Why Upgrade to Release 12? WIIFM? Cost and Related Improvements Douglas Volz Douglas Volz Consulting Sharon Widmer Independent Consulting Slide 2 Agenda R12 Cost Related Features MOAC Multi-Org Access Control Subledger Accounting Re-Designed A/P Accruals COGS Recognition Cost-Related BOM Features Period Close Drilldown As-of Dates for Inventory Valuation Reconciliation Challenges Cost Rollup Changes Slide 3 R12 Multi-Org Access Control Mostly affects operating unit level functions Allows you to access information across multiple operating units without changing responsibilities Set up a security profile listing the operating units to access Run Security List Maintenance concurrent program Assign the security profile using the MO: Security Profile Slide 4 R12 Multi-Org Access Control Slide 5 SLA: Primary and Secondary Ledgers Primary and Secondary Ledgers In Release 12 Subledger Accounting replaced Global AX Primary to secondary ledger mapping is much better Slide 6 Flexible variance account recognition for: Invoice price and purchase variances Average cost adjustment Standard cost adjustment Manufacturing variances Account aliases Freight charges Most other inventory, manufacturing and related account entries Oracle Discrete Costing SLA enhancements: Slide 7 JOURNAL ENTRY SETUPS Define/copy and modify journal line types Define/copy and modify account derivation rules Define/copy and modify descriptions PROCESS Enter Transaction(s) Cost Manager Create Accounting*Transfer Journal Entries to GL *Run Create Accounting Cost Management concurrent request for accounting all transactions from the Cost Management SLA responsibility. Receiving Accounting can be generated in the Purchasing responsibilities using the Create Accounting Receiving concurrent request. These requests have an option to transfer the entries created to General Ledger. A separate process is also available. SLA Setup and Process Overview Slide 8 Subledger Accounting SLA for product line accounting, variance recognition Transactions Accounting Events Cost Management SLA Accounting Configurations Subledger Balances Subledger Journal Entries Accounting Program Journal Entry Setup GL Journal Entries and Balances Slide 9 Subledger Accounting SLA Basic Architecture SLA Accounting Tables Enter Transaction(s) Transaction Accounting Tables Cost Manager XLA_AE_HEADERS XLA_AE_LINES XLA_DISTRIBUTION _LINKS XLA_EVENTS Same Cost Transaction Accounting Tables Create Accounting GL_ INTERFACE G/L Tables GL_LEDGERS GL_JE_HEADERS GL_JE_LINES GL_JE_BATCHES One Common Accounting Subledger Table Subledger Accounting and Inquiries Slide 10 Tools menu options (View Accounting and View Accounting Events) launch SLA UI pages (HTML) which display the information regarding the accounting event with the transaction and its corresponding accounting Clicking on distributions button shows the default accounting from MTL_TRANSACTION_ACCOUNTS Subledger Accounting and Inquiries - View Accounting Slide 11 Accounting details for the Miscellaneous receipt transaction in the SLA UI (launched from the Tools menu) Accounting is created for all ledgers associated with the primary ledger (Vision Operations (USA)) COGS Recognition In R12 all customer shipment entries go to deferred COGS Revenue and COGS are explicitly matched AR: Autoinvoice & Revenue Recognition Master Program CST: Inventory Cost Processor or Record Order Management CST: Collect Revenue Recognition Information CST: Then Generate COGS Recognition Events New Accounting Entries to clear deferred COGS Use the COGS Revenue and COGS Matching Report Slide 12 COGS Recognition Accounting Entries True COGS 1. Customer Shipment COGS Recognition Deferred COGS Inventory 10 New Accounting Entries to clear deferred COGS Use the COGS Revenue and COGS Matching Report Slide 13 Slide 14 New Deferred COGS Account Slide 15 COGS Recognition (Continued) Dependencies This new feature introduces a dependency in the Receivables and Costing period close processes Costing will process COGS recognition events in a closed inventory period until the Receivables period status is set to CLOSED You have to run Create Accounting after you have closed your inventory orgs Having to remember to run COGS Recognition Processes followed by Create Accounting may create confusion at month-end Slide 16 Related BOM Features Fixed Component Usage Support: Support for lot-based materials that have a fixed usage regardless of the job size for discrete WIP jobs, OSFM lot-based jobs and Flow Manufacturing Component Yield Support: Flexibility to control the value of component yield factors at WIP job level. The transaction logic now considers pre-yield BOM quantity per assembly rather than the quantity inflated by shrinkage. Slide 17 Period Close Diagnostics Forms Drilldown Using the same Inventory Accounting Periods form you can drilldown to associated forms to view the problem transactions New workflow to notify of failing transactions Period Close Pending Transactions Report Report for the transactions holding up the inventory accounting period Slide 18 A/P Accruals Perpetual A/P Accruals are Completely Rewritten Monthly load into summary tables Excellent detail and summary reporting (same report/different templates) A/P Accrual write-offs go to your G/L Works right out of the box! Period End Accruals: Calculate Accrual Balances at PO Distribution Level Period-end accrual entries stored in a separate accounting table and automatically reversed in the new month Uninvoiced Receipts Report and Period-End Accruals use same underlying code / same results Slide 19 Reconciliation Improvements in R12 Inventory Reconciliation Inventory Value Reports have an as of date Inventory Value Report Receiving Value Report Intransit Value Report All Inventories Value Report Slide 20 Reconciliation Challenges in R12 Subledger Accounting and Inventory Reconciliation Which accounts represent inventory and WIP valuation? Dropped Reports (use: R12 Open Account Balance Listing and Account Analysis report ) Receiving Value by Destination Account Report Subinventory Account Value Report and the Cost Group Account Value Report have been dropped Release 12 dropped the valuation accounts on most inventory reports Slide 21 Reconciliation Challenges in R12 (Continued): Material and WIP Distribution Inquiries and Reports Release 12 Matl and WIP distribution inquiries & reports do not reflect the SLA results SLA Journal Reports do not show operational information Release 12 records the Material accounting and WIP accounting entries by cost element rendering the old 11i inquiries and reports more difficult to use, especially for Standard Costing. Release 12 forces Standard Costing to record WIP & Material entries by Cost Element / you can summarize in SLA but you dont have the same detail reporting in SLA Slide 22 SLA Accounting Tables Enter Transaction(s) Basic Table Structure for SLA Transaction Accounting Tables Accounting Processor XLA_AE_HEADERS XLA_AE_LINES XLA_DISTRIBUTION _LINKS XLA_EVENTS Module Specific Transaction Accounting Tables Create Accounting G/L Tables GL_LEDGERS GL_JE_HEADERS GL_JE_LINES GL_JE_BATCHES One Common Accounting Subledger Table GL_ INTERFACE Receiving Material WIP Slide 23 Cost Rollup Changes The Supply Chain Cost Rollup and Cost Rollup have been combined Slide 24 Cost Rollup Changes Slide 25 Summary Subledger Accounting solves many account classification issues Yet Subledger Accounting causes additional reconciliation headaches Yet one more interface and batch job More levels of indirection: multiple accounting tables Which accounting table to tell your auditors and how to explain to them it is different? Must run Cost Management Subledger Period Close Exceptions Report (by ledger but you can use Ledger Sets) Slide 26 Summary (continued) COGS Recognition works well, just have to get used to entries hitting after you close the inventory accounting periods New period close diagnostics Inventory reconciliation issues are improved and also hindered in Release 12 Inventory value reports have as as of date But most inventory value reports have no valuation accounts Still only single warehouse Period Close Reconciliation Report not multi-org (consider custom reports from the period close snapshot table cst_period_close_summary) Slide 27 Acknowledgements Oracle Cost Development Partners in crime at our clients Slide 28 Sharon Widmer Professional Background. Core Expertise Data Conversion Data Cleansing Standard Costing Manufacturing Processes Cost Management Inventory Warehouse Management WIP Bills of Material Experience Clients Served: Form Factor Stryker Endoscopy Qualcomm USG Toshiba America Business Systems Amkor Technology JDS Uniphase With over 25 years total work experience, Sharon Widmer is an accomplished Oracle Functional Consultant and Accounting Manager, specializing in manufacturing and distribution companies. She has 14 years experience implementing Oracle Applications, and over 10 years in Accounting for Manufacturing and Distribution companies. Sharon has helped clients with Oracle implementations (Release through Release 12.1) and process reengineering for Inventory Control and Accounting. Industries she has worked in include High Tech, Building Construction & Industrial Products, Telecommunications, and Life Sciences. In a recent consulting role Sharon helped a Chip Test Equipment manufacturer and their Cost Management team get to the next level. As a SME for Inventory Control and Cost Accounting, she helped them achieve significant process redesign and Oracle configuration changes, which resulted in more accurate Inventory Control and a streamlined, faster Cost Month End Close. Slide 29 Douglas Volz Professional Background Doug Volz is a Senior Architect and Advisor for Oracle Application projects, with a particular interest in Project and Cost Management. He has 30 years accumulated experience, including 5 years in Oracle Development (co-designing Oracle Cost Management) and 12 years in industry in Cost and Accounting Management positions. His Manufacturing and Cost systems experience covers project management, software design/development, delivery and consulting services, for both Oracle Corporation, and multiple international consulting firms. Prior to his systems career, Mr. Volz also held numerous management accounting positions for telecommunications, defense, and electronics companies. In his consulting roles, Doug has served over 100 clients. Many of these were multi-org, multi-currency with global footprints. Countries include US, Mexico, UK, Netherlands, Belgium, Taiwan, P.R.O.C., Norway, Japan, Italy and Germany. Doug leads the Cost Sub-Committee, for the OAUG Discrete Manufacturing Special Interest Group. He also advises and participates on the Oracle Customer Advisory Board for Fusion Costing. Core Expertise Multi-organization, Multi-currency ERP Implementations Project Management and Senior Project Advisor Core manufacturing processes Cost Management Inventory Bills of Material WIP Systems Integration and Data Conversions Experience Sample of clients served: Beckman Coulter (US) Matsushita (UK, Mexico) NTL (now Virgin Media) Logitech (US, Taiwan, P.R.C.) Matsushita (UK, Mexico) NTL (now Virgin Media) TCI International (US) Onninen AS (Norway) Slide 30 Thanks for allowing us to discuss these topics with you!