Oracle EBS Release 12 Inventory Module Configuration

Oracle Inventory
Oracle Inventory is a very important part of the Oracle E-Business Suite. Its main functionality is to
manage and provide real-time transactions for our Inventory Suite. It allows us to manage our
inbound and outbound logistics and to keep track of transactions in real-time. In simple words,
Oracle Inventory allows us to manage items, which can be in the form of raw material, semi-finished
goods, finished goods, services, and so on.

Configuration Steps
1. Define System Items Flexfield
You must design and configure your System Items Flexfield before you can start defining items in
Oracle Inventory. You must indicate how many separate segments you need for an item code and
how many characters should be there in each segment. Once you define the structure of your
Flexfield and any applicable value sets, you must freeze and compile your Flexfield definition.
System Items Flexfield Structure can only be created once in overall application so decision for its
segments is very crucial. As this is a Key Flexfield so we will follow these 6 steps:
i.

Create

ii.

Assign

iii.

Create

iv.

Assign

v.

Add

vi.

Key

Create

Flexfield

Structure

if

required

qualifiers

Value

Set

for

Value
Values
combinations

for

each

segment

Set

to

in

each

all

segments

of

Flexfield

each
in

segment

Value

Set

each

structure

Navigation path: Inventory>Setup>Flexfields>Key>Segments

2. Open Values in System Item Flexfield

When we have created the value sets for each segment then the next step is to open values for each
segment.
Navigation path: Inventory>Setup>Flexfields>Key>Values

3. Define Categories Flexfield

Categories are the method by which the items in inventory can be separated logically and
functionally for planning, purchasing and other activities. You can use categories and category sets to
group your items for various reports and programs. A category is a logical classification of items that
have similar characteristics. A category set is a distinct grouping scheme and consists of categories.
The flexibility of category sets allows you to report and inquire on items in a way that best suits your

needs.

As

this

i.

is

Key

Flexfield

Create

ii.
Create

Assign

v.

Add

Set

for

Value

will

combinations

steps:

if

required

each

segment

in

each

all

these

Structure

to

for

follow

Flexfield

Set

Values

Create

we

qualifiers

Value

iv.

so

Key

Assign

iii.

vi.

of

Flexfield

each

segments

segment

Value

Set

each

structure

in

Navigation path: Inventory>Setup> Key>Segments

4. Open Values in Categories Flexfield

When we have created the value sets for each segment then the next step is to open values for each
segment.
Navigation path: Inventory>Flexfields>Key>Values

5. Define Stock Locators Flexfield

If you keep track of specific locators such as aisle, row and bin indicators for your items, you need to
configure your Stock Locators Flexfield and implement locator control in your organization. You
must indicate how many separate segments your flexfield has, how many characters each segment
has, and -whether you want to validate the values that you assign to the segments. As this is a Key
Flexfield

so

i.

we

Create

ii.
Create

iv.

Assign

v.

Add
Create

Navigation

follow

Key

Assign

iii.

vi.

will

these

Set

for

Value
Values
combinations

for

Structure

if

required

each

segment

Set

to

in

each

all

segments

path: Inventory>Setup>

steps:

Flexfield

qualifiers

Value

of
each

in

Flexfield
segment

Value

Set

each

structure
Key>Segments

Note: Even if you do not implement locator control, you must still compile the Stock Locators
Flexfield because all Oracle Inventory transaction and on-hand inquiries and reports require a
frozen flexfield definition. However you do not need to configure the flexfield in a specific way.

6. Open Values in Stock Locators Flexfield

When we have created the value sets for each segment then the next step is to open values for each
segment.
Navigation path: Inventory>Flexfields>Key>Values

7. Define Account Aliases Flexfield

An account alias is an easily recognized name or label representing a general ledger account number.
You can view, report, and reserve against an account alias. During a transaction, you can use the
account alias instead of an account number to refer to the account. As this is a Key Flexfield so we
will

follow

i.

these

Create

ii.

Key

Assign

iii.

Create
Assign

v.

Add

vi.

Create

Set

for

Value
Values
combinations

for

Structure

if

required

each

segment

Set

to

in

each

all

steps:

Flexfield

qualifiers

Value

iv.

of

Flexfield

each

segments

segment

Value

Set

each

structure

in

Navigation path: Inventory>Setup> Key>Segments

8. Open Values in Account Aliases Flexfield

When we have created the value sets for each segment then the next step is to open values for each
segment.
Navigation path: Inventory>Setup>Flexfields>Key>Values

9. Define Locations
Locations

have

Bill

Ship

Office

Locations

various
to
to

(identifies
can

a
be

usages

assigned

to

them

such

as:

(where

suppliers

send

invoices)

(where

suppliers

send

product)

where

employees

business

address

linked

to

one

or

many

are

located)

organizations

Navigation path: Inventory>Setup>Organizations>Locations

10. Define Organization Calendar /

Workday Calendar
You can define the inventory organization calendar or the workday calendar in both Oracle Inventory
and Oracle Bills of Material. When you set out to define an inventory organization Oracle asks you to
assign a workday calendar to that Inventory Organization. Organization parameters cannot be saved
without

workday

calendar.

In a workday calendar you specify which days are worked within your organization and which shifts
are available to be worked. The workday calendar is also referred to as the manufacturing calendar or

simply the inventory calendar. However, the workday calendar is separate from the Oracle General
Ledger

calendar.

When you define the inventory organization calendar Oracle Inventory assumes a workday pattern
that includes all days, between the start and end dates of the calendar. The usual practice is to define
a workday pattern of 5 days on and 2 days off for a 5 day working week or 6 days on and 1 day off for
a 6 day working week. You can define one or more workday calendars and assign them to any
number

of

organizations,

and

any

number

of

organizations

can

share

calendar.

Navigation path: Inventory>Setup>Organizations>Calendars

11. Define Inventory Organization(s)

Two types of Inventory Organizations are found in Oracle Applications. They are defined in the same
way. Both are assigned a set of books, a legal entity organization, an operating unit organization and
a

location.

An item master organization is used for item number maintenance and validation. This master
organization serves as a data repository storing items and item attributes, master level categories and
category sets, master level cross references, and numerous data defaults. On-hand balances,
inventory movements and other on-going inventory activities are not performed in an item master
organization. Generally, the master organization is used as the validation organization for
Purchasing and Order Entry. It is recommended that a single item master organization be defined,
even
Set

in

multiple
of

organizations
books

and
environments.

In addition to the item master organization there is one or more non-master or you may say
transactional Inventory Organizations. Like the item master inventory organization, the non-master
organizations are assigned a set of books, a legal entity organization and an operating unit
organization. The non-master inventory organization points to a master organization and looks to
the master organization for master level item attributes, master level categories and other master
level

controlled

data.

NOTE: Each organization has its own set of books/legal entity/operating unit relationship, so
inventory organizations with differing Set of books or operating units may share the same master
organization.
These non-master inventory organizations are the execution level organizations. They hold on-hand
balances and transaction history. Here is where inventory users execute their daily activities, such as
receiving and issuing material, performing cycle counts and viewing material availability and
transaction history. A single organization therefore generally represents a single manufacturing site

or

distribution

center.

Navigation path: Inventory>Setup>Organizations>Organizations

12. Define Cost Types

A cost type is a set of costs uniquely identified by name. Two cost types are predefined for you,
Frozen (for standard costs) and Average. You can define and update an unlimited number of
additional simulation or unimplemented cost types. Each cost type has its own set of cost controls.
These cost types are defined at Inventory Organization level so first we have to select the Inventory
Organization

by

following

this

navigation

path.

Navigation path: Inventory>Change Organization

13. Define Financial Options

Use the Financials Options window to define the options and defaults that you use for your Oracle
Financial Application(s). Values you enter in this window are shared by Oracle Payables, Oracle
Purchasing and Oracle Assets. You can define defaults in this window to simplify supplier entry,
requisition

entry,

purchase

order

entry,

invoice

entry,

and

automatic

payments.

NOTE: Financial Options are shown in Oracle Inventory Document because Financial Options
should be set before setting up Receiving Options and Purchasing Options which are the part of
Oracle

Inventory

and

Oracle

Purchasing

respectively.

Navigation path: Payables>Setup>Options>Financials Options

14. Define Receiving Options

Use the Receiving Options window to define options that govern receipts in your system. Most of the
options that you set here can be overridden for specific suppliers, items, and purchase orders. These
Receiving Options are set at Inventory Organization level so first we have to select the relevant
Inventory Organization Level for which we are going to set our Receiving Options.
Navigation path: Inventory>Change Organization

15. Define Organization Access

You can specify which organizations a responsibility can access by mapping responsibilities to
organizations. Once this mapping is set up, a user logging into an Oracle Inventory product is
restricted to the organizations mapped to the responsibility chosen. The Change Organization
window

is

restricted

Navigation path: Inventory>Organizations>Organizations Access

as

well.

16. Define Unit of Measure Classes

Unit of measure classes represent groups of units of measure with similar characteristics. Creating
unit of measure classes is the first step in unit of measure management. Each unit of measure you
define

must

belong

to

unit

of

measure

class.

Each class has a base unit of measure. The base unit of measure is used to perform conversions
between units of measure in the class. For this reason, the base unit of measure should be
representative of the other units of measure in the class, and generally one of the smaller units. For
example, you could use CU (cubic feet) as the base unit of a class called Volume.
Navigation path: Inventory>Setup>Unit of Measure>Classes

17. Define Unit of Measure

Units of measure are used by a variety of functions and transactions to express the quantity of items.
Defining units of measure is the second step in unit of measure management. The values defined in
the Units of Measure window provide the list of values available in unit of measure fields in other
windows.
Units

of

measure

are

not

organization-specific.

Navigation path: Inventory>Setup>Unit of Measure

18. Define Unit of Measure Conversions

Unit of measure conversions are numerical factors that enable you to perform transactions in units
other

than

the

primary

unit

conversion

of

the

item

common

to
a

conversion

for

specific

item

within

conversion

for

specific

item

between

being

transacted. You

any
unit
unit

of
of

item
measure

measure

can

define:

(Standard)

class

(Intra-class)

classes

(Inter-class)

Navigation path: Inventory>Setup>Unit of Measure>Conversions

19. Define Subinventory(s)

A Subinventory is used as a holding point for on-hand inventory and generally represents a stock
room, stocking area or cage used for storing material. Subinventory(s) are defined within Inventory
Organizations. An Inventory Organization may have any number of Subinventories, and an asset
account is assigned to each Subinventory. Since the Subinventory entity is logical, as there is not an
address

or

physical location description associated with it. Clients may define Subinventories for any physical or
logical

grouping

of

inventory.

As Subinventory is defined under a specific Inventory Organization so first we have to enter into an
Inventory

Organization.

Navigation path: Inventory>Change Organization

20. Define Stock Locators

Stock Locators are an optional entity that may be used to represent physical locations within a
Subinventory. You may choose to use Stock Locators for selected Subinventory(s) or selected items
within selected Subinventory(s). If Locators are used, Subinventory and Locator track on-hand
balances. Therefore, if Locators are defined to represent a shelf within a stockroom, on-hand
balances on the system would show the item and quantity down to the physical location within the
facility.
Oracle Inventory uses a key flexfield for Stock Locators. This presents a few limitations for its use.
Only one Locator flexfield definition is allowed per installation. Therefore, if the stockroom
(Subinventory) wants to track material by row, bin and shelf, it will likely define a three-segment
flexfield with segments for row, bin, and shelf. If Locators are desired for another Subinventory, even
in another Inventory Organization, the structure will again be 3 segments for row, bin and shelf. In
addition to this limitation, Locators must be unique within an Inventory Organization. You cannot
use the same Locator in different Subinventory(s) within an Inventory Organization, but you can use
the

same

locator

in

Subinventory(s)

in

different

Inventory

Organization.

Navigation path: Inventory>Setup>Organizations>Stock Locators

21. Define Category Codes

You can define an unlimited number of categories and group subsets of your categories into category
sets. A category can belong to multiple category sets. You can assign a category to a category set
either at the time you define a category set or at the time you assign an item to the category.
Navigation path: Inventory>Setup>Items>Categories>Category Codes

22. Define Category Codes

You can use categories and category sets to group items for various reports and programs. Category
sets may be used as a means to develop custom lists of items on which to report and sort.
Navigation path: Inventory>Setup>Items>Categories>Category Set

23. Define Default Category Set

When you install Oracle Inventory, you must assign a default category set to each of the following
functional areas: Inventory, Purchasing, Planning, Service, Product Line Accounting and Order
Entry. Product Line Accounting is seeded with the Inventory category set. Inventory makes the
default category set mandatory for all items defined for use by a functional area. If your item is
enabled for a particular functional area you cannot delete the items corresponding default category
set assignment. Default category sets are required so that each functional area has at least one
category set that contains all items in that functional area. You can enable an item for each functional
area by using that functional areas item defining attribute. An item defining attribute identifies the
nature

of

an

item.

Navigation path: Inventory>Setup>Items>Categories>Default Category Sets

24. Define Item Template(s)

A template is a defined set of attribute values. When you apply a template to an item, you overlay or
default

in

the

set

of

attribute

values

to

the

item

definition.

You can apply the same or different templates to an item multiple times. The more recent attribute
values (from the last template applied) override previous values unless the previous value is not
updatable

(for

example,

the

Primary

Unit

of

Measure,

which

is

never

updatable).

Navigation path: Inventory>Setup>Items>Templates

25. Assign Organization, Subinventory(s)

and Stock Locator(s) to Items
As we have discussed preciously that there are two types on Inventory Organizations. One is the
Master Organization in which all the required items are opened and the other is Non-master or
Transactional Organization to which items are assigned which are opened in Master Organization.
After assigning the Non-Master or Transactional Organization to an item you can assign items to a
given Subinventory. Assigning items to a Subinventory does not restrict the Subinventory to that list
of items rather the items are restricted to that Subinventory. Thus, you can always issue and receive
unrestricted items to any Subinventory, but you can only issue and receive restricted items to their
list of Subinventory(s). You activate the list of Subinventory(s) for a restricted item by setting the
Restrict
Similar

Subinventory(s)
to

Subinventory,

attribute
a

Locator

when
can

Navigation path: Inventory>Items>Master Items

defining
also

be

or
assigned

updating
to

an

items.
Item(s).

26. Define Material Overheads (NonMandatory)

You can use material overhead and overhead cost sub-elements to add indirect costs to item costs on
either a percentage basis or as a fixed amount in both standard and average costing organizations.
Each overhead sub-element has a default basis, a default activity, and an absorption account. The
overhead absorption account offsets the corresponding overhead cost pool in the general ledger.
You can base the overhead charge on the number of resource units or percentage of resource value
earned in the routing operation. Or, you can set up move-based overheads where the rate or amount
is charged for each item moved in an operation. To do this, use the Item or Lot basis types.
You can base the material overhead charge on a percentage of the total value, which is earned when
you receive purchase orders or perform WIP completion transactions. Or, you can use the Item or
Lot

basis

types.

You can apply each of these sub-elements using different basis types for increased flexibility.
Material overhead is earned when an item is received into inventory or completed from work in
process. Overhead, based upon resources, is earned as the assembly moves through operations in
work

in

process.

Navigation path: Inventory>Setup>Sub-elements>Overheads

27. Define Default Material Overheads

Rates (Non-Mandatory)
You can define and update default material overhead sub-elements and rates. These defaults speed
data

entry

when

defining

items.

When you define items, these material overheads are defaulted into the Frozen cost type under
standard costing, and into the cost type you defined to hold average rates under average costing.
Navigation path: Inventory>Setup>Costs>Sub-elements>Defaults

28. Define Item Costs (Non-Mandatory)

The

Material

Overheads

defined

are

assigned

to

specific

Item.

Navigation path: Cost Management SLA>Item Costs>Item Costs

29. Define Material Overhead Absorption

Rules (Non-Mandatory)

For

specific

transaction

types

the

defined

Material

Overheads

can

be

used.

Navigation path: Cost Management SLA>Setup>Sub-Elements>Material Overhead Absorptions

Rules

30. Define Organization Shipping Network

(Non-Mandatory)
Inter-organization shipping network information describes the relationships and accounting
information that exists between a shipping (from) Inventory Organization that ships inventory to a
destination

(to)

Inventory

Organization.

Depending on the function security assigned to your responsibility, you can define a shipping
network between the current organization and another organization or between any two
organizations. The function security assigned to your responsibility determines whether you have the
ability to define shipping networks for all organizations or just the current organization.
Navigation path: Inventory>Setup>Organizations>Shipping Networks

31. Define Account Aliases (NonMandatory)

An account alias is an easily recognized name or label representing a general ledger account number.
You can view, report, and reserve against an account alias. During a transaction, you can use the
account

alias

instead

of

an

account

number

to

refer

to

the

account.

Account Aliases are defined in each Inventory Organization. For this purpose first we have to enter
into

an

Inventory

Organization.

Navigation path: Inventory>Change Organization

32. Define Transaction Source Type (NonMandatory)

A transaction source type is the type of entity against which Oracle Inventory charges a transaction.
Along with a transaction action, it uniquely identifies the type of transaction you perform. Oracle
Inventory

provides

the

following

predefined

transaction

source

types:

Purchase

Order

Sales

Order

Account
Job

or
Account

Schedule
Alias

Internal

Requisition

Internal

Order

Cycle

Count

Physical

Inventory

Standard

RMA

Cost
(Return

Update

Material

Authorization)

Inventory

You can define additional transaction source types in the Transaction Source Types window. You can
then use these user-defined transaction source types and predefined transaction actions to define a
new transaction type. This user-defined transaction type is now a customized form of tracking
transactions with which you can group and sort reports and inquiries. When you perform a
transaction, you specify a transaction type and a source. For example, for a PO receipt transaction,
the transaction source type is Purchase Order and the actual PO number is the source.
Navigation path: Inventory>Setup>Source Types

33. Define Transaction Type (NonMandatory)

A transaction type is the combination of a transaction source type and a transaction action. It is used
to

classify

particular

transaction

for

reporting

and

querying

purposes.

Navigation path: Inventory>Setup>Transactions>Types

34. Cost Period (Non-Mandatory)

Oracle Inventory provides the features you need to summarize costs related to inventory and
manufacturing activities for a given accounting period and distribute those costs to the general
ledger.
Cost Periods are set at Inventory Organization level so first we have to select the relevant Inventory
Organization

for

which

we

are

going

to

set

our

Cost

Periods.

Navigation path: Inventory>Change Organization

After the configuration of these steps we are able to make entries in Oracle Inventory.
Please contact me for any kind of detail and screeshots related to the understanding of Oracle
Inventory

Configuration at:

Email: raheelirshadkhan@gmail; Facebook: Raheel

Irshad

Khan

orraheel.i.khan.14@facebook.com
Linkedin: Raheel

Irshad

Khan

Phone: +92-302-4381795
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