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An Introduction: Oracle Subcontracting
Srikanta Nanjundaswamy
Oracle Senior Software Engineer
AGENDA
• Introduction to Subcontracting
• Types of Subcontracting
• Subcontracting in Oracle
• Features of Oracle subcontracting
• Basic setups in Subcontracting
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• Basic setups in Subcontracting
• Upcoming Trainings
• Demo
• Q&A
© 2010 Oracle Corporation – Proprietary and Confidential
Introduction to Subcontracting
Subcontracting is a common business practice where
a brand-owner or an Original Equipment Manufacturer (OEM)
outsources its entire manufacturing operations or a portion of it
by entering into a contractual agreement with an external
manufacturing service provider commonly known as a
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Manufacturing Partner (MP).
Types of Subcontracting
• Extent of Outsourcing:
Enterprises can opt to outsource the entire manufacturing process or a portion of it
by collaborating with a MP.
• Nature of Component Supply:
Enterprises can either own and manage the components for consumption at the
MP's facility, or engage a supplier to either own and consign inventory, or drop
ship the components at the MP's facility. In other situations, the OEM may charge
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ship the components at the MP's facility. In other situations, the OEM may charge
the MP by registering a sale of the components resulting in a complete transfer of
Ownership
• Shipment of Finished Goods:
Enterprises can decide to either supply finished goods directly to the customer or
enter into a contractual agreement with the MP to drop ship the finished goods to
the customer's facility.
Subcontracting In Oracle
Oracle supports the following types of subcontracting business practices that involve
complete outsourcing of assemblies and most importantly, component sale by an OEM to a MP:
• Chargeable Subcontracting
Chargeable Subcontracting is a practice where the OEM completely outsources the
manufacturing of an assembly to an MP and makes a provisional sale of components by
invoicing the MP
• Buy/Sell Subcontracting
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• Buy/Sell Subcontracting
Buy/Sell Subcontracting is a business practice where an Original Equipment
Manufacturer (OEM) completely outsources the manufacturing of an assembly to a
Manufacturing Partner (MP) by buying the assembly from the MP and most
importantly, selling the components to the MP that are consumed in the manufacturing
of the assembly at the MP's premises. The ownership of the components is transferred
to the MP immediately after the OEM ships the components to the MP unlike
Chargeable Subcontracting where the OEM retains the ownership of the components
throughout the subcontracting process.
Features of Oracle subcontracting
> Modeling of OEM and MP as inventory organizations to facilitate tracking and
simulation of subcontracting processes.
> Chargeable Subcontracting support is only for Standard Costing Orgs and can
be deployed in Japan, Taiwan, and Korea.
> Buy/Sell Subcontracting support is for Standard, Average, FIFO and LIFO
costing methods and can be deployed in any country.
>Separate tracking of accounting transactions and variances associated with
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subcontracting component sales in the OEM Org by setting up different accounts
for Subcontracting COGS, Subcontracting Revenue, and Subcontracting
Receivables.(only for chargeable subcontracting)
>Integrated planning (using ASCP) and subcontracting execution in discrete and
project manufacturing environments to manage and control processes throughout
the extended supply chain
>Support for different types of component supplies both Pre-positioned and
Synchronized,
Features of Oracle subcontracting
> Automatic creation of discrete jobs, replenishment sales order and purchase orders by running interlock manager
>Dedicated Subcontracting Workbench and Reports providing better tracking and
increased visibility throughout the subcontracting life cycle.
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Basic setups in Subcontracting• Setting Profile Options
• Defining Original Equipment Manufacturer (OEM) Organizations
• Defining Manufacturing Partner Organizations
• Defining WIP Parameters
• Defining Customers and Suppliers
• Associating Customers and Suppliers
• Setting Up Item Definitions
• Setting Up Bills of Material for Outsourced Assemblies
• Setting Up Subcontracting Accounting
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• Defining Receivables Transaction Types
• Defining Transaction Sources
• Setting Up Order Management Transaction Types
• Setting Up Standard Costs of Components and Assemblies
• Defining Price Lists for Subcontracting Components
• Setting up Purchase Price of an Outsourced Assembly
• Setting Up Shipping Network/Shipping lead times
• Defining Sourcing Rules
• Defining Netting Agreements
.
Demo Setups – Profile set up
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The above two profiles should be enabled to use subcontracting
Demo Setups – Defining OEM and MP
orgs
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OEM org is defined and OEM org location is attached from Inventory responsibility
Demo Setups – Defining OEM and MP
orgs
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MP3 org is defined and MP org location is attached from Inventory responsibility
Demo Setups – Defining OEM and MP
orgs
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Define OEM org Organization parameters from Inventory responsibility
Demo Setups – Defining OEM and MP
orgs
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Define MP org Organization parameters from Inventory responsibility
Demo Setups – Modelling Customer
and Suppliers
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Model OEM org as a supplier and MP org as customer and supplier
Demo Setups – Modelling Customer
and Suppliers
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Model OEM org as a supplier and MP org as customer and supplier
Demo Setups – Modelling Customer
and Suppliers
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Model OEM org as a supplier and MP org as customer and supplier
Demo Setups – Modelling Customer
and Suppliers
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Model OEM org as a supplier and MP org as customer and supplier
Demo Setups – Associating Customer
and Supplier to OEM and MP orgs
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Associate Supplier modelled from OEM org as supplier in OEM org parameters
Demo Setups – Associating Customer
and Supplier to OEM and MP orgs
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Associate Supplier and customer modelled from MP org as supplier and customer in MP org parameters
Demo Setups – Defining WIP
parameters
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Define WIP paramters for MP org
Demo Setups – Receivables
Transaction Types
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Define the Recevables Transaction types
Demo Setups – Defining Transaction
Sources
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Define the Recevables Transaction typesTransaction sources from Order Management
Demo Setups – Defining Order
Management Transaction Types
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Define the Transaction types in Order management which is used while creating sales order
Demo Setups – Defining Order
Management Transaction Types
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Define the Transaction types in Order management which is used while creating sales order
Demo Setups – Defining Shipping
Networks
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Define shipping networks between OEM and MP org from Inventory
Demo Setups – Defining Shipping
Networks
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Define shipping networks between OEM and MP org from Inventory and make sure Default order type for Internal orders are assigned
Demo Setups – Defining Shipping
Networks
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Define shipping networks between OEM and MP org from Inventory and assign a default shipping method
Demo Setups – Defining Items In MP
and OEM orgs
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Define Items from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Items from Inventory , ensure you have checked outsourced assembly flag for Outsourced assembly
Demo Setups – Defining Items In MP
and OEM orgs
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Define Items from Inventory and ensure for the assembly you have set as Do not release for Release time fence so that planning does not release the assembly order to MP org
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining Items In MP
and OEM orgs
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Define Subcon assembly component from Inventory
Demo Setups – Defining BOM In MP
and OEM orgs
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Define BOM in OEM org
Demo Setups – Defining BOM In MP
and OEM orgs
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Define BOM in MP org
Demo – Creation Of PO
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Create a PO for the Subcontracted assembly in OEM org OU
Demo – Launching Interlock Manager
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Launch Interlock manager from Subcontrating super user responsibility.Make sure the paramters are correct and it refrences the correct OU
Demo – Viewing results in
Subcontracting Workbench
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Navigate to Subcontracting workbench from Suncontracting super user responsibility
Demo – Viewing results in
Subcontracting Workbench
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Query in the subcontracting workbench with the OEM and MP org and you can view the subcontracted assembly purchase orders
Demo – Viewing results in
Subcontracting Workbench
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Also you can view components used for the subcontracting order and also the quantity required for each component and quantity allocated
Demo – Viewing results in
Subcontracting Workbench
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Also you can view components used for the subcontracting order and also the replenishment order for the components
Demo – Workorder and sales order
creation after Interlock
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Also you can view subcontracting workoprder created in the WIP for the outsourced PO by interlock manager
Demo – Workorder and sales order
creation after Interlock
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Also you can view the replenishment sales order created for the component in Order management