Using ‘Procure to Order’ to Source Buy Items Cross Organizations

8/11/2019 Using Procure to Order to Source Buy Items Cross Organizations

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M. Coleman - July 19,2004 1

Using Procure to Order to Source

Buy Items Cross Organizations

Maggie Coleman

Margaret Coleman Consulting

NorCal OAUG Training DayJuly 19, 2004


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Agenda

ATO item sourcing options in Oracle OrderManagement

How to source ATO items from an internalinventory organization

System steps for a Procure to Orderprocess

Resulting inter-company invoicing andaccounting for cross op unit transfers

Challenges and issues


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Oracle Functionality

Order ManagementAssemble 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


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Oracle ATO Sourcing Options

Customer orders an ATO make item

Item shipped directly from the mfg org to the customer 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 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 requestmanufacturing of an item to order

Linked to the sales order line A manufacturing org builds the product to order

Inventory is reserved to sales order line uponproduction completion

Partial shipments allowed 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 thesales order line.

Inventory is reserved to the sales order line uponPO receipt

Partial shipments allowed Auto-split SO lines

Drop shipments allowed = Back to Back orders


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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

EuroSOB

AsiaSOB

USSOB

Euro OpUnit AsiaOp UnitUS Op Unit

Mfg Org#1

Mfg Org#2

Euro InvOrg

Asia InvOrg

Master Inventory Organization

Oracle ERP Instance


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Inter-Org Material Flow

Direct shipment from source org to thecustomer

Within or cross operating units

Transfer material from one inventory orgto another inventory org before customershipment

Within or cross operating units Use internal orders to transfer material


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Direct Ship ProcessShip to Customer from Mfg Org

Selling Op UnitSourcing Op Unit

Final Assy Org

Sourcing Op Unit

Sub Assy Org

Customer

sales order for

Finished

Product

ATO Job - build

assy

Internal

Requisition -

source board

from Sub Org

Internal sales

order - request

to ship sub to

US - FA

Discrete Job -

build board to

stock

Planning

Planning Complete Job

Ship I/O

Receive I/R

Create I/O

Order Import

Create FAS

Complete Assy


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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 FlowSelling

Op Unit

Sourcing Op Unit

Final Assy Org

Sourcing Op Unit

Sub Assy Org

Customer

sales order for

FinishedProduct

Internal

requisition -

source item

from US Org

Internal sales

order - request

to ship assy to

UK

ATO Job - build

assy

Internal

Requisition -

source boardfrom Sub Org

Internal sales

order - request

to ship sub toUS - FA

Discrete Job -

build board to

stock

Create Req

Req Import

Create I/O

Order Import

Create FAS

Planning

Planning Complete Job

Ship I/O

Receive I/R

Complete Assy

Receive I/R

Ship I/O

Create I/O

Order Import


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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 With or without in-transit inventory

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 INV: Intercompany Invoice for Internal Orders = Yes

ATO flag can be different in each inventory org


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Inter-Company Invoicing Process

Selling Op Unit Sourcing Op Unit

Create Inter-

Company AR

Invoice

US Ships/Sells

Item to Non-Us

Create Inter-

Company AP

Invoice

UK Receives/

Buys Item

from US

Internal

requisition -

source item

from US Org

Internal sales

order - request

to ship assy to

Non-US


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Internally Sourced ATO Items

Use a planning function to create internalreqs 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 purchaserequisitions

Switch purchase requisition into internal requisition

after sales order line progression and beforerequisition import

Models and options cannot be placed on aninternal order

Create newly created item/BOM/routing in eachsourcing 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 requestpurchase of an item to order

Workaround to change into an internal requisitionif items source type = Inventory

Internal requisition triggers creation of internalsales 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 putinto in-transit inventory

Inventory is reserved to the customer salesorder line upon internal requisition receipt

Partial shipments allowed

Auto-split SO lines

ATO standard items supported

Workaround to internally order configuration items

Same item can be make ATO in one org & buyATO 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 ItemCreate 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 opunit

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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Line Actions Button

Or run AutoCreate Final Assembly Orders in WIP responsibility

Creates ATO discrete job

Progress Order Line to Create 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 ShipmentAccounting Entries in Shipping Org

Material Transaction Accounting Distributions


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Internal Order ReceiptAccounting Entries in Receiving Org

Material Transaction Accounting Distributions

C t I t C AR I i


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Create Inter-Company AR InvoiceIn 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

I t C AR I i


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Inter-Company AR Invoice

In Sourcing Op Unit

Revenue Accounting Entry

C I C AP I i


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Create Inter-Company AP InvoiceIn 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 InvoiceIn Selling Op Unit

Invoice Distributions


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Challenges and IssuesATO Buy Items

SO line cancellations/splits/qty changes PO/requisition must be de-linked first

Workflow creates new requisition if backgroundautocreate 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 reservationWSH: Retain ATO Reservations profile option


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Challenges and IssuesATO 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 internalrequisition, internal order, ATO discrete jobdates

Ch ll d I


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Challenges and IssuesInternally Sourced ATO Items

Requisition typeATO configurations

Create configuration item first, then create

internal req Config item data in sourcing organization

Item org assignment, BOMs, routings, internal pricelists, standard cost

Mapped shipping methods to internalcustomer locations

Ch ll d I


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Challenges and IssuesInternally Sourced ATO Items

Used descriptive flexfields for visual linkfrom external sales order to requisition tointernal sales order to discrete job

External sales order data not flowing to theinternal order

Ship sets

Customer credit checking

Shipping notes

PO Reservation up on receipt

Inter Company Invoicing and


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Inter-Company Invoicing andInternal Order Accounting Notes

COGS recorded for customer shipment ininventory

Inter-co margin is recorded using 2 entries

A credit at standard cost is recorded to marginupon internal order ship confirm

A second entry debits margin at transfer price

through the inter-company AP invoice. Margin = Transfer priceStandard cost

d


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Inter-Company Invoicing andInternal Order Accounting Issues

Inter-company invoices uses an internalorder price list

Shipping network setup should not use inter-

org transfer charges Inter-org AR & Inter-org AP should clear out

each other


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Inter-Company Invoicing andInternal Order Accounting Issues

RMA requires manual entry to correctaccounting

Oracle does not have functionality to returnproduct directly to the manufacturing org.

Oracles solution is to sell inventory back tomanufacturing org


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Contact Information

Maggie Coleman

Margaret Coleman Consulting

Email: [email protected] Phone: 415-215-1112
mailto:[email protected]:[email protected]

Documents

Using ‘Procure to Order’ to Source Buy Items Cross Organizations