XYZ Rollouts Intercompany solution

Workshop

Agenda (First Session)

Objective

Solution Design Summary: Intercompany Transfer Price

Scenario 1 - Internal buy Transfer using Configured

Item
o Pre-Requisite Steps
o Transaction Flow Steps
o Transfer Price Calculation and Accounting

Scenario 2 - Buy Shipment using Configured Item

o Pre-Requisite Steps
o Transaction Flow Steps
o Transfer Price Calculation and Accounting

Scenario 3 - Internal Buy Transfer using Standard

Item
o Pre-Requisite Steps
o Transaction Flow Steps
o Transfer Price Calculation and Accounting

Intercompany Inventory Report

2

Objective

Overall Plan : Blueprint (definition) -> Present State (demo) -> Gap ->
Roadmap

Re-visit and Refresh the solution in brief and understand mutually the
end-to-end IC Solution concept, approach and Solution Designed based
on our understanding / Assumptions' of XYZs Business needs/feedback
from earlier workshops/BP080 (draft) and MD50 (Draft) available in surf
portal

Alignment & Course-correction (GAP) needed on any Business

requirements or Solution Design to be clarified and firmed up, if any

This session would be key input in identifying the gaps and roadmap for
completion of IC solution

Solution Design: Intercompany Transfer Price

Order type and Warehouse will be verified for Drop Shipment or Buy Transfer. Customer
Selling Price and currency will be used to incorporate the margins while calculating the
transfer price.

Mark up and mark down percentage values are defined in the Shipping Network DFFs for
arriving at the Transfer price.

In case material is received for Internal Replenishment, transfer price is calculated by

Marking up the Item Cost in Shipping Organization.

If the orders are end customer orders or for drop ship, the selling price is marked down to
arrive at the Transfer price. Transfer price and Currency are captured in Line level DFF
attributes

Transfer
price/picking
calculation
logic
is
kept
in
Oracle
provided
hook
MTL_INTERCOMPANY_INVOICES API. Profile option CST: Transfer Pricing Option is set as
Yes, Price As Incoming Cost.

CR60 custom component is deployed in the ROLLGER instance where the five scenarios
will use separate WFs to branch out as per Business need. Below are the dropdown
values in the attribute Shipment type . First two are result of customization and the
remaining three are standard Workflows
Buy Shipment
Internal Buy Transfer
Drop Shipment
Standard Shipment
Supplier Shipment
4

Mark Down/Up Percentage Setup

Scenario 1- Internal buy Transfer using Configured

Item
Scenario Details: This is the case where in the Business process calls
Instance
ROLLGER Instance
http://waveuat.XYZ.com:8004/
for
Internal replenishment
of a configured
Item. Germany wants to
replenish
Sourcefor
OUstock
( Supplier
)

XYZ
OYJ
of configured item and requests XYZ Finland to
manufacture
Organization

001
HEL
operations
and deliver
the
same.
Configured Item HMP100
Destination OU XYZ GMBH
Organization 032 HAM Services
End Customer Price List VAIEEUR
Intercompany Pricelist - HELTHAM
Exchange Rate type Corporate

Pre-Requisite Setups: Internal buy Transfer using

Configured Item

Define Finland OU as Internal Supplier

Define Germany OU as Internal Customer
Define required profile options
Set up Intercompany pricelist and include those items which you wish to transact.
Link Internal Intercompany price list to Customer Bill to site
Define Intercompany Transaction Relationship between the required
inventory organizations
Define Shipping Networks. Set up the Mark up percentage values in the
DFF's
Ensure that all the accounting periods for the transaction date are open GL
Accounting Period, AP Accounting Period, AR Accounting Period, Purchasing
Accounting Period, Inventory Accounting Period for relevant operating units/
Inventory Orgs
Ensure appropriate setup for Intercompany AR Batch Source. Ensure that
Intercompany AR Transaction Type is setup appropriately.
Setup Item validation orgs correctly.
Setup the Sourcing rules for the Model items

Transaction Flow Steps: Internal buy Transfer using

Configured Item
Enter Internal Sales Order with Customer as XYZ Germany in XYZ GmbH OU with
Shipment Type as "Internal Buy Transfer". (ISO# 2440000007)
Configure the item by selecting the right option classes and option class options.
Book the order and progress the order line. This will create configured line with *
item . IR will be Requested
Run Requisition import program in Germany. IR gets created with *Item. (IR# 18)
Run Create internal orders in XYZ GmbH OU
Order Import from XYZ Oyj to create ISO with * Item
Query the created Internal Sales order (ISO) , check and Book it. (ISO#
5110000025)
( if Avg cost is not equal to 0 run now ) Run 'XXVAI Transfer Price Update
Program' Program. Verify Order Line DFF for the calculated transfer
price and Currency
Progress the Internal Sales Order line . This will kick off AutoCreate Final
Assembly Orders & Assemble To Order Mass Load Report programs and will
create Job order in WIP module.
Perform all steps and complete the WIP Job. Finished Assembly will be moved to
inventory

Transaction Flow Steps: Internal buy Transfer using

Configured Item
( if the item was a fresh item/avg cost was zero run now ) Run 'XXVAI
Transfer Price Update Program' Program. Verify Order Line DFF for the
calculated transfer price.
Release the ISO and Pick confirm it from the OBT-001 as rule
Move the ISO , Allocate and Transact from your Sub-Inventory
Ship confirm the ISO.
Run 'Create Accounting/Cost Mgmt XYZ' Request Set from Cost Management
-SLA resp
Check for Material Transactions /Distribution accounts and verify the
Transfer Price is calculated accurately
Run "Create Intercompany AR invoice" in XYZ Oyj
Auto Invoice Master Program in XYZ Oyj (AR Invoice# 10020)
Validate the AR Invoice. Check for market segments and accounting info
Open Intercompany AR Invoice. Tools, Create Accounting Final to GL
View Accounting and see the Intercompany segments and the cost centre
replaced with Market segments for the Revenue account and Receivables
account
Receive the ISO in Germany OU and put away
Run "Create Intercompany AP invoice" in XYZ GmbH
Run Payables Open Interface Import and Validate the AP Invoice (AP Invoice#
10020-1039)
Post to GL
9

Accounting for Internal buy Transfer using

Configured Item

Sending Organization
(Helsinki)

Receiving Organization
(Hamburg)

Dr. Deferred COGS (EUR)

Dr. Intransit Inventory (EUR)

Internal Order Shipment (FOB

Cr. Inventory (EUR)
Shipment)
@ Average Cost

Internal Order Receipt (FOB

Shipment)
Inter-Company Invoicing

Intercompany AR Invoice

Intercompany AP Invoice

Cr. Accrual (EUR)

@Transfer Price
Dr. Inventory (EUR)
Cr. Intransit Inventory (EUR)
@ Average Cost

Shipping Operating Unit

(XYZ oyj)

Receiving Operating Unit

(XYZ GmbH)

Dr. IC Receivables (EUR)

Cr. IC Revenue (EUR)

@ Transfer Price

Dr. Accrual (EUR)

Cr. IC Payables (EUR)
@ Transfer Price

10

Transfer Price Calculation

Product Cost

41.60 EUR

Mark Up % (HEL to HAM)

10%

Transfer Price Calculation

41.60*1.1 = 45.76 EUR

11

Scenario 2- Buy Shipment using Configured Item

Scenario Details : Customer Sales Order is booked in XYZ Germany for a product. Delivery is shipped
from HEL Operations to HAM Services after Assembly. HAM Services ships out the material and invoices
the Customer. XYZ Finland raises an Intercompany AR Invoice for XYZ Germany. XYZ Germany in turn
raises the Intercompany AP Invoice with XYZ Finland as supplier.

Instance ROLLGER Instance http://waveuat.XYZ.com:8004/

Source OU ( Supplier ) XYZ OYJ Finland
Configured Item HMP100
End Customer - Alfred-Wegener-Institut fr or Schneider Electric Buildings Germany GmbH
Order Type Sales Order DE
Organization - 001 Helsinki operations
Destination OU XYZ Germany
Organization 032 HAM Services
Intercompany Price List HELTHAM
End customer pricelist - VAIEEUR
Exchange Rate type Corporate
Source Type Internal

12

Pre-Requisite Setups: Buy Shipment using

Configured Item

Define the end customer in OU

Define the required Transaction Type
Define required profile options
Set up Intercompany pricelist and include those items which you wish to
transact.
Link Price list to Customer Bill to site
Setup the Intercompany Relationships
Define Shipping Networks. Set up the Mark down percentage
values in the DFF's
Ensure that all the accounting periods for the transaction date are open GL
Accounting Period, AP Accounting Period, AR Accounting Period, Purchasing
Accounting Period, Inventory Accounting Period for relevant operating units/
Inventory Orgs
Ensure appropriate setup for Intercompany AR Batch Source. Ensure that
Intercompany AR Transaction Type is setup appropriately.
Setup Item validation orgs correctly.
Setup the Sourcing rules for the Model items

13

Transaction Flow Steps: Buy Shipment using

Configured Item
Create the Sales order in Germany OU with 032 Warehouse with Buy shipment
as the option in the Shipment type in line DFF (SO# 5540000029)
Configure the item by selecting the right option classes and option class options.
Book the order and progress the order line. This will create configured line with *
item . IR Requested will be the status
Run 'XXVAI Update Internal Requisition Attributes'
Run Requisition Import IR is created with * Item (IR# 23)
Run Create internal orders in XYZ GmbH OU
Order Import from XYZ Oyj to create ISO with * Item
Run 'XXVAI Update internal Order Line Attributes' program
Query the created Internal Sales order (ISO) , check and Book it. (ISO#
5110000030)
( if Avg cost is not equal to 0 run now ) Run 'XXVAI Transfer Price Update
Program' Program. Verify Order Line DFF for the calculated transfer
price and Currency
Progress the Internal Sales Order line . This will kick off AutoCreate Final
Assembly Orders & Assemble To Order Mass Load Report programs and will
create Job order in WIP module.

14

Transaction Flow Steps: Buy Shipment using

Configured Item
Perform all steps and complete the WIP Job. Finished Assembly will be moved to
inventory
( if the item was a fresh item/avg cost was zero run now ) Run 'XXVAI
Transfer Price Update Program' Program. Verify Order Line DFF for the
calculated transfer price.
Release the ISO and Pick confirm it from the OBT-001 as rule
Move the ISO, Allocate and Transact from your Sub-Inventory
Ship confirm the ISO
Run 'Create Accounting/Cost Mgmt XYZ' Request Set from Cost Management -SLA
resp
Check for Material Transactions /Distribution accounts and verify the Transfer Price
is calculated accurately
Run Intercompany AR invoice in XYZ Oyj
Auto Invoice Master Program in XYZ Oyj (AR Invoice# 10024)
Validate the AR Invoice. Check for market segments and accounting info
Open Intercompany AR Invoice. Tools, Create Accounting Final to GL
View Accounting and see the Intercompany segments and the cost centre replaced
with Market segments for the Revenue account and Receivables account
Receive the ISO in Germany OU and put away
Create Intercompany AP invoice
Run Payables Open Interface Import and Validate the AP Invoice (AP Invoice#
10024-1039)
Run Invoice Validation program
Open the Invoice and Click Actions button. Select Create Accounting Final to GL
Now ship the received item to the end customer and Invoice
Post to GL
15

Transfer Price Calculation

Item Price

217 EUR

Mark Down % (HEL to HAM) 18%

Transfer Price Calculation

217 *0.82 = 177.94 EUR

16

Accounting for Buy Shipment using Configured Item

Sending Organization
(Helsinki)

Receiving Organization
(Hamburg)

Dr. Deferred COGS (EUR)

Dr. Intransit Inventory (EUR)

Internal Order Shipment (FOB

Cr. Inventory (EUR)
Shipment)
@ Average Cost

Internal Order Receipt (FOB

Shipment)
Inter-Company Invoicing

Intercompany AR Invoice

Intercompany AP Invoice

Cr. Accrual (EUR)

@Transfer Price
Dr. Inventory (EUR)
Cr. Intransit Inventory (EUR)
@ Average Cost

Shipping Operating Unit

(XYZ oyj)

Receiving Operating Unit

(XYZ GmbH)

Dr. IC Receivables (EUR)

Cr. IC Revenue (EUR)

@ Transfer Price

Dr. Accrual (EUR)

Cr. IC Payables (EUR)
@ Transfer Price

17

Scenario 3- Internal Buy Transfer using Standard Item

Scenario Details: This is the case where in the Business process calls for
Internal replenishment of a standard Item available in Finland from
Inventory. Germany wants to replenish for stock of this standard item
and requests XYZ Finland to manufacture and deliver the same.

Instance ROLLGER Instance http://waveuat.XYZ.com:8004/

Source OU ( Supplier ) XYZ OYJ Finland
Organization 001 HEL operations
Configured Item HMP100
Destination OU XYZ GMBH
Organization 032 HAM Services
End Customer Price List VAIEEUR
Intercompany Pricelist - HELTHAM
Exchange Rate type Corporate

18

Pre-requisite Setups - Internal Buy Transfer using

Standard Item

Define Finland OU as Internal Supplier

Define Germany OU as Internal Customer
Define required profile options
Set up Intercompany pricelist and include those items which you wish to
transact.
Link Internal Intercompany price list to Customer Bill to site
Define Intercompany Transaction Relationship between the
required inventory organizations
Define Shipping Networks. Set up the Mark up and Mark down
percentage values in the DFF's
Ensure that all the accounting periods for the transaction date are open
GL Accounting Period, AP Accounting Period, AR Accounting Period,
Purchasing Accounting Period, Inventory Accounting Period for relevant
operating units/ Inventory Orgs
Ensure appropriate setup for Intercompany AR Batch Source. Ensure
that Intercompany AR Transaction Type is setup appropriately.
Setup Item validation orgs correctly.
Complete the Sourcing rules for the Standard items
19

Transaction Flow Steps: Internal Buy Transfer using

Standard Item

Enter the IR for the standard Item in XYZ GmbH OU

Approve the IR. (IR# 20)
Create internal orders in Germany OU
Order Import from XYZ Oyj to create ISO
Query the created Internal Sales order (ISO) , check and Book it. (ISO#
5110000026)
Run 'XXVAI Transfer Price Update Program' Program. Verify Order
Line DFF for the calculated transfer price and Currency
Release the ISO and Pick confirm it from the OBT-001 as rule
Move the ISO , Allocate and Transact from your Sub-Inventory
Ship confirm the ISO.
Run 'Create Accounting/Cost Mgmt XYZ' Request Set from Cost Management
-SLA resp
Check for Material Transactions /Distribution accounts and verify the
Transfer Price is calculated accurately
Run 'Create Intercompany AR invoice' in XYZ Oyj
Auto Invoice Master Program in XYZ Oyj (AR Invoice# 10021)
Validate the AR Invoice. Check for market segments and accounting info
Open Intercompany AR Invoice. Tools, Create Accounting Final to GL
20

Transaction Flow Steps: Internal Buy Transfer using

Standard Item
View Accounting and see the Intercompany segments and the cost
centre replaced with Market segments for the Revenue account and
Receivables account
Receive the ISO in Germany OU and put away
Run 'Create Intercompany AP invoice' program
Run Payables Open Interface Import and Validate the AP Invoice(AP
Invoice# 10021-1039)
Run Invoice Validation program
Open the Invoice and Click Actions button. Select Create Accounting
Final to GL
Post to GL

21

Transfer Price Calculation

Item Cost

15 EUR

Mark Up % (HEL to HAM)

10%

Transfer Price Calculation

15 *1.1 = 16.5 EUR

22

Accounting for Internal Buy Transfer using Standard

Item

Sending Organization
(Helsinki)

Receiving Organization
(Hamburg)

Dr. Deferred COGS (EUR)

Dr. Intransit Inventory (EUR)

Internal Order Shipment (FOB

Cr. Inventory (EUR)
Shipment)
@ Average Cost

Internal Order Receipt (FOB

Shipment)
Inter-Company Invoicing

Intercompany AR Invoice

Intercompany AP Invoice

Cr. Accrual (EUR)

@Transfer Price
Dr. Inventory (EUR)
Cr. Intransit Inventory (EUR)
@ Average Cost

Shipping Operating Unit

(XYZ oyj)

Receiving Operating Unit

(XYZ GmbH)

Dr. IC Receivables (EUR)

Cr. IC Revenue (EUR)

@ Transfer Price

Dr. Accrual (EUR)

Cr. IC Payables (EUR)
@ Transfer Price

23

Intercompany Inventory Report

Provides consolidated view of Unearned profit against the Inventory

received from Intercompany Transfers
Cost in Receiving Organization is same as Transfer Price
IC Profit is the difference of Transfer Price and Item Cost in Sending
organization
Three report are developed
Detail Report Inventory and amounts are displayed for Supplier
Company, Cost Center and Product
Summary Report Summarized View based on Supplier and Cost
Center
PII Details in Excel format Excel output for PII analysis.

24

25