Overview of Outside Processing

Oracle Manufacturing allows you to include supplier-sourced components and

resources in your manufacturing processes. This is referred to as outside
processing, and its competitive advantages include:

o Using specialized supplier skills in your manufacturing process to

help lower engineering and manufacturing costs and increase
production quality

o Using supplier capacity to temporarily or permanently increase your

overall production capacity

An overview of the life cycle of outside processing from setup through execution
is described below.

Outside Processing Items and Outside Resources

You can define outside processing items that represent supplier-sourced items,
resources, and services that you include in your build process. These items can
be non-stocked items which represent the actual supplier contribution in your
build process or you can define the assembly itself as an outside processing
item. The outside processing item is the item on your requisition or purchase
order and the item you receive in your purchase order receipts.

You also define outside resources and associate them with these outside
processing items. The outside resources are included on your routings for
scheduling and costing purposes. A job or repetitive schedule in Work in Process
is charged for outside processing through these outside resources.

Work in Process automatically requisitions the outside processing items

associated with outside resources on jobs or repetitive schedules. Purchasing
charges outside resources to jobs or repetitive schedules when you receive the
outside processing items.

Multiple Outside Resources per Operation

You can assign multiple outside resources to each operation on the routings of
your outside processed assemblies.

Supplier-Sourced Components

You can define supplier-sourced components by selecting the Supplier supply

type on your bills of material to identify components that are provided by
suppliers. Supplier components provide information on the component materials
that your suppliers provide, but the supplier components need not be transacted.
Supplier components are not backflushed.

Automatic Requisition Generation

Work in Process automatically generates a purchase requisition for outside

processing operations, unless you specify that they be created manually. An
outside processing operation is an operation that contains an outside resource
linked to an outside processing item. The timing of the creation of the purchase
requisition is based on the setting of the WIP parameter Requisition Creation
Time. If you set the parameter to At Job/Schedule Release, a purchase
requisition is created for all outside processing operations on a job or schedule
when you release the job or schedule. If you set the parameter to At Operation, a
purchase requisition is created when you move into the Queue intraoperation
step of an outside processing operation. You then use Purchasing's Autocreate
feature to convert these requisitions to purchase orders or releases against
blanket agreements.

Note: The Requisition Import process automatically runs when using PO Move
and PO Receipt resource types. However, only PO Move initiates the
Intermediate Shipment workflow.

When the purchase requisition is created, the revision of the outside processing
item is determined and put on the requisition. If the outside processing item is an
assembly component, the current revision of the item is used. If the outside
processing item is the assembly being built, the bill of material revision on the job
or schedule is used.

Note: For lot based jobs in Oracle Shop Floor Management, set this is parameter
to At Operation. Multiple paths are available in a network routing, and the outside
processing operation can change for each manufacturing run.

Manual Outside Resource Requisitions and Purchase Orders

You can manually requisition and/or purchase outside resources that are not
linked to outside processing items by requisitioning and/or purchasing an outside
processing item and referencing a particular outside resource on a job or
repetitive schedule.

Multiple Jobs or Repetitive Schedules per Purchase Order Line

You can define a purchase order with several lines; each line can be for a
different outside processing item, and each outside processing item can refer to
several discrete jobs or repetitive schedules.

View Jobs or Repetitive Schedules Included on a Purchase Order

You can view each of the jobs or repetitive schedules referenced on a purchase
order. You can also report purchase order information associated with resources
on jobs or repetitive schedules.

Automatic Resource Charging

Purchasing automatically charges jobs or repetitive schedules for outside

resources when you receive the outside processing items linked to outside
resources on those jobs or repetitive schedules.

Automatic Move Transactions

When you receive outside processing items linked to PO Move resources,

Purchasing automatically moves the assemblies to Queue of the next operation
or to To Move of the final operation (if you are at the final operation).

If you receive more assemblies than the quantity in the Queue of the outside
processing operation, WIP automatically moves a quantity up to the over-
completion tolerance limit on the assembly being built. If the quantity received is
greater than the acceptable over-move quantity for the job, then the transaction
will error and quantity will be included on the Pending Move Transaction window.

Note: If Oracle Shop Floor Management is installed, and you are using lot based
jobs with network routings, the PO Receipt transaction moves the items to the
last operation-not the next operation. See: Creating a Network Routing.

Automatic Assembly and Work Order Completion

If the outside processing operation is the last operation on the routing, and the
resource has a charge type of PO Move, Work in Process automatically
completes both full and partial outside processing assembly quantities into
Inventory when they are received back from the supplier. When quantities that
account for the remaining uncompleted quantity of a work order are received, the
status of the work order is updated to "complete-charges allowed."

Receiving Inspection Options

Oracle Manufacturing gives you several options to handle your receiving

inspection flow: Supplier Inspection, Shop Floor Inspection, and Receiving
Inspection.

Returns and Corrections

You can return outside processed assemblies to suppliers for rework, and you
can reverse receiving transactions to correct over-receipts. Purchasing reverses
accounting charges and move transactions associated with the initial
transactions.

Setting Up Outside Service Processing

Purchasing recognizes items, while eAM recognizes resources. As a result, the
contractor service item must be linked to a resource for the purchase order to be
tied to the work order. This is associated via the Resources window. Additionally,
the resource must be associated with a department. The department must
specify the location where the services are to be delivered. This must be a valid
location for the organization.

For each contractor service resource, you can determine whether the rate
charged to the work order will be a standard rate or the actual amount, based on
the purchase order confirmed price. This is set up within the Resources window,
and may vary for each resource.

To set up purchasing information:

1. Navigate to the Financials Options window.

2. Select the Supplier-Purchasing tabbed region.

The options you define in this region, except for Inventory organization,
are used as default values for the Purchasing region of the Suppliers
window (See: Suppliers). The supplier values default to new supplier sites
for the supplier, which default to new purchasing documents for the
supplier site.

3. Select Ship-To and Bill-To Locations from the lists of values. These are the
names of the ship-to/bill-to location for the system default values. If the
name you want does not appear in the list of values, use the Location
window to select a new location (See: Setting Up Locations, Using Oracle
HRMS - The Fundamentals).

4. Select an Inventory Organization from the list of values. You can associate
each of your purchasing operating units with one inventory item master
organization. When you associate your purchasing operating unit with an
inventory organization, items you define in this organization become
available in Purchasing. You can only choose an inventory organization
that uses the same set of books as your Purchasing operating unit. Do not
 change the inventory organization after you have already assigned on to
Purchasing.

5. Optionally, select a Ship Via code from the list of values. This is the freight
carrier you use with suppliers. If the type of freight carrier you want does
not appear in the list of values, use the Freight Carriers window to define a
new shipping method. The value you enter here is the value in the
Description field of the Freight Carriers window in Purchasing.

6. Select an FOB from the list of values. If the type of FOB you want is not in
the list of values, use the Oracle Purchasing Lookups window to define a
new FOB.

7. Select a Freight Terms code from the list of values. The fright terms for a
supplier identify whether you or your supplier pays for freight charges on
goods you receive. You can define new freight terms in the Oracle
Purchasing Lookups window.

8. Save your work.

See Also:

Supplier - Purchasing Financials Options

To set up outside services as items:

Create an item for each outside service, such as landscaping services.

9. Navigate to the Master Item window.

10. Enter the item Name for the contractor service. For example, Landscape
Service.

11. Select Copy From within the Tools menu.

12. Select @Outside Processing Item from the Template list of values.

13. Choose Apply.

14. Choose Done.

15. Within the Purchasing tabbed region, select the Unit Type.

Assembly: Costs reflect the list price set up in the Master Item.

Resource: Costs are based on the resource standard rate.

 16. Enter a list price for this contractor service.

17. Select Each for the Unit of Issue. This is the unit of measure you use to
issue the item from inventory.

18. You use units of issue to round order quantities, minimizing shipping,
warehousing, and handling costs. The unit of issue must be the same for
all units of measure belonging to the same unit of measure class as the
primary unit of measure. See: Defining Unit of Measure Classes.

19. Save your work.

To link outside service items to resources:

You must define outside resources and link them to outside processing items in
order to automatically generate purchase requisitions for outside processing.
When you assign outside resources to a department, you also specify a usage
rate or amount that determines the quantity you are requisitioning and/or
charging to eAM work orders.

20. Navigate to the Resources window.

21. Select Miscellaneous from the Type list of values.

22. Select the PO Receipt Charge Type.

23. Select the Enabled check box to enable this resource for outside
processing.

24. Select the outside services Item to associate with this resource.

25. Select the Costed check box to include this outside resource in your cost
rollup. When you define a resource with a charge type of PO Receipt,
Cost Management automatically defaults Outside Processing as the cost
element.

26. Enter an Absorption Account. You must define an absorption account for
each outside resource. The absorption account defaults from the
organization's receiving account, which is debited when an outside
processing item is received and which is subsequently credited when the
item is delivered to eAM. The debit goes to the outside processing
account associated with the accounting class of the work order when the
item is delivered to eAM.
 27. Optionally, enter a Variance Account. You must define a purchase price
variance account for each outside resource you define. This account
defaults from the organization's purchase price variance account.

28. Select the Standard Rate check box to charge the standard, non-purchase
order amount to the work order. Choose Standard Rate Clear to charge
the work order the actual purchase order amount.

29. Save your work.

To link the outside service resource to a department:

30. Navigate to the Departments window.

31. Select the Department to associate with the outside service resource from
the list of values.

32. Select a valid Location from the list of values.

33. Choose Resources.

34. Select the outside service resource from the Service list of values.

35. Optionally, indicate whether this resource is Available 24 Hours a day. You
cannot assign shifts to a resource that is available 24 hours a day.

36. Optionally, indicate whether this department can share this resource and
capacity with other departments.

37. Enter the number of capacity Units (resource units) available for this
department.

38. Save your work.

See Also:

For information on all remaining fields, See: Defining a Resource.

To define WIP parameters:

39. Navigate to the Work in Process Parameters window.

40. Select a value for Requisition Creation Time.

At Job/Schedule Release - This enables automatic creation of a purchase

order requisition, for contractor services, when the work order is Released.
 Manual - Choose Manual to manually create requisitions.

At Operation - Within eAM, At Operation is equivalent to At Job/Schedule

Release.

41. Save your work.