Using Procure to Order to Source

Buy Items Cross Organizations

Maggie Coleman
Margaret Coleman Consulting
NorCal OAUG Training Day
July 19, 2004

M. Coleman - July 19,2004

Agenda

ATO item sourcing options in Oracle Order

Management
How to source ATO items from an internal
inventory organization
System steps for a Procure to Order
process
Resulting inter-company invoicing and
accounting for cross op unit transfers
Challenges and issues
M. Coleman - July 19,2004

Oracle Functionality

Order Management
Assemble to Order
Procure to Order
Configure to order

Internal requisitions and orders

Within and cross operating units

Inter-company invoicing

Cross operating unit item sourcing

M. Coleman - July 19,2004

Oracle ATO Sourcing Options

Customer orders an ATO make item

Customer orders an ATO buy item

Purchased from a supplier

Shipped from inventory or drop shipped from supplier
to the customer (Back to Back orders)

Customer orders an ATO item

Item shipped directly from the mfg org to the customer

Sourced from another inventory org

Inventory transferred from one inventory org to the
selling org before shipment to the customer
Workaround to be discussed

aka

Procure to Order
Supply to Order
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Make Item Assemble to Order Process

Planning make/buy code=Make

ATO Flag = Yes
OM workflow creates discrete job to request
manufacturing of an item to order

A manufacturing org builds the product to order

Inventory is reserved to sales order line upon
production completion
Partial shipments allowed

Linked to the sales order line

Auto-split SO lines

ATO configurations and standard items supported

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Make Item ATO Flow Status Codes

BOOKED
PRODUCTION_ELIGIBLE
PRODUCTION_OPEN
PRODUCTION_PARTIAL
PRODUCTION_COMPLETE
CLOSED

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Procure to Order or Buy ATO Process

Planning make/buy code=Buy

ATO Flag = Yes
OM workflow creates a purchase requisition to
request the ordering of the item
A purchase order is created and is linked to the
sales order line.
Inventory is reserved to the sales order line upon
PO receipt
Partial shipments allowed

Auto-split SO lines

Drop shipments allowed = Back to Back orders

M. Coleman - July 19,2004

OM Buy ATO Flow Status Codes

BOOKED
PO_REQ_REQUESTED
PO_REQ_CREATED
PO_CREATED
PO_PARTIAL
PO_RECEIVED
CLOSED
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Sample Multi-Org Architecture

Oracle ERP Instance
US
SOB

Euro
SOB

Asia
SOB

US Op Unit

Euro Op
Unit

Asia
Op Unit

Euro Inv
Org

Asia Inv
Org

Mfg Org
#1

Mfg Org
#2

Master Inventory Organization

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Inter-Org Material Flow

Direct shipment from source org to the

customer

Within or cross operating units

Transfer material from one inventory org

to another inventory org before customer
shipment

Within or cross operating units

Use internal orders to transfer material

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Direct Ship Process

Ship to Customer from Mfg Org

Selling Op Unit

Customer
sales order for
Finished
Product

Sourcing Op Unit
Final Assy Org

Create FAS

Sourcing Op Unit
Sub Assy Org

ATO Job - build

assy

Complete Assy
Planning Receive I/R

Internal
Requisition source board
from Sub Org

Ship I/O
Create I/O
Order Import

Internal sales
order - request
to ship sub to
US - FA
Planning Complete Job

Discrete Job build board to

stock

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Direct Ship Process

SO warehouse is source organization

Does not transfer inventory value or quantity to selling
organization
Cannot use in-transit inventory
AR invoice created upon shipment from source org
Uses inter-company invoicing for cross op unit shipments
One shipment transaction
One demand feeding planning
Does not use internal req/orders

No config issues

ATO flag set same in all inventory orgs

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Inter-Company/Org Material Flow

Selling
Op Unit

Sourcing Op Unit
Final Assy Org

Sourcing Op Unit
Sub Assy Org

Customer
sales order for
Finished
Product
Create Req
Req Import

Receive I/R

Internal
requisition source item
from US Org

Ship I/O
Create I/O
Order Import

Internal sales
order - request
to ship assy to
UK

Create FAS Complete Assy

ATO Job - build

assy

Planning Receive I/R

Internal
Requisition source board
from Sub Org

Ship I/O
Create I/O
Order Import

Internal sales
order - request
to ship sub to
US - FA
Planning Complete Job

Discrete Job build board to

stock

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Ship to Customer from Selling Org

SO line warehouse is not sourcing org

Utilize internal requisitions/orders or inter-org transfers

In-transit leadtime offset for internal order demand

Two shipments transactions

Sourcing org on internal order into in-transit

Selling org on customer order

Transfers inventory value and quantity to selling org

AR invoice created upon shipment from selling org
Option to use inter-company invoicing

With or without in-transit inventory

INV: Intercompany Invoice for Internal Orders = Yes

ATO flag can be different in each inventory org

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Inter-Company
Invoicing
Process
Inter-Company Invoicing Process
Selling Op Unit

Sourcing Op Unit

Internal
requisition source item
from US Org

Internal sales
order - request
to ship assy to
Non-US

UK Receives/
Buys Item
from US

US Ships/Sells
Item to Non-Us

Create InterCompany AR
Invoice

Create InterCompany AP
Invoice

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Internally Sourced ATO Items

Use a planning function to create internal

reqs from sales order demand

ATO flag set to Yes in sourcing org, No in

selling org
Models/options not supported on internal
reqs/orders
No link from external sales order to internal
req/order/discrete job
No reservation upon inventory receipt
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Internally Sourced ATO Items

Problems and workarounds

Procure to order only creates purchase

requisitions

Switch purchase requisition into internal requisition

after sales order line progression and before
requisition import

Models and options cannot be placed on an

internal order
Create newly created item/BOM/routing in each
sourcing organization after config is created by OM
Place ATO config on internal order

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Internally Sourced ATO Item Process

Planning make/buy code=Buy

ATO Flag = Yes
Source type = Inventory
Source organization = sourcing inventory org
OM workflow purchase requisition to request
purchase of an item to order
Workaround to change into an internal requisition
if items source type = Inventory
Internal requisition triggers creation of internal
sales order from source org to selling organization
ATO job is created and completed in mfg org
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Internally Sourced ATO Item Process

Internal sales order is picked, shipped and put

into in-transit inventory
Inventory is reserved to the customer sales
order line upon internal requisition receipt
Partial shipments allowed

ATO standard items supported

Auto-split SO lines
Workaround to internally order configuration items

Same item can be make ATO in one org & buy

ATO in another org
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Book Customer Order in Selling Op Unit

Line 1.1 is an internally sourced ATO Buy Item

Line 2.1 is a supplier sourced ATO Buy Item
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Progress Order Line to Create Requisition

Line Actions Button

Or run AutoCreate Purchase Requisitions in BOM responsibility

Inserts a record into the PO requisitions interface table
Workaround used to change PR into internal requisition
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PO Req Requested from OM Workflow

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Import Requisition

Selling Op Unit PO responsibility

Import Source = CTO
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ATO Supplier Buy Item

Create standard PO or blanket release

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PO Created Workflow Status

Line 1.1 is an internally sourced ATO Buy Item

Line 2.1 is a supplier sourced ATO Buy Item
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Create Internal Sales Order In Mfg Op Unit

Run PO Create Internal Orders in the selling

op unit

Inserts internal sales order information in the

OM interface tables in the sourcing op unit

Run OM Order Import in the sourcing op

unit

Validates and creates internal sales order in the

sourcing op unit
Customer = selling organization
Will book automatically if no missing data

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Internal Sales Order

3 day calendar day transit time

Ship from sourcing inv org to selling inv org
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Progress Order Line to Create Job

Line Actions Button

Or run AutoCreate Final Assembly Orders in WIP responsibility

Creates ATO discrete job

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ATO Discrete Job

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Viewing Supply

Reservation Details
Purchase requisition, purchase order or WIP Job
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Viewing Supply

Supply to Order Workbench

Purchase requisition, purchase order or WIP Job
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Fulfilling ATO Supply Request

Internally sourced ATO item

Build ATO job in a manufacturing org

Pick and ship internal order
Receive internal requisition

Supplier sourced ATO item

Receive purchase order

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Internal Order Shipment

Accounting Entries in Shipping Org

Material Transaction Accounting Distributions

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Internal Order Receipt

Accounting Entries in Receiving Org

Material Transaction Accounting Distributions

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Create Inter-Company AR Invoice

In Supplying Op Unit

Run Create Inter-company AR Invoices in Inventory

- Inserts into AR invoice interface tables

Run Autoinvoice in AR
- Creates AR inter-company invoice from interface

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Inter-Company AR Invoice
In Sourcing Op Unit
Revenue Accounting Entry

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Create Inter-Company AP Invoice

In Selling Op Unit
Run Create Inter-company AP Invoices in Inventory
- Inserts into AP expense report tables

Run Expense Report Import in AP

- Creates AP inter-company invoice from interface

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Inter-company AP Invoice
In Selling Op Unit
Invoice Distributions

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Challenges and Issues

ATO Buy Items

SO line cancellations/splits/qty changes

PO/requisition must be de-linked first

Workflow creates new requisition if background
autocreate process is scheduled - put line on
hold first
Cancel original requisition
New requisition created for changed/split lines
Cannot re-link an existing requisition or PO
Partial shipments will automatically split line and
retain reservation

WSH: Retain ATO Reservations profile option

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Challenges and Issues

ATO Buy Items

Requisition import grouping rules

Wanted all external sales order lines on one

requisition, not supported in std functionality

SO schedule date changes

Date changes allowed, does not update

requisition or purchase order.
For internal requisitions, must sync up internal
requisition, internal order, ATO discrete job
dates
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Challenges and Issues

Internally Sourced ATO Items

Requisition type
ATO configurations

Create configuration item first, then create

internal req
Config item data in sourcing organization

Item org assignment, BOMs, routings, internal price

lists, standard cost

Mapped shipping methods to internal

customer locations
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Challenges and Issues

Internally Sourced ATO Items

Used descriptive flexfields for visual link

from external sales order to requisition to
internal sales order to discrete job
External sales order data not flowing to the
internal order

Ship sets
Customer credit checking
Shipping notes

PO Reservation up on receipt
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Inter-Company Invoicing and

Internal Order Accounting Notes

COGS recorded for customer shipment in

inventory
Inter-co margin is recorded using 2 entries

A credit at standard cost is recorded to margin

upon internal order ship confirm
A second entry debits margin at transfer price
through the inter-company AP invoice.

Margin = Transfer price Standard cost

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Inter-Company Invoicing and

Internal Order Accounting Issues

Inter-company invoices uses an internal

order price list

Shipping network setup should not use interorg transfer charges

Inter-org AR & Inter-org AP should clear out
each other

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Inter-Company Invoicing and

Internal Order Accounting Issues

RMA requires manual entry to correct

accounting

Oracle does not have functionality to return

product directly to the manufacturing org.
Oracles solution is to sell inventory back to
manufacturing org

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Contact Information

Maggie Coleman

Margaret Coleman Consulting

Email: mlcolema@ix.netcom.com
Phone: 415-215-1112

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