Oracle User Student Guide

7/25/2019 Oracle User Student Guide

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R12 Oracle InventoryManagement Fundamentals

Student Guide

D49489GC20

Edition 2.0

April 2009

D59282


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Copyright 2009, Oracle. All rights reserved.

Disclaimer

This document contains proprietary information and is protected by copyright and other intellectual property laws. You may copy andprint this document solely for your own use in an Oracle training course. The document may not be modified or altered in any way.Except where your use constitutes "fair use" under copyright law, you may not use, share, download, upload, copy, print, display,perform, reproduce, publish, license, post, transmit, or distribute this document in whole or in part without the express authorizationof Oracle.

The information contained in this document is subject to change without notice. If you find any problems in the document, pleasereport them in writing to: Oracle University, 500 Oracle Parkway, Redwood Shores, California 94065 USA. This document is notwarranted to be error-free.

Restricted Rights Notice

If this documentation is delivered to the United States Government or anyone using the documentation on behalf of the UnitedStates Government, the following notice is applicable:

U.S. GOVERNMENT RIGHTSThe U.S. Governments rights to use, modify, reproduce, release, perform, display, or disclose these training materials are restrictedby the terms of the applicable Oracle license agreement and/or the applicable U.S. Government contract.

Trademark Notice

Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective

owners.

Authors

Tyra Crockett, Maneesha Nanda

Technical Contributors and Reviewers

Jennifer Sherman, Susan Flierl, Ronald Delong, David Nelson, Itzik Pripstein

This book was published using: OracleTutor


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R12 Oracle Inventory Management Fundamentals Table of Contentsi

Table of Contents

R12 Overview of Oracle Inventory ................................................................................................................1-1R12 Overview of Oracle Inventory ...............................................................................................................1-3Objectives ......................................................................................................................................................1-4

Overview .......................................................................................................................................................1-5Inventory Capabilities....................................................................................................................................1-6Receipt to Issue Life Cycle............................................................................................................................1-8Receiving Inventory ......................................................................................................................................1-9Transferring Inventory...................................................................................................................................1-12Issuing Inventory...........................................................................................................................................1-14Oracle Inventory Application Integration......................................................................................................1-16Integration of Oracle Inventory to Financial Applications ............................................................................1-18Summary........................................................................................................................................................1-19

R12 Defining Inventory Organizations..........................................................................................................2-1R12 Defining Inventory Organizations..........................................................................................................2-3Objective........................................................................................................................................................2-4Inventory Organizations ................................................................................................................................2-5

Inventory Organization Structure ..................................................................................................................2-6Sample Inventory Organization.....................................................................................................................2-7Multi-Organization Structure.........................................................................................................................2-8Setting Up Locations .....................................................................................................................................2-9Defining Organizations..................................................................................................................................2-10Inventory Parameters.....................................................................................................................................2-11Costing Parameters........................................................................................................................................2-12Revision, Lot, Serial, and License Plate Number (LPN) Parameters ............................................................2-13ATP, Pick, Item-Sourcing Parameters...........................................................................................................2-14Interorganization Parameters .........................................................................................................................2-15Other Account Parameters.............................................................................................................................2-16Warehouse Management Parameters.............................................................................................................2-17What Is a Subinventory?................................................................................................................................2-18

What Is a Subinventory .................................................................................................................................2-19Defining Subinventories ................................................................................................................................2-20Locator Control .............................................................................................................................................2-21Dynamic and Static Locators.........................................................................................................................2-22Subinventory-Locator Relationship...............................................................................................................2-23Locator Flexfield Structure............................................................................................................................2-24Interorganization Shipping Networks............................................................................................................2-25Shipping Method ...........................................................................................................................................2-27Additional Set Up Steps ................................................................................................................................2-28Additional Organizational Setups..................................................................................................................2-29Copying Inventory Organizations..................................................................................................................2-30Organization Hierarchy .................................................................................................................................2-32Organization Reports.....................................................................................................................................2-34Profile Options...............................................................................................................................................2-36Implementation Considerations .....................................................................................................................2-37Summary........................................................................................................................................................2-43

R12 Units of Measure ......................................................................................................................................3-1R12 Units of Measure....................................................................................................................................3-3Objectives ......................................................................................................................................................3-4Units of Measure ...........................................................................................................................................3-5Uses of Units of Measure ..............................................................................................................................3-6Unit of Measure Class ...................................................................................................................................3-7


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R12 Oracle Inventory Management Fundamentals Table of Contentsiii

Generating Serial Numbers............................................................................................................................5-19Serial Uniqueness ..........................................................................................................................................5-21Maintaining Serial Numbers..........................................................................................................................5-23Lot Genealogy ...............................................................................................................................................5-24Serial Genealogy ...........................................................................................................................................5-25Lot and Serial Reports...................................................................................................................................5-26Profile Options...............................................................................................................................................5-29Implementation Considerations .....................................................................................................................5-31Summary........................................................................................................................................................5-33

R12 Transaction Setup....................................................................................................................................6-1R12 Transaction Setup...................................................................................................................................6-3Objectives ......................................................................................................................................................6-4Overview .......................................................................................................................................................6-5Inventory Transactions ..................................................................................................................................6-6Move Orders..................................................................................................................................................6-7Transaction Source Types..............................................................................................................................6-8Transaction Action ........................................................................................................................................6-10Transaction Reasons ......................................................................................................................................6-12Transaction Types..........................................................................................................................................6-13Predefined Transaction Types .......................................................................................................................6-14Transaction Managers....................................................................................................................................6-15Running Transaction Managers.....................................................................................................................6-16Creating Picking Rules ..................................................................................................................................6-18Account Aliases.............................................................................................................................................6-20Accounting Periods........................................................................................................................................6-21Material Shortage Alerts and Notifications ...................................................................................................6-22Setting Up Shortage Alerts and Notifications................................................................................................6-24Setting Up for Move Orders ..........................................................................................................................6-25Setup Steps for Move Orders.........................................................................................................................6-27Profile Options...............................................................................................................................................6-29Implementation Considerations for Shortage Checks....................................................................................6-35Implementation Considerations for Move Orders .........................................................................................6-36Summary........................................................................................................................................................6-37

R12 Issue and Transfer Material ...................................................................................................................7-1R12 Issue and Transfer Material....................................................................................................................7-3Module Objectives.........................................................................................................................................7-4Overview of Inventory Transactions .............................................................................................................7-5Inventory Transactions ..................................................................................................................................7-6Inventory Transactions Without Documents and Requisitions......................................................................7-7Inventory Transactions with Documents and Requisitions............................................................................7-8Control Options and Restrictions...................................................................................................................7-9Miscellaneous Transactions...........................................................................................................................7-10Subinventory Transfer ...................................................................................................................................7-11Inter-organization Direct Shipment ...............................................................................................................7-12Inter-organization Intransit Shipment............................................................................................................7-13Managing Receipts ........................................................................................................................................7-15Express Receipts and Receiving Transactions...............................................................................................7-17Direct Receipts ..............................................................................................................................................7-18Standard Receipt............................................................................................................................................7-19Inspection Receipt .........................................................................................................................................7-20Move Orders..................................................................................................................................................7-21Move Orders Process Flow............................................................................................................................7-22Move Order Requisition Approval Process ...................................................................................................7-23Benefits of Managed Material Flow in a Facility ..........................................................................................7-25Move Order Source Types.............................................................................................................................7-27Move Order Components ..............................................................................................................................7-29


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R12 Oracle Inventory Management Fundamentals Table of Contentsiv

Generate Move Orders...................................................................................................................................7-31Move Order Allocating..................................................................................................................................7-33Item Allocation..............................................................................................................................................7-35Transact Move Orders ...................................................................................................................................7-36Mobile Transactions......................................................................................................................................7-37Managing Shipments .....................................................................................................................................7-39Transactions Reports .....................................................................................................................................7-40Summary........................................................................................................................................................7-45

R12 On-hand and Availability........................................................................................................................8-1R12 On-hand and Availability.......................................................................................................................8-3Objectives ......................................................................................................................................................8-4Overview of On-hand Quantity .....................................................................................................................8-5Overview of Reservations..............................................................................................................................8-6Overview of Availability...............................................................................................................................8-7Reservation Versus Allocation ......................................................................................................................8-8Material Workbench......................................................................................................................................8-9Display Options.............................................................................................................................................8-10Viewing Available Items...............................................................................................................................8-12Material Workbench Transactions.................................................................................................................8-13Available to Promise .....................................................................................................................................8-14What are Supply and Demand? .....................................................................................................................8-15Uses of ATP in Oracle Inventory ..................................................................................................................8-16ATP Rules Setup Steps..................................................................................................................................8-17Defining Computation Options......................................................................................................................8-18Specifying Supply and Demand Time Fences...............................................................................................8-20Specifying Demand Sources..........................................................................................................................8-24Specifying Supply Sources............................................................................................................................8-26Setting Up Item and Bills for ATP Checking ................................................................................................8-27ATP Checking ...............................................................................................................................................8-28Reservation Types .........................................................................................................................................8-29Supply Types.................................................................................................................................................8-30Demand Types...............................................................................................................................................8-31Reserving Material ........................................................................................................................................8-32Reservation Management - Transfer Supply .................................................................................................8-34Reservation Management - Transfer Demand ...............................................................................................8-35On-hand and Availability Reports .................................................................................................................8-36Profile Options...............................................................................................................................................8-37Implementation Considerations .....................................................................................................................8-39Summary........................................................................................................................................................8-40

R12 Material Status.........................................................................................................................................9-1R12 Material Status .......................................................................................................................................9-3Objectives ......................................................................................................................................................9-4Material Status...............................................................................................................................................9-5Material Status Control Levels......................................................................................................................9-6Material Status Transactions..........................................................................................................................9-7Cumulative Effective Status ..........................................................................................................................9-8Material Status Examples ..............................................................................................................................9-9Setting Up......................................................................................................................................................9-10Defining Item Material Status Control ..........................................................................................................9-11Assigning Material Status Control to Subinventories and Locators ..............................................................9-12Assigning Planning Statuses..........................................................................................................................9-13Disabling Material Statuses ...........................................................................................................................9-14Material Status Reports .................................................................................................................................9-15Profile Option................................................................................................................................................9-16Implementation Considerations .....................................................................................................................9-17Summary........................................................................................................................................................9-18


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R12 Oracle Inventory Management Fundamentals Table of Contentsv

R12 Replenishment Fundamentals.................................................................................................................10-1R12 Replenishment Fundamentals ................................................................................................................10-3Objectives ......................................................................................................................................................10-4Overview of Inventory Planning ...................................................................................................................10-5Order Planning...............................................................................................................................................10-6How Much to Order.......................................................................................................................................10-7Replenishment Process for Intra-Org Supply Sources...................................................................................10-8Replenishment Process for Supplier Supply Sources ....................................................................................10-9Replenishment Process for Inter-Org Supply Sources...................................................................................10-10Replenishment Process for Production Supply Sources ................................................................................10-11Replenishment Methods ................................................................................................................................10-12Overview of Inventory Forecasting ...............................................................................................................10-13Forecast Types...............................................................................................................................................10-15Forecast Setup and Maintenance ...................................................................................................................10-16Oracle Inventory Replenishment Methods ....................................................................................................10-17Replenishment Methods Levels.....................................................................................................................10-18Safety Stock...................................................................................................................................................10-19Economic Order Quantity..............................................................................................................................10-20Overview of Reorder-Point Planning ............................................................................................................10-21Uses of Reorder-Point Planning ....................................................................................................................10-22Reorder-Point Planning Steps........................................................................................................................10-23

Performing Reorder-Point Planning ..............................................................................................................10-24Overview of Min-Max Planning....................................................................................................................10-26Uses of Min-Max Planning............................................................................................................................10-27Min-Max Planning.........................................................................................................................................10-28Min-Max Planning: How Much to Order? ....................................................................................................10-29Min-Max Planning Steps...............................................................................................................................10-30Item Planning Attributes................................................................................................................................10-31Min-Max Planning Setup Procedure..............................................................................................................10-32Selecting a Planning Level ............................................................................................................................10-33Entering Planning Attributes .........................................................................................................................10-34Submitting the Min-Max Planning Requests.................................................................................................10-35Overview of Replenishment Counting ..........................................................................................................10-37Uses of Replenishment Counting ..................................................................................................................10-38

Replenishment Planning Steps ......................................................................................................................10-39Subinventories Window ................................................................................................................................10-41Item Subinventories Window........................................................................................................................10-42Item Subinventories: Order Modifier Tab .....................................................................................................10-43Replenishment Count Headers ......................................................................................................................10-44Replenishment Count Lines...........................................................................................................................10-45Processing Replenishment Counts.................................................................................................................10-47Mobile Replenishment Count Overview .......................................................................................................10-49Overview of PAR Counting...........................................................................................................................10-50Processing PAR Counts.................................................................................................................................10-51Reorder Quantity for PAR Count ..................................................................................................................10-52Overview of Kanban Replenishment.............................................................................................................10-54Kanban Cards ................................................................................................................................................10-56Kanban Planned Items...................................................................................................................................10-57Kanban Cards ................................................................................................................................................10-59Kanban Supply Status....................................................................................................................................10-61Kanban Replenishment Sources ....................................................................................................................10-62Kanban Card Printing ....................................................................................................................................10-63Planning and Replenishment Reports............................................................................................................10-64Profile Options...............................................................................................................................................10-66Implementation Considerations .....................................................................................................................10-68Summary........................................................................................................................................................10-72


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R12 Oracle Inventory Management Fundamentals Table of Contentsvi

R12 Inventory Accuracy Fundamentals .......... ........... .......... ........... ........... .......... ........... .......... ............ ........11-1R12 Inventory Accuracy Fundamentals ........................................................................................................11-3Objectives ......................................................................................................................................................11-4Overview of Inventory Accuracy ..................................................................................................................11-5ABC Analysis Overview ...............................................................................................................................11-6Defining an ABC Analysis ............................................................................................................................11-7Define and Run an ABC Compilation ...........................................................................................................11-8ABC Compilation Criteria.............................................................................................................................11-9ABC Valuation Scope ...................................................................................................................................11-11Defining ABC Groups...................................................................................................................................11-12Defining ABC Classes...................................................................................................................................11-13ABC Item Assignments.................................................................................................................................11-14Cycle Counting Overview .............................................................................................................................11-16Defining and Maintaining a Cycle Count ......................................................................................................11-17Cycle Count Approval Tolerance ..................................................................................................................11-18Approval Tolerances......................................................................................................................................11-19Hit/Miss Tolerance ........................................................................................................................................11-21Measurement Errors ......................................................................................................................................11-22Cycle Count Items.........................................................................................................................................11-23Automatic Scheduling ...................................................................................................................................11-25Manual Scheduling........................................................................................................................................11-26

Count Requests..............................................................................................................................................11-27Entering Cycle Counts...................................................................................................................................11-29Cycle Count Open Interface ..........................................................................................................................11-30Count Adjustments and Approvals................................................................................................................11-31Automatic Recounts ......................................................................................................................................11-32Approving Cycle Counts and Adjustments ...................................................................................................11-33Mobile Inventory Accuracy Overview ..........................................................................................................11-35Physical Inventory Overview ........................................................................................................................11-36Why Perform Physical Inventories? ..............................................................................................................11-37Defining Physical Inventories........................................................................................................................11-38Physical Inventory Tags ................................................................................................................................11-39Inventory Snapshots ......................................................................................................................................11-41Entering Physical Inventory Counts ..............................................................................................................11-43

Voiding Tags .................................................................................................................................................11-45Approval Tolerances......................................................................................................................................11-46Physical Inventory Adjustments ....................................................................................................................11-47Accuracy Reports ..........................................................................................................................................11-48Profile Options...............................................................................................................................................11-54Implementation Considerations .....................................................................................................................11-55Summary........................................................................................................................................................11-58

R12 Table Information....................................................................................................................................12-1R12 Table Information ..................................................................................................................................12-3Objective........................................................................................................................................................12-4Organization Tables.......................................................................................................................................12-5Subinventories and Locator Tables................................................................................................................12-7Item Master Tables........................................................................................................................................12-9

Item Status Tables .........................................................................................................................................12-11Item Categories Tables..................................................................................................................................12-13Item Reservation Tables ................................................................................................................................12-15Inventory Transaction Tables ........................................................................................................................12-17Summary........................................................................................................................................................12-19


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R12 Oracle Inventory Management Fundamentals Table of Contentsvii

Preface

Profile

Before You Begin This Course

Working experience with Oracle Applications.

Prerequisites

There are no prerequisites for this course.

How This Course Is Organized

R12 Oracle Inventory Management Fundamentalsis an instructor-led course featuring lectureand hands-on exercises. Online demonstrations and written practice sessions reinforce theconcepts and skills introduced.


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R12 Oracle Inventory Management Fundamentals Table of Contentsviii

Related Publications

Oracle Publications

Title Part Number

Oracle Inventory Users Guide B31547-02

Additional Publications

System release bulletins

Installation and users guides

Read-me files

International Oracle Users Group (IOUG) articles

Oracle Magazine


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R12 Oracle Inventory Management Fundamentals Table of Contentsix

Typographic Conventions

Typographic Conventions in Text

Convention Element Example

Bold italic Glossary term (ifthere is a glossary)

The algorithminserts the new key.

Caps andlowercase

Buttons,check boxes,triggers,windows

Click the Executable button.Select the Cant Delete Card check box.Assign a When-Validate-Item trigger to the ORD block.Open the Master Schedule window.

Courier new,case sensitive(default islowercase)

Code output,directory names,filenames,passwords,pathnames,URLs,

user input,usernames

Code output: debug.set (I, 300);

Directory: bin(DOS), $FMHOME(UNIX)

Filename: Locate the init.orafile.

Password: User tigeras your password.

Pathname: Open c:\my_docs\projects

URL: Go to http://www.oracle.com

User input: Enter 300

Username: Log on as scott

Initial cap Graphics labels(unless the term is aproper noun)

Customer address (butOracle Payables)

Italic Emphasized wordsand phrases,titles of books andcourses,variables

Do notsave changes to the database.For further information, see Oracle7 Server SQL LanguageReference Manual.

[email protected], where user_idis thename of the user.

Quotation

marks

Interface elements

with long namesthat have onlyinitial caps;lesson and chaptertitles in cross-references

Select Include a reusable module component and click Finish.

This subject is covered in Unit II, Lesson 3, Working withObjects.

Uppercase SQL columnnames, commands,functions, schemas,table names

Use the SELECT command to view information stored in theLAST_NAMEcolumn of the EMP table.

Arrow Menu paths Select File> Save.Brackets Key names Press [Enter].

Commas Key sequences Press and release keys one at a time:[Alternate], [F], [D]

Plus signs Key combinations Press and hold these keys simultaneously: [Ctrl]+[Alt]+[Del]


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R12 Oracle Inventory Management Fundamentals Table of Contentsx

Typographic Conventions in Code

Convention Element Example

Caps andlowercase

Oracle Formstriggers

When-Validate-Item

Lowercase Column names,table names

SELECT last_nameFROM s_emp;

Passwords DROP USER scottIDENTIFIED BY tiger;

PL/SQL objects OG_ACTIVATE_LAYER(OG_GET_LAYER (prod_pie_layer))

Lowercaseitalic

Syntax variables CREATE ROLE role

Uppercase SQL commands andfunctions

SELECT useridFROM emp;

Typographic Conventions in Oracle Application Navigation Paths

This course uses simplified navigation paths, such as the following example, to direct youthrough Oracle Applications.

(N) Invoice > Entry > Invoice Batches Summary (M) Query > Find (B) Approve

This simplified path translates to the following:

1. (N) From the Navigator window, select Invoicethen Entrythen Invoice BatchesSummary.

2. (M) From the menu, select Querythen Find.

3. (B) Click the Approvebutton.

Notations:

(N) = Navigator

(M) = Menu

(T) = Tab

(B) = Button

(I) = Icon

(H) = Hyperlink

(ST) = Sub Tab


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R12 Oracle Inventory Management Fundamentals Table of Contentsxi

Typographical Conventions in Oracle Application Help System Paths

This course uses a navigation path convention to represent actions you perform to findpertinent information in the Oracle Applications Help System.

The following help navigation path, for example

(Help) General Ledger > Journals > Enter Journals

represents the following sequence of actions:

1. In the navigation frame of the help system window, expand the General Ledger entry.

2. Under the General Ledger entry, expand Journals.

3. Under Journals, select Enter Journals.

4. Review the Enter Journals topic that appears in the document frame of the help system

window.


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R12 Oracle Inventory Management Fundamentals Table of Contentsxii


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R12 Overview of Oracle InventoryChapter 1 - Page 1

R12 Overview of OracleInventory

Chapter 1


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R12 Overview of Oracle Inventory


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Objectives


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Overview

Overview

Oracle Inventory treats many different types of things as inventory. Inventory can be:

Finished goods that you sell to customers

Services that you sell to customers

Spare parts for maintenance

Raw materials for manufacturing processes

Inventory you purchase from a supplier on consignment


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Inventory Capabilities


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Inventory Capabilities


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Receipt to Issue Life Cycle

Receipt to Issue

Oracle Inventory uses the receipt to issue process to manage your inventory. When inventoryarrives in your warehouse you receive it. After you receive inventory, you can transfer it withinyour organization or to another organization. Finally, you can issue material out of OracleInventory.


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Receiving Inventory

Receiving Inventory

There are different ways you can receive material into your organization.

Purchasing

You can use Oracle Purchasing to receive material from outside of your organization. You canreceive:

Purchase order receipts

Internal requisitions

In-transit receipts

Return material authorizations

Unexpected receipts


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Work in Process

You can use Oracle Work in Process to receive material from the manufacturing floor. You canreceive:

Component returns

Negative component issues

Assembly returns

Inventory

You can use Oracle Inventory to receive material in to your warehouse. You can receive:

Miscellaneous account receipts

Receipt from projects

User-defined receipts

Interorganization transfers


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Receiving Inventory


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Transferring Inventory

Transferring Inventory

Different applications can generate requests to transfer inventory.

Shipping

You can use Oracle Shipping Execution to generate a transfer to move material from a storagearea to a staging to for shipping.

Order Management

You can use Oracle Order Management to generate a transfer to move material from a storagearea to a staging area for shipping.

Work in Process

You can use Oracle Work in Process to generate a transfer to acquire components for a project.


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Inventory

You can use Oracle Inventory to:

Transfer material between organizations

Transfer material within an organization

Replenish materials

Request transfers


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Issuing Inventory

Issuing Inventory

You can use the following applications to issue material:

Order Management

Oracle Order Management can generate an inventory issue through:

Sales orders

Internal orders

Purchasing

Oracle Purchasing can generate an inventory issue for:

Return to vendor materials

Work in Process

Oracle Work in Process can generate an inventory issue through:

Component issues

Assembly returns


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Inventory

Oracle Inventory can issue stock through:

User-defined material issues

Interorganization transfers

Cycle count negative issue

Issue requests


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Oracle Inventory Application Integration

Integration of Oracle Inventory to Manufacturing Applications

Oracle Inventory interacts with the following applications:

Oracle Cost Management receives cost information and transaction rates from OracleInventory. Oracle Inventory integrates to Oracle General ledger via Oracle CostManagement

Oracle Work in Process provides work in process (WIP) activity and available to promise(ATP) supply information to Oracle Inventory and receives item and on-hand quantityinformation from Oracle Inventory.

Oracle Advanced Supply Chain Planning and Oracle Global Order Promising provideATP supply information and receive on-hand quantity and forecast information from

Oracle Inventory.

Oracle Bill of Materials receives item information from Oracle Inventory.

Oracle Engineering provides engineering item information and receives item informationfrom Oracle Inventory.

Oracle Order Management provides shipping, reservations, and demand information andreceives item, ATP, and on-hand quantity information from Oracle Inventory.


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Oracle Purchasing provides receipt, delivery, ATP supply, and planning supplyinformation and receives item requisition, and interorganization shipment informationfrom Oracle Inventory.


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Integration of Oracle Inventory to Financial Applications

Integration of Oracle Inventory to Financial Applications

Oracle General Ledger provides ledger and currency exchange rates and receivingaccounting summary and detail information via Oracle Cost Management.

Oracle Payables receives Item information from Oracle Inventory.

Oracle Receivables provides intercompany invoice information and receives iteminformation from Oracle Inventory.

Oracle Assets receives item information from Oracle Inventory.


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Summary


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R12 Defining Inventory OrganizationsChapter 2 - Page 1

R12 Defining InventoryOrganizations

Chapter 2


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R12 Defining Inventory Organizations


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Objective


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Inventory Organizations

Inventory Organizations

An inventory organization is a facility where you store and transact items. Before you can useOracle Inventory, you must define one or more inventory organizations. Inventoryorganizations represent distinct entities in your enterprise and can be one of the following:

A physical entity such as a manufacturing facility, warehouse, or distribution center.

A logical entity such as an item master organization, which you use to define items.

An inventory organization may have the following attributes:

An inventory organization can have its own location, ledger, costing method, workdaycalendar, and items.

An inventory organization can share one or more of these characteristics with otherorganizations.


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Inventory Organization Structure

Inventory Organization Structure

An inventory organization, where you store and transact items can have one or moresubinventories. Subinventories are unique physical or logical separations of material inventory,such as raw material inventory, finished goods inventory, or defective goods inventory. InOracle Inventory, all material within an organization is held in a subinventory. You mustdefine at least one subinventory for every organization. You can track item quantities bysubinventory as well as restrict items to specific subinventories.

The subinventories in an inventory organization may be made up of one or more locators. Youuse locators to identify physical areas where you store inventory items. You can track items bylocator and restrict items to a specific locator. Locator control is optional in Oracle Inventory.


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Sample Inventory Organization


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Multi-Organization Structure

Multi-Organization Structure

Multi-Organization structure enables you to model multiple business units in an enterpriseusing a single installation of Oracle applications. In a multi-organization architecture you cankeep data secure and separate from each business unit.

The following are the benefits of multi-organization structure:

You can use a single installation of any Oracle Applications product to support anynumber of business units, even if those business units use a different ledger.

Secure access to data so users can access only relevant information.

You can define a organizational model that best suits your business requirements.

In Inventory, you can fulfill any Sales Order or Purchase Order regardless of them beingbooked from any Inventory organization. You can also determine if any inter-companyinvoicing needs to occur based on if the Sales Order or Purchase Order was booked in adifferent Operating Unit other than the one to which the Inventory organization isassigned.


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Setting Up Locations

Setting Up Locations

Define information describing the physical locations of employees and organizations.

Locations are shared between Oracle Inventory, Oracle Purchasing, and Oracle HumanResource Management Systems. Locations flagged as global locations are available to allbusiness groups. You can associate each organization with only one location; however,you can associate more than one organization with the same location.

Physicallocations are defined in Oracle Human Resource Management Systems.


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Defining Organizations

Defining Organizations

Classify the Organization

Choose an organization classification to describe the general purpose of your organization.

Examples of organization classifications are inventory organization, legal company, andHR organization.

Choose inventory organization as your organization classification to use your organizationfor inventory management.

Ledger

Tie each inventory organization to an operating unit. Each operating unit is associated to a

legal entity and a primary ledger.


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Inventory Parameters

Inventory Parameters

Organization Features

You must enter organization information such as the organization code, and the item masterorganization. The system defaults this field to the current organization. You must change thisfor any organization that is not an item master organization. The item master organizationshould be the first inventory organization you create.

Note:The Manufacturing Partner Organization functionality is only available in Japan, Taiwanand Korea.

Products and Features

You can enable specific products on the Inventory Parameters tab. These include OracleWarehouse Management, Oracle Process Execution, and Oracle Enterprise Asset Management.If you have Oracle Warehouse Management installed, then you can enable the WarehouseControl System.


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Costing Parameters

Costing Parameters

Standard costing:A costing method where a predetermined standard cost is used for chargingmaterial,resource, overhead, period close, job close, and cost update transactions and valuinginventory. Any deviation in actual costs from the predetermined standard is recorded as avariance.

Average costing:A costing method which can be used to cost transactions in both inventoryonly and manufacturing (inventory andwork in process) environments. As you performtransactions, the system uses the transaction price or cost and automatically recalculates theaverage unit cost of your items.

LIFO costing:Costing method where it is assumed that items that were received most recently

are transacted first.FIFO costing:Costing method where it is assumed that items that were received earliest aretransacted first.


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Revision, Lot, Serial, and License Plate Number (LPN)Parameters

Revision, Lot, Serial, and LPN Parameters

You determine the starting revision for all items in the organization when you define yourinventory organization. You can also choose to set lot control and serial control parameters atthe organization level. Revision control is discussed in the Defining and Maintaining Itemsmodule. Lot control and serial control is discussed in the Lot and Serial Control module.

LPN Generation Options

If you have Oracle Warehouse Management installed, and you are working with a WarehouseManagement enabled organization, you can define License Plate Number (LPN) GeneratingOptions. LPNs must be unique across organizations. Setting the parameters on the Revision,Lot, Serial, And LPN tab enables the system to generate LPNs on demand, or through aconcurrent request. As long as the number is unique, Oracle Warehouse Management alsoenables you to generate your own LPNs.


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ATP, Pick, Item-Sourcing Parameters


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Interorganization Parameters


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Other Account Parameters


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Warehouse Management Parameters

Warehouse Management Parameters

For more information about Oracle Warehouse Management Organization Parameters see theOracle Warehouse Management Implementation Guide.


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What Is a Subinventory?

What Is a Subinventory?

A subinventory is a physical or logical grouping of inventory such as raw material, finishedgoods, defective material, or a freezer compartment. A subinventory can be the primary placewhere items are physically stocked. You must specify a subinventory for every inventorytransaction.


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What Is a Subinventory

What Is a Subinventory (continued)

For more information about subinventories, Defining Subinventories, Oracle Inventory UsersGuide.

Note:Types of subinventories other than Storage matter only in WMS. You can't have areceiving subinventory unless you're using MSCA or WMS e.g. you can receive material onthe dock and can place it in a receiving subinventory (quantity is not reflected in on-hand)before you transfer it to a putaway location. There can be many receiving subinventories in thereceiving area of a warehouse. Refer to Oracle Warehouse Management User Guidefor moreinfo.


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Defining Subinventories

Defining Subinventories

You define subinventories by organization. Each subinventory must contain the followinginformation:

Unique alphanumeric name

Status

Cost Group (if you have Oracle Warehouse Management installed)

Parameters

Lead times

Sourcing information

Account informationFor more information about subinventories see Defining Subinventories, Oracle InventoryUsers Guide


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Locator Control

Locator Control

Locators are structures within subinventories. Locators are the third level in the enterprisestructuring scheme of Oracle Inventory. Locators may represent rows, aisles, or bins inwarehouses. You can transact items into and out of locators. You can restrict the life oflocators, establish capacity of a specific locator in weight or units, as well as specifydimensions which define a locators capacity by volume.

In coordination with locator settings at the subinventory and item level, you must first specifylocator controls at the Organization level:

None:Inventory transactions within this organization do not require locator information.

Prespecified only:Inventory transactions within this organization require a valid,

predefined locator for each item.

Dynamic entry allowed:Inventory transactions within this organization require a locatorfor each item. You can choose a valid, predefined locator, or define a locator dynamicallyat the time of transaction.

Determined at subinventory level:Inventory transactions use locator control informationyou define at the subinventory level.


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Dynamic and Static Locators


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Subinventory-Locator Relationship

Subinventory-Locator Relationship

You can structure Oracle Inventory in such a way that some of the subinventories and itemshave locator control while others do not. If locator control is turned on at the item level, youmust specify a locator when transacting the item into or out of a subinventory. If locatorcontrol is turned on at the subinventory level, you must specify a locator when transacting anyitem into or out of that subinventory. Each stock locator you define must belong to asubinventory, and each subinventory can have multiple stock locators. The possible locatorcontrol types are:

None

Prespecified

Dynamic entry

Item Level

You cannot use the same locator names within any two subinventories within the sameorganization.

For more information about setting up locator control see Defining Stock Locators, OracleInventory Users Guide.


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Locator Flexfield Structure

Locator Flexfield Structure

Locator flexfield structure is common across all organizations. For Example if you set up Row1A Rack 1A and Bin 1A in M1 Seattle, you cannot use Aisle 1A Rack 1A and Bay1A structurein M2 Boston.

For more information see the Oracle Applications Flexfields Guide.


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Interorganization Shipping Networks

Interorganization Shipping Networks

An interorganization shipping network describes the relationships and accounting informationbetween a shipping organization and a destination organization. You must define a shippingnetwork between two organizations before you can transfer material between organizations.When you setup a shipping network you must select a transfer type. The choices are intransit ordirect. If you choose intransit, Oracle Inventory moves material to an intermediary state beforeit reaches the destination organization, and a receipt transaction is required in the destinationorganization once the material arrives in order to retrieve it. If you choose direct, OracleInventory moves the material directly to the destination organization. However, for both, youcan determine default receipt routing and whether internal orders are required to transfer

material.If you choose intransit as the transfer type you can determine:

Shipping methods

GL accounts to use in transit

Material ownership during transfers


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Planning lead-times

Transfer charges

For more information see Interorganization Shipping Network, Oracle Inventory Users Guide.


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Shipping Method

Shipping Method

Shipping methods are the way you ship material. When you create a shipping method, youmust enable it before you can use it in a shipping network. If you disable a shipping methodyou cannot use it in a shipping network.


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Additional Set Up Steps

Additional Set Up Steps

Entering Employees

Employees who perform cycle and physical inventory counts.

Defining Planners

Identify persons responsible for planning items or groups of items.

Defining Freight Carriers

Enables assignment of a general ledger account to one or more carriers to collect costsassociated with their use. You can assign a carrier to each interorganization transfer.


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Additional Organizational Setups

Additional Organizational Setups

Material Shortage Parameters

Define the parameters for the system to determine when unsatisfied demand exceeds availablequantity of incoming supply. This condition can be used by the system to trigger shortagealerts and notifications.

Organization Access

This controls access to organizations based on the user responsibility assigned to a user by thesystem administrator.

When implemented for one user responsibility, it is then required for all other userresponsibilities accessing the same organization.


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Copying Inventory Organizations

Copying Inventory Organizations

You can create new inventory organizations or copy an existing organization. You mustestablish a model organization to use as a baseline for new organizations. This modelorganization must be a transactional organization and not an item master organization. You cancopy only organizations within the same operating unit. The system creates the neworganizations under the same business group to which the model organization belongs, andassigns the new organizations to the same operating unit, legal entity, and ledger as the modelorganization.

When you copy organizations you specify which information to copy from the modelorganization. You can choose to copy the following information from the model organization:

Organization definition Shipping networks

Hierarchy assignments

Bills of material and bills of material parameters

Departments, resources, and routings

Item information


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When you copy a model organization the system automatically copies the followinginformation:

Subinventories

Locators

Work in Process parameters

Work in Process accounting classes

Planning parameters

Shipping parameters

Note: The system does not copy organization-specific data including: cost type, cost sub-element, Process Manufacturing Enabled, Oracle Warehouse Management enabled, and cost-sharing entities.

For more information about copying inventory organizations see Copy Inventory OrganizationImplementation Guide.


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Organization Hierarchy

Organization Hierarchy

Organization hierarchies enable you to group together organizations and perform operationsacross all organizations within a hierarchy. You can perform the following operations acrossall organizations within an organization hierarchy:

Assign items to organizations:You can assign an item to any organization that belongsto the same master organization within the same hierarchy. You can also assign a range ofitems or item categories to a single organization, as well as a range of items or categoriesto multiple organizations.

Copy item attributes:You can manage item attributes for many organizations in oneplace. You can verify that an item or group of items were set up correctly, copy

organization-level item attributes from one item to other organizations that use the item,and copy item attributes from one item to another within an organization.

View item information: You can view on-hand quantity information as well as itemwhere used information for organizations.

Open and close accounting periods:You can open and close accounting periods.

Purge transactions:You can purge transactions.


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Process transactions with the Inventory Transaction Open Interface:You can use theInventory Transaction Open Interface to review, submit, or cancel transactions.

Manage bills of materials:You can create common bills of material for organizations aswell as delete items, bills, components, routings, and operations.

Manage engineering change orders:You can automatically implement as well as makechanges to engineering change orders.


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Organization Reports


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Organization Reports


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Profile Options


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Implementation Considerations


When you set up your organizations you need to determine the organization type. For example,you need to determine if the organization is a process or a discrete organization and if you areusing Oracle Warehouse Management. You can use Oracle Warehouse Management andOracle Process Management in the same organization. You should not however, use OracleAsset Management with Oracle Warehouse Management or Oracle Process Execution. If youplan on using Oracle Warehouse Management you need to determine if you are going to usethe Warehouse Control system. If this organization transacts business with Japan, Taiwan, orKorea you can enable Chargeable Subcontracting for the organization. You must consider allof this information before you create items or process transactions.


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Summary


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R12 Units of MeasureChapter 3 - Page 1

R12 Units of Measure

Chapter 3


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R12 Units of Measure


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Objectives


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Units of Measure

Unit of Measure

You define units of measure for tracking, moving, storing, and counting items.

Primary Unit of Measure

When you define an item you establish a primary unit of measure. The system tracks on-handquantity and calculates transactions based on the primary unit of measure.

Secondary Unit of Measure

You can optionally establish a secondary unit of measure (dual unit of measure control) for anitem. Secondary unit of measure can be used for cases where you need to track in two units ofmeasure and there is no constant conversion between the two unit of measures (UOMs). Forexample, chickens can be tracked in pounds and eaches.

If an item is under dual unit of measure control the system tracks on-hand quantity based onboth the primary and secondary units of measure. For example, you can track an item in botheaches and liters.


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Uses of Units of Measure

Uses of Units of Measure

Planning Products

- Forecasting and consumption

- Master scheduling

- Material requirements planning

Work in Process

- Shop floor moves

- Resource transaction

- Completion and return transactions

- Inquiries and reports

Bills of Material and Engineering

- Defining bills of material

- Defining engineering items


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Unit of Measure Class

Unit of Measure Class

Unit of measure classes represent groups of units of measure with similar characteristics. Aunit of measure class contains a base unit of measure. You use the base unit of measure toperform conversions between units of measure in the class. For this reason, the base unit ofmeasure should represent the other units of measure in the class, and be one of the smallerunits. For example, quantity is a unit of measure class and each, dozen, and gross are examplesof units of measure within the class. The unit of measure each is the base unit of measure forthis class.


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Unit of Measure Conversions

Units of Measure Conversions

A unit of measure conversion is a mathematical relationship between two different units ofmeasure. For example, 16 ounces = 1 pound, or 2.2 pounds = 1 kilogram. If you want totransact items in units of measure belonging to classes otherthan their primary UOM class,you must define conversions between the base units of measure in different UOM classes.


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Lot-Level Unit of Measure Conversions

Lot-Level Unit of Measure Conversions

Lot specific conversions enable you to perform a specific inter-class conversion for a given lot.This enables you to establish more granular control over the transactional quantities of a lot.For example, the standard inter-class conversion for a lot controlled item is one gallon equals15 pounds; however, when you receive a particular lot of the item, 1 gallon equals 16 pounds.You can create a lot specific unit of measure for this instance.

You can create lot-specific unit of measure conversions for on-hand lots or lots with a zerobalance. If you create a lot-specific conversion for a lot with on-hand quantities, you canautomatically update the quantities in the system to more accurately reflect the on-handquantity.


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Oracle User Student Guide

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