Oracle Inventory: Inventory Organizations

Inventory Organizations

An inventory organization is a facility where you store and transact items. Before you can use
Oracle Inventory, you must define one or more inventory organizations. Inventory
organizations represent distinct entities in your enterprise and can be one of the following:
A physical entity such as a manufacturing facility, warehouse, or distribution centre.
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, workday calendar, and items.
An inventory organization can share one or more of these characteristics with other
organizations.

Inventory Organization Structure

An inventory organization, where you store and transact items can have one or more
subinventories. Subinventories are unique physical or logical separations of material inventory,
such as raw material inventory, finished goods inventory, or defective goods inventory. In
Oracle Inventory, all material within an organization is held in a subinventory. You must define
at least one subinventory for every organization. You can track item quantities by subinventory
as well as restrict items to specific subinventories. The subinventories in an inventory
organization may be made up of one or more locators. You use locators to identify physical
areas where you store inventory items. You can track items by locator and restrict items to a
specific locator. Locator control is optional in Oracle Inventory.

Sample Inventory Organization

Receiving Subinventory
Raw material subinventory
Manufacturing subinventory
Finished goods subinventory
Inspection subinventory
Defective goods subinventory
Shipping Subinventory

Multi-Organization Structure

Multi-Organization structure enables you to model multiple business units in an enterprise

using a single installation of Oracle applications. In a multi-organization architecture you can
keep 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 any number 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 Oracle Inventory, you can fulfil any sales order or purchase order regardless of them being
booked from any Inventory organization. You can also determine if any intercompany invoicing
needs to occur based on if the Sales Order or Purchase Order was booked in a different
Operating Unit other than the one to which the Inventory organization is assigned.

Setting Up Locations

Define information describing the physical locations of employees and organizations.

Locations are shared between Oracle Inventory, Oracle Purchasing, and Oracle Human
Resource Management Systems. Locations flagged as global locations are available to all
business groups. You can associate each organization with only one location; however, you can
associate more than one organization with the same location.
Physical locations are defined in Oracle Human Resource Management Systems.

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, and HR
organization.
Choose inventory organization as your organization classification to use your organization for
inventory management
Ledger
Tie each inventory organization to an operating unit. Each operating unit is associated to a legal
entity and a primary ledger.
Inventory Parameters
Organization Features
You must enter organization information such as the organization code, and the item master
organization. The system defaults this field to the current organization. You must change this

for any organization that is not an item master organization. The item master organization
should be the first inventory organization you create.
Note: The Manufacturing Partner Organization functionality is only available in Japan, Taiwan
and Korea.
Products and Features
You can enable specific products on the Inventory Parameters tab. These include Oracle
Warehouse Management, Oracle Process Execution, and Oracle Enterprise Asset Management.
If you have Oracle Warehouse Management installed, then you can enable the Warehouse
Control System.
Costing Parameters
Standard costing: A costing method where a predetermined standard cost is used for charging
material, resource, overhead, period close, job close, and cost update transactions and valuing
inventory. Any deviation in actual costs from the predetermined standard is recorded as a
variance.
Average costing: A costing method which can be used to cost transactions in both inventory
only and manufacturing (inventory and work in process) environments. As you perform
transactions, the system uses the transaction price or cost and automatically recalculates the
average 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 are
transacted first.
Revision, Lot, Serial, and License Plate Number (LPN) Parameters
You determine the starting revision for all items in the organization when you define your
inventory organization. You can also choose to set lot control and serial control parameters at
the organization level. Revision control is discussed in the Defining and Maintaining Items
module. 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 Warehouse
Management enabled organization, you can define License Plate Number (LPN) Generating
Options. 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 a
concurrent request. As long as the number is unique, Oracle Warehouse Management also
enables you to generate your own LPNs.

ATP, Pick, Item-Sourcing Parameters

This enables to
Set the available to Promise (ATP) default rule for the organization
Set the picking default for the organization
Set the item sourcing default for the organization
Inter-organization Parameters

This enables to determine the parameters the organization uses when it transfer the material
between organization.
Other Account Parameters
This enables to setup receiving information, profit and loss account information, and other
additional account details.