Monday, October 10, 2016

Oracle inventory Overview and Setups

The purpose of Oracle inventory application is to assist an organization in defining and tracking inventory items or parts. It helps the organization keep track of as how many of a particular part are on hand and where the parts are located. It provides support for recording the receipt and disbursement of items as well as the physical and cyclical counting of those items.

Inventory items within an organization are stored in locations called subinventories. In these subinventories, you can specify storage locators that can consist of aisles, rows and bins. You can specify that an item be lot or serial number controlled or have no controls.

The setup process of Oracle Inventory consists of number of steps wherein you define such things as the structure of your organization and your inventory items. These setup steps customize the Oracle Inventory application to the unique requirements of the organization.

Interaction with other modules

Required Setups  : All activities are 1 time during implementation

1.      Create calendar / define currency / locations / inv orgs: 1 time
2.      Define Organization Calendar and Exceptions
3.      Define the locations
4.      Define Organization Inventory Parameters
5.      Define the system items key flexifield: : 1 time
6.      Define the item categories key flexifield: 1 time
7.      Define the accounting aliases key flexifield
8.      Define the item catalog group key flexifield: 1 time
9.      Change to a Valid Organization
10.  Define unit of measure classes and units of measure
11.  Define subinventories
12.  Define stock locators
13.  Define Item Attributes
14.  Define Categories and Category Sets
15.  Define cost types
16.  Open accounting periods
17.  Set profile options

Creating a Set Of Books

Define the key accounting flexifield structure, segments, segment values and code combinations. Define the fiscal calendar period types and periods. Enable currencies and define rate types and conversion rates. Assign the set of books to the site or individual responsibilities.

Define the System items Key Flexifield

The system items flexifield is sometimes called the item flexifield. This flexifield is an Oracle Application Flexifield that contains the definition of the structure of your item or part number field. We need to define whether item number is a single segment or multi-segmented field and the length of each segment. To define the system item flexifield we need to provide how many separate segments your item number has, length of each one the separate segments and their sequence as well as the segment separator. What are the segments that will be validated.

Defining the Item Categories Key Flexifield

A category is a logical classification of items that have similar characteristics. A category set is a way of grouping together categories. We must design and configure the item categories flexifield before defining the items because all items must be assigned to categories. The tasks to define Item categories key flexifield are Define the flexifield structure for the item categories flexifield. Define categories, category sets. Assign default category sets for each functional area.

Define the item catalog group key flexifield

Oracle inventory enables you to create multiple catalog groups to aid in term classification. Each catalog group can have its own set of item characteristics, called descriptive elements. Define as many descriptive elements as necessary to describe the items and specify whether an entry for the element is optional. Once the items are cataloged we can search on one or more descriptive elements to assist in locating items for order entry or group technology purposes.

Defining the Stock Locators Key Flexifield

A Stock Locator is a physical area within a subinventory where you store material such as row, aisle, bin or shelf.

Define the accounting aliases key flexifield

The account alias flexifield is a key flexifield that allows you to use a shorthand label for a general account number combination when entering Inventory transactions. This can reduce keystroke entries as well as the chance of entering the wrong account numbers for your inventory transactions.  In addition to define the structure of flexifield and any applicable value sets we need to freeze and compile the flexifield definition.

Define the locations

Define names and addresses for the locations we use within the organization as well as for the location of inventory organization itself. For each location that we are going to use enter the name, organization, description, address style and all of the address data lines and fields such as city, state and Zip. We also need to indicate, by way of check boxes whether the location is a ship-to-site, office site, receiving site, bill-to-site, and internal site.

Inventory > Setup > Organizations > Locations

Define Organization Calendar and Exceptions

A workday calendar defines the valid working days for a manufacturing organization and consists of a pattern of repeating days on and off and exceptions to that pattern. Specify the start and end dates and the weekend schedule for each calendar. Define any member of workday calendar and assign them to any number of organizations and any number of organizations can share a calendar. We can apply exceptions to the workday calendar by specifying individual days, loading them from an exception template, or copying a set of exceptions from another calendar. For any workday calendar we can also specify any number of shifts. Each shift can have a different weekend schedule and a list of specific work interval start and end times.

Navigation: Template:
Inventory > Setup > Organizations > Calendar Exception Templates

Define Organizations

An inventory organization is an organization for which you track inventory transactions and on-hand balances and that manufacture or distributes parts and products. Some examples of organizations are manufacturing plants, warehouses, distribution centers and sales offices. Before defining the organizations we need to understand the item definition process in oracle inventory. We define items in a single organization sometimes referred to as the item master for item definition. Once an item has been defined in the master organization it can be enabled or assigned to any of the other organizations.
To define the inventory organization we need to specify the organization name, the organization type and a three character abbreviation for the organization. This unique code is used to identify the organization with which we want to work. In addition we have to specify which set of books the organization will be tied to.

Inventory > Setup > Organizations > Organizations > Click on “New”

Define Organization Inventory Parameters

A number of inventory, costing, control and movement parameters are associated with an inventory organization. We need to specify various inventory parameters like the master organization where items will be initially defined. The workday calendar for planning, scheduling and determining days to perform cycle counts. Indicate whether the negative inventory balances will be allowed.  Choose some of the settings for locator control. Specify the costing information and the default general ledger accounts to be associated with this organization. For the revision, lot and serial number parameters specify the information for some of the areas. Supply ATP, Pick and item sourcing parameters. We must also provide inter-org information parameters to correctly transfer charges between organizations when items are moved between organizations.

Inventory > Setup > Organizations > Parameters

Change to a Valid Organization

When we sign into an oracle inventory transaction session, we need to pick an organization. Oracle then associates the session with this inventory organization. When we first setup the inventory application there are no inventory organizations defined

Inventory > Change Organization

Define unit of measure classes and units of measures

Oracle inventory provides a flexible way of defining and transacting items in their units of measure. The process of defining units of measure to use in oracle inventory involves several steps such as
  1. Define units of measure classes and the base unit of measure (UOM) for each class.
  2. Define multiple units of measure for each unit of measure class.
  3. Define conversions between units of measure of the same and of different classes.

Inventory > Setup > Unit of Measures > Unit of Measures

Define subinventories

A subinventory is a sub division of an organization, representing either a physical area or a logical grouping of items. All inventory transaction activity must reference a subinventory, and all material within an organization must be stored in a inventory. It is therefore required that you define atleast one subinventory. For each subinventory you need to define both inventory and accounting information. Some of the inventory information that we need to provide when defining a subinventory includes
  • A subinventory name
  • Whether the inventory is quantity tracked
  • Whether items are valued as assets
  • Whether items in this subinventory will be used in ATP calculations
  • Whether items will be used in available to reserve calculations.
  • Whether to include on-hand item quantities in the planning progress.
If locator is determined at subinventory level then we have to specify a type of locator control for the subinventory.

inventory >setup>organization>subinventory

Defining Stock Locators

A stock locator is a physical area within a subinventory where you store material (such as a row, rack, aisle, bin or shelf). We can turn on locator control for the whole organization, for a specific subinventory, or for a particular item. Item quantities can be tracked by locator. We can restrict an item to a specific locator. The tasks in the process to define a specific stock locator are
  1. Enter the locator and its description
  2. Enter the subinventory where the locator resides.

 Inventory > Setup > Organizations > Stock Locators

Define Item Attributes

Each item has a number of attributes such as lead time, cost, unit of measure, item status, revision control, and so on. You need to specify for each of these attributes the level at which oracle inventory will maintain the item attribute, the item master level or at the item/organization level. We can specify that a particular item attribute such as unit of measure, be maintained at the item master level.

Inventory > Set Up > Items > Attribute Controls

Define Categories

One of the key strengths of the Oracle Inventory application is the capability to allow the user to attach several user-defined categories to an item and inquire and report on the items using these categories. After defining the item categories key flexifield, the next step in the category definition process is the definition of the names for each one of the categories. To define a new category, you have to specify both the category flexifield structure name and a unique category name.

Inventory > Setup > Item > Categories > Category Codes

Define Category Sets

 To define the Category sets provide the following information
  • A unique category set name
  • A category flexifield structure
  • A control level of Master Level
  • A default category, which is the value that Oracle Inventory assigns to an item when it is initially created.
  • Indication of whether to enforce a list of valid categories.
  • A list of valid categories.

Define cost types

Before entering item costs we need to define cost types. A cost type is a set of costs used for costs for future current, historical or simulation purposes. Oracle inventory comes predefined with three cost types: frozen, average and pending.

Inventory > Costs > Item Costs

Open accounting periods

An accounting period must be open to be able to perform an inventory transaction. This means that the inventory transaction must fall within the beginning and ending dates of the open accounting period. First define the accounting periods in Oracle General Ledger. Then before entering transactions in Oracle Inventory open an accounting period. Use the Inventory Accounting Periods window to perform this function.

Inventory > Accounting Close Cycle > Inventory Accounting periods  (Check whether Period in which you are transacting is open)

Set profile options

Each of the oracle application has a set of profile options that allow you to indicate how the application should access and process application information. In oracle inventory we can indicate what the application used when creating, processing or transacting an inventory item.

Defining the Organization Shipping Network

We can use the shipping networks screen to define the accounting information and the relationships that exist between shipping destination organization. When we define a new organization, the shipping information we specified in the organization appears by default on the shipping networks screen. For each organization relationship, we specify an organization whether it is a shipping organization, a destination organization, or both. We also specify for each organization whether the shipping type is direct or in-transit.

Material transaction is general terms that represent material movement in a warehouse or are manufacturing plant.
You can use a single transaction to transfer more than one item.

Inter Organization Transfer:
To move inventory items from one organization to another, you can use either direct or in-transit shipment. You perform inter organization transfers on the inter organization transfer form.

Prerequisites for inter organization Transfer:
Items you transfer must exist in both organizations although they can have different attributes and control level (locator,revision, lot and serial number) settings.

Shipping Network:
The inter-organization shipping network form allows you to define accounting information and relevant shipping information between inventory organizations.     The relationship can be two-way or just one-way and these relationships are not item specific.     

Direct Shipment:

The source and destination information are required at the time of the transaction. You cannot perform a direct transfer of items that are not under                 revision/lot/serial/number-control in the shipping  organization if the destination organization requires any of controls. If transfer type is direct, inventory is immediately visible in the  destination organization..

Inventory > Transactions > Inter-Organization Transfer
Choose type as Direct


In-transit Shipment:

In-transit shipment is typically is used when transportation time is significant or if you require separate shipping and receiving steps The delivery location need not be specified at the time of transfer transaction and only the source and freight information is only required.

If the FOB (freight on board) point is set to receipt in the shipping network, the desti                        nation organization owns the shipment after receiving the items. If it is set to shipment the destination organization owns the shipment when the shipping organization ships it and while it is in-transit. You can perform a in-transit transfer of items that are not under revision/lot/serial/number-control in the shipping organization if the destination organization requires any of controls.

Inventory > Transactions > Inter-Organization Transfer
Choose type as In-transit

On Hand quantity at the destination doesn’t change automatically.For this  we should move to receipt and receive the items specifying the locator at the destination where the items should be placed.

Sub-Inventory Transfers:
This transactions results in the movement of material between two locations with in the organization. The locations can be either sub inventories or locators. You can transfer material within your current organization between subinventories, or between two locators within the same subinventory. You can transfer from asset to expense subinventories, as well as from tracked to non-tracked subinventories. If an item has a restricted list of subinventories, you can only transfer material from and to subinventories in that list. Oracle Inventory allows you to use user-defined transaction types when performing a subinventory transfer.

After performing sub-inventory transfers, check the on-hand quantity in both the sub-inventories using the On-hand quantity form.
 Inventory > Transactions > Sub Inventory Transfer  

Miscellaneous Transactions:
With a miscellaneous transaction you can issue material to or receive material from general ledger accounts in your current organization. This allows you to issue material to groups that are not inventory, receiving, or work in process such as a research and development group or an accounting department. You can also make manual adjustments to the general ledger by receiving material from one account to inventory, and then issuing that material from inventory to another account.

You can use your user-defined transaction types and sources to further classify and name your transactions. You can use this feature to issue items to individuals, departments, or projects; or to issue damaged items to expense accounts such as scrap. You can perform the receipts for items that were acquired by means other than a purchase order from a supplier. You can also use this feature to load all item on-hand quantities when you start implementing Oracle Inventory.

Inventory > Transactions >Miscellaneous transactions

Defining Lot and serial Number Information

You can assign either lot or serial number information to your inventory items. For those items you have specified that your want to be under lot control, when you enter receipt or issue transactions, you need to specify the lot control information for those items so that the system will assist you in tracking the lots associated with the items.

Likewise, if you have specified serial number control for any of your items, you need to specify the serial numbers for those items when you transact those items into and out of inventory.

 You  can specify for each of your inventory items that you want the item to be lot-controlled, to be serial-number-controlled, or to have no lot-or serial-number-control.

Cycle Counting

Cycle Counting is a procedure in which a selected list of items are physically counted to verify the on-hand quantities of those items. Cycle Counting normally involves continuous counting of a subset of inventory on a regular cycle, usually prioritized by ABC classification. For example, you will count you’re A items more frequently than your B or C items
The following are the steps followed in cycle counting.

1. Cycle Count Classes:
 In this step we will enter cycle count classes in the Cycle Counting Classes form. We also enter ABC classes to include in our cycle count.  We can also enter approval and hit/miss tolerances for our cycle count classes. For each class that is included in the cycle count, enter the number of times per year we want to count each item in this class.

2. Including items in the Cycle Count:
We need to load items into our cycle count before we can schedule or count them. You can either enter the items manually in the Cycle Counts form or automatically include items based on an ABC group. You specify an ABC group from which to load your items and all items in the ABC group you choose are automatically included in your cycle count. The ABC classes for that ABC group are also copied into the current cycle  classes and the classifications of the included items are also retained.

3. Cycle Count Scheduling:
 We can schedule Cycle Counts either automatically or manually. The number of items in each cycle count class, the count frequency of each class, and the workday calendar of the organization are used to determine the items that need to be included in the scheduled cycle count. In case of automatic scheduling, the Cycle Count Enabled item attribute should be set to Yes for the items you want to include in the cycle count, and automatic scheduling should be enabled when we define our cycle count.
            We can also manually schedule counts using the Manual Schedule Requests form. We can request counts for specific sub inventories, locators, and items. We can manually schedule specific items or all items in a sub inventory.

4. Count Requests:
After scheduling our counts, the processes Generate Count Requests should be submitted to generate count requests. This process takes the output of the automatic scheduler and the manually scheduled entries and generates a count request with a unique sequence number for each item number, revision, lot number, sub inventory, and locator combination for which on-hand quantities exist.

5.Cycle Count Approvals:
The Count Adjustment Approval Summary window allows us to approve the count adjustments that require approvals. We can approve or reject the adjustment, or we might ask for a recount.

Physical Inventory
Physical Inventory typically counts all the inventory in an organization once a year. In other words it is a periodic reconciliation of physical inventory with system on-hand quantity. The following are steps involved in physical inventory
  • Physical inventory takes a snapshot of inventory on-hand quantities at the beginning of the process and all adjustments are made against the snapshot quantity.
  • Physical inventory generates unique tag numbers for recording counts
  • Physical counts are reviewed, and either accepted or rejected, as a whole.
  • Physical inventory has no predefined tolerances and it is the user’s decision to accept or reject the entire count.

ABC Analysis:
ABC analysis provides us with the ability to rank our items according to a criterion and prioritize the list of items so that we can establish better material control methods for items with a higher rank. In order to perform the warehouse control activities such as cycle count , we make use of this ABC analysis.

Steps followed in ABC Analysis:

      The ABC analysis it defined in this ABC Compile form.

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