Oracle R12 Inventory Overview Workshop

Agenda
Oracle Inventory Overview Organizational Structures

Inventory Item Management

Inventory Level Management Material Transaction Management Inventory Accuracy Management Material Replenishment Planning Demand Forecasting Other Functionality

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Oracle Inventory Overview

Supply Chain Inventory Overview

Oracle Inventory Introduction Oracle Inventory Integration Oracle Multi-Org Structure Oracle Inventory Capabilities

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Oracle Inventory Introduction

Inventory can be defined as on-hand stock that can be used in a required process. Below are several areas where Oracle Inventory can support the enterprise.
Receive Inventory Transfer Inventory Issue Inventory

Purchasing Purchase order receipts Internal requisitions In-transit receipts Return material receipts Unexpected receipts

Inventory Miscellaneous account receipts Receipts from projects User-defined receipts Inter-org transfers

Ship Oracle shipping Execution can be used to generate a transfer to move materials from a storage to a staging area for shipping. Order Mgmt Oracle Order Mgmt (OM) can be used to generate transfer to move material from storage to shipping staging area for delivery. Inventory Transfer material between orgs Transfer between orgs Replenish materials Request transfers -4-

Purchasing Oracle Purchasing can generate an inventory issue though: Sales Orders Internal Orders Order Mgmt Oracle OM can generate an inventory issue for: Return vendor materials Inventory Issue stock though: User defined materials Inter-org transfer Cycle count negative issue Issue requests

Oracle Inventory Integration

Oracle Inventory Integrates with the following applications:
Payables

General Ledger Assets

Receivables Inventory Activity

Invoices Assets EAM Requisitions Receipts Project/Task Suppliers Items Inventory Levels Accounting Procurement Requisitions/POs Inventory Order Management Projects

Internal Requisitions

Legend
SC Modules

Others

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Oracle Multi-Org Structure

Multi-Org structure enables consolidation of operations under one installation of Oracle Applications on a single global instance. It also enables the organization to keep transaction data secure by line of business.

Legal Entity

Vision Ops

Ledger

Operating Unit

Vision Ops

Master Organization

V1

Inventory Organizations

D2

M1

M2

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Oracle Inventory Capabilities

Below are listed Oracle Inventory capabilities that will be covered during this workshop.
1 Organizational Structure Management 5 Inventory Accuracy Management

Inventory Item Management

AS18947

Material Replenishment Planning

Inventory Level Management

7
AS18947 = 1000 on-hand

Demand Forecasting

Material Transaction Management

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Organizational Structure Management

Supply Chain Inventory Overview

Manage Organizational Structures Defining an Organizational Structure Defining an Inventory Org Structure

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Manage Organizational Structures

What is an Inventory Organization? An inventory organization is a facility where you store and transact items. These have to be defined prior to using the inventory module. Inventory organizations represent distinct entities in the enterprise, and can be the following:

Physical Entity: Manufacturing facility, warehouse, or distribution center (DC). Logical Entity: Item master organization, which can be used to define items. Its own location, ledger, costing method, workday, calendar, and item Orgs can share one or more of these attributes with other orgs

An inventory organization can have several of this attributes:

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Manage Organizational Structures (cont)

Inventory Organizations are composed of one or more Sub Inventories, which are unique physical or logical segmentations of materials. All materials are held in one Sub Inventory. Optionally, Sub Inventories may have Locators, which are physical areas where items are stored.

Business
Operating Unit

US

UK

IN

Inventory Organization

D2
Sub1

M1
Staging Receiving

M2

M3
FG Staging

B1
Shipping Return

Sub Inventory

Locators (optional)

Row Rack

Bin

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Defining an Inventory Org Structure

Oracle Inventory allows can be tailored to represent your company's inventory sites and business units. This includes defining organizations, locations, sub-inventories, and locators.
Setup Process
Defined in HRMS Locations can represent companys physical address

Define Location

Define Inventory Orgs

Define a workday calendar Set Org parameters

Define Sub Inventories

Define locator control and other parameters

Define Locators

Define flexfields Define locators

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Inventory Item Management

Supply Chain Inventory Overview

Item Management Overview Overview of Oracles Item Master Defining Inventory Items Item Attribute Groups Units of Measure Item Templates Item Categories Item Mfg Part Number Inventory Catalog Lot Control and Serial Number Control
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Item Management Overview

AS18947

Inventory is capable of utilizing items in various ways. These are some actions for which Items are used throughout the enterprise: Purchasing, Selling , Lending, Manufacturing, Stocking, and Distributing. Oracle has built in flexibility that allows for Item serialization and SKU (Stock Keeping Unit) management.

Sample Types of Items

Finished goods

Services

Spare parts

Raw materials

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Overview of Oracles Item Master

Item Master manages the core entity Item that is the basis for all of Oracle Manufacturing and supply chain functions. Item Master allows customers to manage their items information such as item attributes, status control attributes Transactable, Purchasable, Stockable, flex attributes, and others. In addition, item related information is supported file attachments, related items, cross-references, etc. Item Master supports multi-organization capabilities and gives the ability to define control attributes at Master Organization or child organization as the business case demands. Item revision capability offers ability to maintain item revisions and data specific to item revisions. Users can create user item types and usage of items in various business scenarios such as managing manufacturing items, assets, services, etc. Items are defined in Master Organization. Other organizations (child organizations) refer to the Item Master for item definition. Once an item is defined in the Item Master, it can be assigned to multiple organizations. It is recommended that at least one Item Master organization must be defined. It also recommended to not define multiple item masters. This can make item definition and maintenance confusing.

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Defining Inventory Items

To set up an Inventory Item, we must look into the various attribute groups that make up an Item. The diagram below depicts the process
Steps Required to Setup an Item

Define UOMs

Define Status Control Levels

Define Statuses

Define Categories Define Category Sets

Define Default Category Sets

Define Item Cost

Define Catalogs

Define Mfg Part No.

We will further explore the following attribute groups:

Main Inventory BOM Asset Mgmt Costing Purchasing
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Receiving General Planning Lead Times Work in Process Order Mgmt Invoicing

Item Attribute Groups

Main
Unit of Measure: Oracle has dual UOM to support OPM. This is the stocking and selling unit of measure. Any necessary conversions are based on this unit of measure. This attribute is not updatable and assigned at the organization level. Also, the primary unit of measure is the default for invoices and credit memos entered in Oracle Receivables. User Item Type: Oracle provides several types by default at installation. Select one of these values, or one you defined with the Item Type window. Item Status: Item status codes set or default the values for attributes under status control. User-defined status codes control certain item attributes designated as status attributes. Lot Expiration: Lot Expiration control governs how long items in a given lot remain available. Lot Controlled: You can establish lot number control only for an item that has no quantity on hand. If Lot Control is controlled at the Master Item level, the system checks for on hand quantity in all child organizations. Cycle Count Enabled: Turn this option on for automatic cycle count scheduling. Serialization: At receipt: Create and assign serial numbers when receiving the item. At sales order issue: Create and assign serial numbers when shipping the item against sales order. No control: Serial number control not established for this item. Predefined: Assign predefined serial numbers when receiving the item. Grade Control: Indicate whether the item is grade controlled in addition to lot controlled. A grade code represents specific characteristics of a lot.

Inventory

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Item Attribute Groups (cont)

BOM
BOM Allowed: Allows you to define a bill of material for an item, or to assign the item as a component on a bill. BOM Item Type: This attribute is controlled at the Master level only. There are various BOM item types such as: Standard, Model, Option Class, Planning, and Engineering. Base Model: Displays the model from which an ATO configuration was created. In Oracle Order Management, you can place an order for an ATO model, choosing from the list of options. Asset Item Type: This attribute identifies the asset item as an Asset Group, Asset Activity, or Re-buildable item. Activity Type: This indicates the type of maintenance for this asset activity. You use it to define a generic maintenance work order. For example, Inspection, Overhaul, Lubrication, Repairs, Servicing, or Cleaning Activity Cause: Specifies what situation caused the work to be generated. For example, Breakdown, Vandalism, Normal Wear, or Settings. Activity Source: This specifies the reason the activity needs to be executed. For example, Warranty Compliance, OSHA Compliance, or Military Specification Requirements. Shutdown Type: Indicates if this maintenance activity requires a shutdown. For Example, Required and Not Required.
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Asset Mgmt

Item Attribute Groups (cont)

Costing
Costing Enabled: the item is automatically assigned to the default category set for the Oracle Cost Management functional area. Cost of Goods Sold (COGS) is controlled at the organization level only and general ledger accounts are used as a source for the COGS Account. The default COGS account is defined in the organization parameters. Purchased: If this is option on, the item is automatically assigned to the default category set for the Oracle Purchasing functional area. And is enabled for Purchasing. Expense account: This attribute is used only when Inventory Asset Value is turned off. Oracle Purchasing debits this account when an item is received into inventory. Outsourced Assembly: Identifies whether an item is Outsourced Assembly item or not Default Buyer: Contingent worker can also be assigned .PO Buyer validations are enhanced to accommodate this. Receipt Days Early: Number of days before the promise date you can receive an item without warning or rejection. Receipt Days Late: Number of days after the promise date you can receive an item without warning or rejection. Receiving Sub-inventory: Sets the default sub-inventory for incoming shipments.
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Purchasing

Receiving

Item Attribute Groups (cont)

General Planning
Safety Stock Method can be MRP Planned % if either of Planning Method = MRP / MPS Planned, or DRP Planned = Checked is true. Subcontracting Component: Indicates whether the sub-contracting type associated to this item when it is used as a sub-contracting component in Chargeable Subcontracting. Pre-positioned: The item is a subcontracting component sold to a manufacturing partner independently of subcontracting components. Synchronized: The item is a subcontracting component sold to a manufacturing partner and is synchronized with a specific order. Preprocessing: Days you must add to purchasing or manufacturing lead time to place an order. Processing: Days required to procure or manufacture an item. For manufactured assemblies, processing days equals manufacturing lead time. Post-processing: Days required to receive a purchased item into inventory from the initial supplier receipt.

Lead Times

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Item Attribute Groups (cont)

Order Mgmt
Customer Ordered: Indicate whether to allow an item to be ordered by external customers. Internal Ordered: Indicate whether to allow an item to be ordered on an internal requisition. Shippable: Indicate whether to ship an item to a customer. Shippable items are released by Shipping Execution's Pick Release program. OE Transactable: Indicate whether demand can be placed for an item by OM and whether shipment transactions are interfaced to inventory. Default SO Source Type: If an item is to be drop-shipped or internal. Pick Components: Whether an item has a BOM with items to be picked from finished goods inventory. PTO items must have this attribute enabled. Assemble to Order: is on if an item is generally built for sales order demand. Charge Periodicity: The time the system uses to price a persistent or recurring service or product. Invoiceable Item: Indicates whether to include an item on an Oracle Receivables invoice. Invoice Enabled: Indicates whether to activate an item for invoicing in Oracle Receivables. Invoicing Rule: Enter an invoicing rule to determine the period in which you send an invoice when you recognize revenue over time.
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Invoicing

Units of Measure

A Unit of Measure (UOM) is a value that specifies the quantity of an item.

Sample Unit of Measure Classes Collection of UOM in a the same group e.g. length, weight etc

Define UOM class

Each

Box of 4

Box of 8

Volume

Weight

Temperature

Sample UOM Conversion Definition Define UOM codes Individual UOM, e.g. Pounds, Meter
UOM Class = Weight
UOM lbs kg g Base UOM Yes No No

UOM Conversion
1 kg = 2.208 X lbs 1 g = 0.002208 X lbs

Define Conversions

Standard - Common to any item Intra Class - For a specific item within a unit of measure class Inter Class - Specific item between unit of measure classes

UOM Interclass Conversion

Item Keyboard Destination Base UOM lbs Destination UOM Class Weight Conversion 2 Source Source Base UOM UOM Class Each Quantity

2 Each = 1 lb

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Item Templates

If you define many items sharing the same values for a number of attributes, you may want to define item templates that help you avoid duplication of effort. An item template is a standard set of attribute values that you use to define or update items. When you apply a template to an item, you set the item attribute values to the template attribute values for those attributes you enable in the template.

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Item Categories

Item categories and category sets can be used to group 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 users to report and inquire on items in a way that best suits the users needs.
Sample Hardware Category Set Structure Define flex field structure

Computer Category Category Code Define all the codes using segment values

Peripherals Category

Oracle Inventory allows users to assign items to a specified category set.

Category Sets

Provide a unique name Provide the structure name and default category code

Computer Category

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Item Mfg Part Number

Users can define manufacturer part numbers and assign items to these. You can use this information for reporting purposes; and in catalog searches for particular items.

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Inventory Catalog

Item Catalogs enable users to add descriptive information to items and to portion an item master into groups of items that share common characteristics. Defining Item Catalogs: To define your catalog, you set up as many distinct item catalog groups as you need to partition your Item Master. Each group has unique characteristics (called descriptive elements) that completely describe items belonging to the group.

Benefits of Item Catalogs Provide standard language in referring to items, enabling companies in the same industry to communicate effectively without needing to name their items identically. Store a detailed description of what an item is without having to embed that meaning in the item number. Use descriptive elements as search criteria for items. Update the item description with a concatenated value of the item catalog group information. Find common existing parts when developing an engineering prototype.
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Lot Control and Serial Number Control

Lot Control
Lot 403B

Serial Number Control

Serial #5847329

A lot can represent a quantity of an item that shares the same specifications, one or more receipts from the same vendor, or whatever you choose. You can divide each lot into child lots that can reflect whatever characteristics you choose for items within the lot. When you allocate stock for production, you can allocate specific lots to a production batch based on the potency, age, or other item characteristics. Oracle Inventory provides complete lot number support for inventory transactions.

Oracle Inventory provides complete serial number support for inventory transactions. For items that are under serial number control, one can assign unique serial numbers to individual units, enabling you to have tight control over every unit of every item in your inventory. Oracles Serial Numbers window allows you to update supplier information that is associated with your serial numbers. Users can view all serial numbers that have been created and the state and supplier lot information that is associated with your serial number.

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Item Management Demo

Objective: To review the setup for an existing inventory item: Attribute Groups UOM Item Templates Item Categories Catalog Mfg Part Numbers Task: Watch as we demonstrate the setup for an existing inventory item, its attributes and characteristics.

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Inventory Level Management

Supply Chain Inventory Overview

On-hand Quantity Overview Reservations Overview Inventory Availability Overview Material Workbench Overview

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On-hand Quantity Overview

Oracle Inventory enables you to view on-hand quantities, reservations, and availability information. Oracles Material Workbench allows users to review these items.
AS18947 = 1000 on-hand

On-hand quantity is the physical quantity that resides and a sub-inventory. For example, the Bulk inventory has 15 items that reside in it. Therefore there are 15 available on-hand items for the bulk inventory.
FGI Sub-inventory Locator: 1.1.1 On-hand Quantity: 100 Returns Sub-inventory Locator: 1.1.3 On-hand Quantity: 18

FGI Sub-inventory Locator: 1.1.2 On-hand Quantity: 10

Bulk Sub-inventory Locator: 1.1.4 On-hand Quantity: 15

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Reservations Overview
A reservation is a link between a supply source and a demand source. A reservation creates a permanent data link between a supply source and a demand source, and represents a guaranteed allotment of material to a specified demand source. Item reservations prevent the allocation of material you previously set aside for a sales order, account, account alias, inventory allotment, or user-defined sources. Users can also create reservations for different types of supplies such as on hand inventory, purchase orders, internal requisitions, discrete jobs, shop floor jobs, and process manufacturing batches.

Book Inventory Transaction

Demand Source Reservation

Receive Material -30-

Supply Source

Inventory Availability Overview

Users can use the Material Workbench to view item availability. The system can calculate item availability for a given item at the sub-inventory, locator, lot, serial, or revision level.

Item Availability

On-hand Quantity

Reservation

Pending Transactions

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Material Workbench Overview

Oracle Material Workbench enables users to view material in receiving, onhand quantities, and in transit material. Users can also view materials across organizations. In addition, you can create and save queries, create move orders, and request cycle counts, as well as change material statuses. The Material Workbench shows the details of the item, quantity, location in inventory and it allows you to drill down into item status, availability, and attribute information.

Material Inbound

Material in Receiving

On-hand Quantity

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View On-hand Quantity Demo

Objective: To view the on-hand quantity of an inventory item in the Material Workbench.

Task: Watch as we demonstrate how to search and view the on-hand quantity of an inventory item.

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Material Transactions Management

Supply Chain Inventory Overview

Material Transactions Overview Receiving Transaction and Returns Transferring Between subinventories Miscellaneous Transactions Inter-org Transactions Transferring Between Organizations Planning transfer transactions Consignment Inventory and VMI Material shortages Move orders
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Material Transactions Overview

Inventory transactions allows users to control the flow of material from the time you receive items to the time you ship goods to a customer.

We will examine the following transactions scenarios: Receiving transaction and returns Transferring between sub-inventories Miscellaneous transactions Inter-org transactions Transferring between organizations Planning transfer transactions Material shortages Move orders

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Manage Material Transaction (cont)

Receiving Transactions and Returns Transferring Between Sub-inventories

Raw Materials

Finished Goods

Users can receive all or a partial list of open lines on any purchase order by using the Receipts window. Users can also receive substitute items and goods or services you have not ordered. Oracle Inventory allows you to match goods you receive on the receiving dock to a purchase order they might be fulfilling. Also users can then record transfers and deliveries in the Receiving Transactions window, record inspections in the Inspections window, record Returns in the Returns window, and record adjustments and corrections in the Corrections window.
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Users can transfer materials within current organizations between subinventories, or between two locators within the same subinventory. Users can also transfer from asset to expense subinventories, as well as from tracked to non-tracked subinventories. If an item has a restricted list of subinventories, users can only transfer material from and to subinventories in that list. Oracle Inventory allows you to use userdefined transaction.

Manage Material Transaction (cont)

Miscellaneous Transactions Inter-org Transactions

Mfg

Packaging

With a miscellaneous transaction users can issue or receive material from general ledger accounts in your organization. This allows you to issue material to groups that are not inventory, receiving, or work in process such as a research and development or an accounting department. User-defined transaction types and sources can be used to further classify and name transactions. This feature is used to issue items to individuals, departments, or projects; or to issue damaged items to expense accounts such as scrap.

Users can define multiple inventories, warehouses, and manufacturing facilities as distinct organizations. With Oracle Inventory you can perform inter-organization transfers as direct or in-transit shipments. Oracle Inventory allows users to transfer one or more items in a single transaction, as well as transfer partial quantities of the same item to different subinventories and locators in a single transaction. The transferred items must exist in both organizations. Inter-org transactions also allow users to transfer expense and asset items from one organization to another using in-transit inventory.

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Manage Material Transaction (cont)

Transferring Between Organizations Planning Transfer Transactions

Oracle Inventory allows users to transfer material from any organization to another organization Similarly, users can transfer between current organization to in-transit inventory. Materials which are in-transit inventory belong to the organization identified by the FOB point. Additionally, users must move the material from in-transit inventory to this organization with an in-transit inventory receipt.

Oracle Inventory allows you to plan transfers involving VMI and consignment items. Planning transfers enables you to assume the planning responsibility from the supplier. This transaction does not move goods, it changes the planning organization from the supplier site to the internal organization that holds the goods. After you perform a planning transfer and run collection, your supplier can no longer see the transferred quantity in the on hand quantity column.

Lets take a closer look at VMI and Consignment inventory.

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Consignment Inventory and VMI

This type of inventory practice differs ownership until items are used.
Create a Blanket Agreement / Automatic Sourcing Rules Designate the item as Consignment on the Approved Supplier List

Consignment Inventory

Create a Requisition A Standard Purchase Order is automatically created based on Sourcing Rules and consignment status Receive the Purchase Order No accounting transaction created Nothing to match to; Purchase Order closes Use the Item Create a Transfer to Regular Transaction Repeat as often as needed Issue a Blanket Agreement Periodically, run a request to issue a new Blanket Release aggregating all usage

This type of inventory functions similarly to Consignment, but the Supplier has access to it, and is responsible for maintaining inventory level. Delegate key inventory management functions to a Supplier. Supplier determines the items, quantities, and delivery schedules on behalf of the enterprise, based on information the Supplier receives from internal inventory and procurement systems. Suppliers can manage inventory levels from the iSupplier Portal.
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VMI

Manage Material Transaction (cont)

Material Shortages Move Orders

A material shortage occurs whenever unsatisfied demand exceeds available quantity for incoming supply of material. Oracle Inventory verifies, during a receipt transaction, to see if the material received is needed elsewhere in the organization. If a shortage exists, the system notifies you, either by a real-time, material shortage alert or a workflow-based notification. The following receipt transaction forms generate shortage alerts and notifications when receiving items for which the system has detected a shortage: Receipts, Receiving Transactions, Miscellaneous Transactions, and others
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Move orders are requests for the movement of material within a single organization. Move orders allow planners and facility managers to request the movement of material within a warehouse or facility for purposes like replenishment, material storage relocations, and quality handling. Users can generate move orders manually or automatically depending on the source type. Move orders allow users to distinguish between inventory management processes and the actual material transaction process, providing: quick response, warehouse visibility, and tracking.

Material Transaction Demos

Objective: To view the following material transactions:

Receive Inventory Inventory Return to Supplier Sub-inventory Move Inter-org Transfer Miscellaneous Issue Miscellaneous Receipt

To perform the following material transaction:

Task: Watch as we demonstrate how to manage the inventory transactions aforementioned.

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Inventory Accuracy Management

Supply Chain Inventory Overview

Inventory Accuracy Tools and Methods ABC Analysis Physical Inventory Cycle Counting

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Inventory Accuracy: Tools and Methods

Oracle Inventory lets you manage inventory accuracy by leveraging various methods.

ABC Analysis

Physical Inventory

Cycle Counting

Lets take a closer look at these methods.

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ABC Analysis

An ABC analysis is leveraged to manage inventory accuracy by determining the relative value of a group of inventory items based on a user-specified valuation criterion.

"ABC" refers to the rankings you assign your items as a result of this analysis, where "A" items are ranked higher than "B" items, and so on. You can optionally use the ABC analyses you compile to drive your cycle counts, where you might count items of high value (A items) very frequently, items of lower value less frequently, and items of lowest value very infrequently.

ABC Analysis Process Define and run ABC compilations

Define ABC classes

Define ABC group, assign items to ABC classes within a group

Update item assignments

Purge ABC information

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Physical Inventory

Oracle Inventory provides a fully automated physical inventory feature that you can use to reconcile system-maintained item on-hand balances with actual counts of inventory.

Inventory Organization

Sub-inventory Physical Inventory

Oracle Inventory allows you to define and maintain an unlimited number of physical inventories. A physical inventory is identified by a unique name and it is to identify any activity, such as adjustments, pertaining to this physical inventory. You can define multiple physical inventories to count selected portions of your inventory, or you can count your total inventory. For example, if your warehouse has two large stockrooms, each represented by a sub-inventory, you can define two physical inventories, one for each sub-inventory, and then perform your physical inventory of the first stockroom, independent of the second.

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Cycle Counting

Accurate measurement of on-hand quantities are essential for managing supply and demand, maintaining high service levels, and planning production.

Cycle counting is the periodic counting of individual items throughout the course of the year to ensure the accuracy of inventory quantities and values. You can perform cycle counting instead of taking complete physical inventories, or you can use both techniques side-by-side to verify inventory quantities and values.

Cycle Count Process

Define cycle count

Establish tolerance and limits

Load items to be counted into cycle count classes Schedule counts and generate count requests

Cycle count benefits include: Enables inventory accuracy by correcting errors between system on-hand and actual quantities. Aids in identifying patterns in errors found as well as helps prioritize activities in training, tools, and processes.
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Enter counts and report results

Approve / reject cycle count

Manage count interface processes

Material Replenishment Planning

Supply Chain Inventory Overview

Material Replenishment Overview Min-Max Planning Reorder-point Planning

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Material Replenishment Overview

Oracle Inventory lets you manage inventory levels using any combination of the system's planning and replenishment features.

Inventory planning involves answering two questions: When should you place a new order? How much should you order? To answer these two questions Oracle Inventory utilizes the following types of replenishment plans: Min-Max planning Reorder-point planning Oracle Inventory provides additional methods for planning and replenishing inventories. Replenishment Counting is a method used typically for items on non-tracked subinventories. We will take a closer look at Min-Max and Reorder-point Planning
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Min-Max Planning

Min-Max planning is used to maintain inventory levels for all of your items or selected items. With min-max planning, you specify minimum and maximum inventory levels for your items.

Minimum Inventory Level

Maximum Inventory Level

Inventory Level Below Minimum

Trigger Time to Reorder

When the inventory level for an item (on-hand quantities plus quantities on order) drops below the minimum, Oracle Inventory suggests a new purchase requisition, internal requisition, move order, or job to bring the balance back up to the maximum. Oracle Inventory performs min-max planning for your items at either the organization level or the sub-inventory level. When you execute a min-max plan at the organization level, you can optionally include the following transactions as demand in the min-max planning calculation: unreserved sales orders, reserved sales orders, account issue move orders, and work in process component requirements.

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Reorder-point Planning

Reorder point planning uses demand forecasts to decide when to order a new quantity to avoid dipping into safety stock.

Reorder point planning suggests a new order for an item when the available quantity-on-hand quantity plus planned receipts drops below the item's safety stock level plus forecast demand for the item during its replenishment lead time. The suggested order quantity is an Economic Order Quantity (EOQ) that minimizes the total cost of ordering and carrying inventory. Oracle Inventory can automatically generate requisitions to inform your purchasing department that a replenishment order is required to supply your organization. Order lead time is the total of the item's processing, preprocessing, and post-processing lead times. In cases where the desired safety stock level changes during the order lead time, Oracle Inventory uses the largest safety stock quantity during the lead time.

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Min-Max Planning Demo

Objective: To review the process of setting up a Min-Max plan for an inventory item.

Task: Watch as we set up an Inventory Item for Min-Max planning.

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Demand Forecasting
Supply Chain Inventory Overview

Forecasting Overview Forecast Types & Setup Process

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Forecasting Overview

Inventory forecasting is the process of extrapolating the expected demand of an item over a number of periods in the future.

Inventory Forecasting Overview Forecasts contain information on the original and current forecast quantities, the confidence factor, and any specific customer information. Users can assign any number of items to the forecast and use the same item in multiple forecasts. Also, for each item, users can specify any number of forecast entries. Oracle inventory utilizes historical transactions to generate forecasts. When creating forecasts, users can select the type of transactions that want to be used. Users can also determine how far in the future they would like to make the predictions. Primary to creating the forecasts, these can be used to modify Reorder-points Planning, and other planning scenarios applicable to the enterprise.

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Forecast Types & Setup Process

To generate a forecast, Oracle Inventory uses mathematical algorithms to calculate a prediction of future demand. Users can estimate demand by using historical data as well as statistical forecasting techniques.
Forecast Types Forecast Setup Process

Statistical Forecasting

Focus Forecasting

Define Forecast Set

Focus forecasting enables you to simulate various methods of calculating demand and you can select the best forecasting model to suit the needs of Company X. Statistical forecasting enables you to use detailed history and applies weighted factors to exponentially smooth the data. It also enables you to apply exponentially weighted trends and seasonality factors to better predict demand of inventory items.
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Define Forecast Rules

Generate Forecasts

Maintain Forecasts

Apply / Utilize Forecasts

Other Functionality
Supply Chain Inventory Overview

Cost Control and Accounting Intercompany Invoicing Inventory Reporting

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Cost Control and Accounting

Oracle inventory allows the enterprise to maintain and manage accounting close cycle as well as accounting periods Accounting Close Cycle: Oracle Inventory provides the features needed to summarize costs related to inventory and manufacturing activities for a given accounting period, and distribute those costs to the general ledger. Accounting Periods: Oracle Inventory uses accounting periods to group material and work in process transactions for accounting purposes.

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Intercompany Invoicing
Oracle Inventory supports intercompany invoicing processes that are generated throughout the use of intra-organization inventory transfers.

Transactional Overview Intercompany invoicing indicates a financial flow that may differ from the physical flow of materials. The intercompany accounts receivable (AR) invoice is the transaction Oracle uses to record intercompany receivable accounting for the shipping organization, debits intercompany AR at transfer price, charges tax, and freight and, credits intercompany revenue. The intercompany accounts payable (AP) invoice is the transaction Oracle uses to record the payable accounting for the selling organization, debits intercompany COGS and freight, and credits the intercompany payable account.

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Business Enablers and Benefits

Business Enablers: Automatically create intercompany payable and receivable invoices to record intercompany revenue, payables, and receivables. Eliminate intercompany profit in the general ledger. Business Benefits: Reduce procurement costs. Reduce the complexity of interactions with suppliers. Centrally control the amount and or timing of funds dedicated to procurement activities on behalf of subsidiaries. Secure supply commitments on the basis of parent company credit ratings. Expedite delivery by avoiding unnecessary intermediate delivery locations

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Intercompany Invoicing Process

The following steps comprise the overall intercompany invoice business process. Some variations exist for internal orders.

Internal or External customer places an order with the selling operating unit. The order is scheduled to ship from a shipping warehouse associated with an operating unit that differs from the selling operating unit. The product ships from the warehouse to the internal or external customer. The shipping operating unit issues an intercompany receivable invoice to the selling operating unit at the transfer price. The selling operating unit issues an intercompany payable to the shipping operating unit.

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Inventory Reporting
Oracle Inventory provides a wide range of reports that come standard with the application. Some examples include:

Sub-inventory Quantities:
This report shows a screenshot of on-hand inventory item quantities by subinventory.
This report can be used as an audit report, to review the transaction date versus the exact date an item was transacted, to review the reason an item was moved into a sub-inventory by running the report for reason only and limiting the from and to subinventory, to check the value of inventory, to report the categories of items that have shipped and the total unit cost for the category, and to trace serial numbers by location. This report is used to view the results of an ABC compile. The report is sorted by descending value or quantity, depending on the compile criterion. This report is used to view the accounts charged for inventory transactions. You can review inventory transaction values transferred to the general ledger by GL batch. This feature helps you reconcile your inventory accounting to your general ledger.

Transaction Register:

ABC Descending Value Report

Material Account Distribution Detail:

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Questions ?
Supply Chain Inventory Overview

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