIP entries created

    in batch release and complete events

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    Production Variances - Resource

    Resource Usage Variance occurs when the actual resource usage

    is different from the scaled formula resource usage

    Resource Substitution Variance (RSV) occurs when the actual

    resources used and the costing formula resources are different

    Resource Manning Variance (RMV) occurs when the actual

    resource count is different from the costing formula resource count

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    Subledger Accounting

    OPM Costing engine

    generates cost

    SLA processes these

    events to create

    journal entries

    Completed material and

    resource transactions

    OPM Costing with SLA

    Cost Preprocessor

    creates

    accounting events

    Define

    Journal Line

    Types

    Journal Entry

    Descriptions

    Account

    Derivation

    Rules

    Journal Lines

    Definitions

    Application

    Accounting

    Definitions

    Subledger

    Accounting

    Methods

    Assign

    Application

    Accounting to

    the Ledger

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    How Does Oracle Create Journal Entries

    Costing Transactions

    from OPM,

    INV, PO, OM

    etc

    1. Allocation Process

    2. Cost Update Process

    Preliminary

    3. OPM Sub ledger Pre Processor

    4. Cost Update Final

    5. Create Accounting

    6. Transfer to the GL

    General Ledger SLA Definitions

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    Cost Update Process

    Costing

    The Cost Update Process copies the OPM cost

    from costing to the GL Item Cost to be used in generating the journal entries

    Act / STD/ Lot

    Cost

    Item Cost

    Legal Entity

    Calendar

    Period

    Cost type

    GL Item Cost X

    Transaction Qty GL Item Cost

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    OPM Subledger Pre Processor Update

    The Sub ledger Pre Process

    calculates the currency value of

    the transaction(s)

    Transaction

    QuantityGL Item Cost

    Journal Template

    Transactions

    from OPM,

    INV, PO, OM

    etc

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    How does Oracle create Journal Entries

    SLA Definitions

    Order

    Management

    (Shipping):

    COGS

    Purchasing:

    Receiving

    receipts and

    returns

    Inventory:

    Adjustments

    and Transfers

    of Inventory

    OPM

    Production:

    Capitalization

    of Inventory

    Subledger Accounting

    Engine: Processes all

    transactions and

    produces balanced

    journal entries ready to

    be interfaced to the

    General Ledger

    General

    Ledger

    Other Financials

    Subledgers

    - Payables

    - Receivables

    - Assets

    - Projects

    - Etc

    OPM

    Costing:

    Inventory re-

    Valuation

    The Create Accounting process

    builds and assigns account code

    combinations to the journal

    templates

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    Complete & Close

    POC Steps &

    Production Batches

    Complete Sales

    Shipment & Close

    AR

    Complete Inv.

    Adjustments

    Complete

    Purchasing, Receiving

    and Close AP

    Run Inventory Close

    Processing (Preliminary)

    Run Actual Cost

    Process

    Make Actual Cost

    Adjustments

    Run GL Expenses

    Allocation

    Process

    Enter/ Modify Expenses

    Allocation

    Run Test Subsidary

    Ledger Run Cost Update

    Preliminary

    Run Final Cost Update

    & Subsidary Ledger

    Update

    Run Inventory

    Close

    Process (Final)

    &

    Close Cost

    Period

    Transfer

    Sub Ledger

    Journals

    to GL

    Account Creation & Period Closing

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    MAC To SLA Transformation

    OPM MAC SLA Comments

    Source Process Category

    Event Event Entity

    Sub-Event Event Class

    Account Titles Journal Line Types (JLT)

    Accounting Template Application Accounting Definitions (AAD)

    Account Mapping Attributes (SLA) Sources

    Priorities and Account Mapping Account Derivation Rules (ADR)

    Test Mapping Test Accounting Builder (TAB)

    OPM Currency, OPM Ledger, OPM

    Exchange Rates Use GL set ups

    Test and Actual Subledger Accounting Draft and Final Accounting -

    Subledger Program Accounting Pre-Processor

    Run Subledger for multiple valuation/cost

    methods for a ledger. Supports multiple valuation methods

    SLA supports multiple

    representations at the same time.

    Detailed Subledger Report Is retained and has been modified

    to use SLA repository

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    Procurement Accounting Flows

    1. Enter PO: Accounting Impact Nil

    2. Enter a receipt:

    -------------Debit --------Inventory Receiving Account (ISP)

    -------------Credit-------- AP Accrual Account

    3. Inspect and Accept: Accounting Impact Nil

    4. Delivery to stock:

    -------------Debit ---------Inventory Account

    -------------Credit --------Inventory receiving account (ISP)

    -------------Debit ---------Purchase Price Variance (PO-Unit Cost)

    5. Enter PO Matched Invoice - Out Side OPM

    -------------Debit ---------AP Accrual Account

    -------------Credit --------Supplier Liability Control Account

    6. Enter payments against the invoice Outside OPM -------------Debit ---------Supplier Liability Account

    -------------Credit --------Cash / Bank Account

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    Inventory Accounting Flows

    1. Miscellaneous Receipts, Account Receipts, Account Alias Receipts

    ----------Debit --------Inventory

    ----------Credit -------Inventory Adjustment Expense

    2. Miscellaneous Issues, Account Issues, Account Alias Issues

    ----------Debit -------- Inventory Adjustment Expense

    ----------Credit -------Inventory

    3. Inventory Org transfer :

    -Direct Transfer

    -In transit Transfer

    The two transfer are supported in Same OU and across OU.

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    Production Batches Accounting Flows

    1. Batch Release

    ----------Debit --------WIP

    ----------Credit -------Inventory

    2. Step certification

    ----------Debit --------WIP

    ----------Credit -------RCA

    3. Batch Certification

    ----------Debit --------Inventory

    ----------Credit -------WIP

    4. Batch Close

    ----------Debit / Credit ------WIP

    ----------Credit / Debit ------CLS

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    Order Management Accounting Flows

    1. Sales Order : No Accounting Impact

    2. Ship items

    -----------Debit ---------Deferred COGS

    -----------Credit --------Inventory

    3.1 Enter invoice when customer is Billed In AR Module -----------Debit ---------Receivables

    -----------Credit --------Deferred Revenue

    3.2 When Portion of Revenue is recognized In AR Module -----------Debit ---------Deferred Revenue

    -----------Credit --------Revenue

    3.3 Additional Entry in OPM to reflect earned revenue

    -----------Debit ---------COGS

    -----------Credit --------Deferred COGS

    4.1 RMA Returns (Before revenue recognition) -----------Debit ---------Inventory

    -----------Credit --------DCOGS

    4.2 After portion of revenue recognized

    -----------Debit --------- Inventory

    -----------Credit --------- Deferred COGS

    -----------Credit -------- COGS

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    OPM LCM Integration Overview

    The objective to use the accurate landed costs in OPM

    cost calculations and accounting

    Support of Landed cost for all receiving transactions

    Receive, Deliver

    Correction, Return

    Landed cost by Cost components

    Item cost details consists of component wise cost in

    OPM

    Support Actual Landed Costs

    Item, freight, charge invoices

    Support LC adjustments in Actual cost Process

    Support LC Adjustments in Lot Cost Process

    GMF: Landed Cost Adjustments Transfer Method to Inventory In

    Actual Costing with

    Apply whole LC Adjustment to Inventory

    Apply LC Adjustment based on the Period Opening Bal

    Post LC Adjustment journal entries in OPM Accounting Pre-

    Process

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    Process Costing Solution

    Enables you to :

    Optimize profits and margins

    Multiple cost methods: standard, actuals, lot

    Capture precise product costs

    Co-products, unlimited cost elements, cost allocations

    Facilitate proactive cost management

    Cost monitoring, cost analysis

    Assure proper accounting of resources & materials

    Flexible account mapping, sub-ledger flow, drilldowns

  • 39 Hexaware Technologies. All rights reserved.

    Awarded the prestigious Golden Peacock Award for Excellence in Corporate Governance

    Listed on Forbes Asias 200 Best Under a Billion List Winner of the prestigious UK Oracle User Group PeopleSoft

    Partner of the Year Award for the year 2012

    Winner of the Information Mastermind Award 2012, by IDG Listed among the Top 100 Innovative service Provider by Global

    Services 100 Listing

    Ranked among leading IT service providers in International Association of Outsourcing Providers (IAOP) Global Outsourcing

    100 list.

    Winner of BPO Excellence Awards 2012- 2013 [Subsidiary : Caliber Point]

    Winner of the EMC Transformers Award for its Cloud and Disaster Recovery (DR) implementation

    Recognized and awarded the Best in Corporate Responsibility Practice award by Indy's Awards

    Received the prestigious CIO100 Award, by IDG.

    Hexaware Overview: Key Facts

    8,950 Employees globally (Sep 13)

    53 Million dollar clients (Sep 13)

    35 Offices worldwide

    224 Active Clients served worldwide

    (Sep 13)

    364 $ mn Revenues in CY 12

    Mumbai Chennai Nagpur Pune Coimbatore Bengaluru

    Industry Recognitions

    Golden

    Peacock Award

    Certifications CMMI Level 5, ISO 9001 & ISO

    27001, SAS 70 Type II, ISO 20000

    Delivery Centers

    New Jersey Dallas Mexico Singapore

  • 40 Hexaware Technologies. All rights reserved.

    40

    Oracle @ Hexaware

    Oracle E-Business Suite

    Oracle Tools/J2EE

    Technology Siebel CRM

    o SOA, Portals, Mobility, Composite Apps, Legacy Modernization

    o Fusion Ready

    o Voted as one of the leading BI services vendor by Gartner

    o Over 100+ BI customers

    o Over 100+ Projects worldwide

    o One of the earliest to implement Oracle R12

    E-Business Suite

    o #1 offshore PeopleSoft partner

    o PeopleSoft development partner before the acquisition

    PeopleSoft Business Intelligence Technology

    Executed over 600 projects for 150+ customers 2500+ trained Oracle consultants Expertise across Human Capital Management, Finance, Supply Chain, Manufacturing and CRM

    PeopleSoft Seibel CRM

    Oracle

    E-Business Suite Technology

  • 41 Hexaware Technologies. All rights reserved.

    Thank you