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M. Coleman - July 19,2004M. Coleman - July 19,2004 11

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

OrganizationsOrganizations

Maggie ColemanMaggie ColemanMargaret Coleman ConsultingMargaret Coleman Consulting

NorCal OAUG Training DayNorCal OAUG Training DayJuly 19, 2004July 19, 2004


AgendaAgenda ATO item sourcing options in Oracle ATO item sourcing options in Oracle

Order Management Order Management How to source ATO items from an How to source ATO items from an

internal inventory organizationinternal inventory organization System steps for a ‘Procure to Order’ System steps for a ‘Procure to Order’

processprocess Resulting inter-company invoicing and Resulting inter-company invoicing and

accounting for cross op unit transfersaccounting for cross op unit transfers Challenges and issuesChallenges and issues


Oracle Functionality Oracle Functionality Order ManagementOrder Management

Assemble to OrderAssemble to Order Procure to OrderProcure to Order Configure to orderConfigure to order

Internal requisitions and ordersInternal requisitions and orders Within and cross operating unitsWithin and cross operating units

Inter-company invoicingInter-company invoicing Cross operating unit item sourcingCross operating unit item sourcing


Oracle ATO Sourcing OptionsOracle ATO Sourcing Options Customer orders an ATO make itemCustomer orders an ATO make item

Item shipped directly from the mfg org to the Item shipped directly from the mfg org to the customer customer

Customer orders an ATO buy itemCustomer orders an ATO buy item Purchased from a supplierPurchased from a supplier Shipped from inventory or drop shipped from Shipped from inventory or drop shipped from

supplier to the customer (‘Back to Back’ orders)supplier to the customer (‘Back to Back’ orders) Customer orders an ATO itemCustomer orders an ATO item

Sourced from another inventory orgSourced from another inventory org Inventory transferred from one inventory org to Inventory transferred from one inventory org to

the selling org before shipment to the customerthe selling org before shipment to the customer Workaround to be discussedWorkaround to be discussed

akaaka Procure to OrderProcure to Order Supply to OrderSupply to Order


Make Item Assemble to Order Make Item Assemble to Order ProcessProcess

Planning make/buy code=‘Make’Planning make/buy code=‘Make’ ATO Flag = ‘Yes’ATO Flag = ‘Yes’ OM workflow creates discrete job to request OM workflow creates discrete job to request

manufacturing of an item to ordermanufacturing of an item to order Linked to the sales order lineLinked to the sales order line

A manufacturing org builds the product to orderA manufacturing org builds the product to order Inventory is reserved to sales order line upon Inventory is reserved to sales order line upon

production completionproduction completion Partial shipments allowedPartial shipments allowed

Auto-split SO linesAuto-split SO lines ATO configurations and standard items ATO configurations and standard items

supportedsupported


Make Item ATO Flow Status Make Item ATO Flow Status CodesCodes

BOOKEDBOOKED PRODUCTION_ELIGIBLEPRODUCTION_ELIGIBLE PRODUCTION_OPENPRODUCTION_OPEN PRODUCTION_PARTIALPRODUCTION_PARTIAL PRODUCTION_COMPLETEPRODUCTION_COMPLETE CLOSEDCLOSED


‘‘Procure to Order’ or Buy ATO Procure to Order’ or Buy ATO ProcessProcess

Planning make/buy code=‘Buy’Planning make/buy code=‘Buy’ ATO Flag = ‘Yes’ATO Flag = ‘Yes’ OM workflow creates a purchase requisition OM workflow creates a purchase requisition

to request the ordering of the itemto request the ordering of the item A purchase order is created and is linked to A purchase order is created and is linked to

the sales order line.the sales order line. Inventory is reserved to the sales order line Inventory is reserved to the sales order line

upon PO receiptupon PO receipt Partial shipments allowedPartial shipments allowed

Auto-split SO linesAuto-split SO lines Drop shipments allowed = ‘Back to Back’ Drop shipments allowed = ‘Back to Back’

ordersorders


OM Buy ATO Flow Status Codes OM Buy ATO Flow Status Codes BOOKEDBOOKED PO_REQ_REQUESTEDPO_REQ_REQUESTED PO_REQ_CREATEDPO_REQ_CREATED PO_CREATEDPO_CREATED PO_PARTIALPO_PARTIAL PO_RECEIVEDPO_RECEIVED CLOSEDCLOSED


Sample Multi-Org Sample Multi-Org ArchitectureArchitecture

Euro SOB

AsiaSOB

US SOB

Euro Op Unit

AsiaOp Unit

US Op Unit

Mfg Org #1

Mfg Org #2

Euro Inv Org

Asia Inv Org

Master Inventory Organization

Oracle ERP Instance


Inter-Org Material FlowInter-Org Material Flow Direct shipment from source org to Direct shipment from source org to

the customerthe customer Within or cross operating units Within or cross operating units

Transfer material from one inventory Transfer material from one inventory org to another inventory org before org to another inventory org before customer shipment customer shipment Within or cross operating units Within or cross operating units Use internal orders to transfer materialUse internal orders to transfer material


Direct Ship ProcessDirect Ship ProcessShip to Customer from Mfg OrgShip to Customer from Mfg Org


Direct Ship ProcessDirect Ship Process SO warehouse is source organizationSO warehouse is source organization Does not transfer inventory value or quantity to Does not transfer inventory value or quantity to

selling organizationselling organization Cannot use in-transit inventoryCannot use in-transit inventory AR invoice created upon shipment from source orgAR invoice created upon shipment from source org Uses inter-company invoicing for cross op unit Uses inter-company invoicing for cross op unit

shipmentsshipments One shipment transactionOne shipment transaction One demand feeding planningOne demand feeding planning Does not use internal req/orders Does not use internal req/orders

No config issuesNo config issues ATO flag set same in all inventory orgsATO flag set same in all inventory orgs


Inter-Company/Org Material FlowInter-Company/Org Material Flow


Ship to Customer from Selling Ship to Customer from Selling OrgOrg

SO line warehouse is not sourcing orgSO line warehouse is not sourcing org Utilize internal requisitions/orders or inter-org Utilize internal requisitions/orders or inter-org

transferstransfers With or without in-transit inventoryWith or without in-transit inventory

In-transit leadtime offset for internal order demand In-transit leadtime offset for internal order demand Two shipments transactionsTwo shipments transactions

Sourcing org on internal order into in-transitSourcing org on internal order into in-transit Selling org on customer orderSelling org on customer order

Transfers inventory value and quantity to selling orgTransfers inventory value and quantity to selling org AR invoice created upon shipment from selling orgAR invoice created upon shipment from selling org Option to use inter-company invoicingOption to use inter-company invoicing

INV: Intercompany Invoice for Internal Orders = ‘Yes’INV: Intercompany Invoice for Internal Orders = ‘Yes’ ATO flag can be different in each inventory orgATO flag can be different in each inventory org


Inter-Company Invoicing ProcessInter-Company Invoicing Process


Internally Sourced ATO ItemsInternally Sourced ATO Items Use a planning function to create Use a planning function to create

internal reqs from sales order internal reqs from sales order demanddemand ATO flag set to ‘Yes’ in sourcing org, ‘No’ ATO flag set to ‘Yes’ in sourcing org, ‘No’

in selling orgin selling org Models/options not supported on internal Models/options not supported on internal

reqs/ordersreqs/orders No link from external sales order to No link from external sales order to

internal req/order/discrete jobinternal req/order/discrete job No reservation upon inventory receiptNo reservation upon inventory receipt


Internally Sourced ATO ItemsInternally Sourced ATO Items Problems and workarounds Problems and workarounds

Procure to order only creates purchase Procure to order only creates purchase requisitionsrequisitions

Switch purchase requisition into internal Switch purchase requisition into internal requisition after sales order line progression requisition after sales order line progression and before requisition importand before requisition import

Models and options cannot be placed on Models and options cannot be placed on an internal orderan internal order

Create newly created item/BOM/routing in Create newly created item/BOM/routing in each sourcing organization after config is each sourcing organization after config is created by OMcreated by OM

Place ATO config on internal orderPlace ATO config on internal order


Internally Sourced ATO Item Internally Sourced ATO Item ProcessProcess

Planning make/buy code=‘Buy’Planning make/buy code=‘Buy’ ATO Flag = ‘Yes’ATO Flag = ‘Yes’ Source type = ‘Inventory’Source type = ‘Inventory’ Source organization = sourcing inventory orgSource organization = sourcing inventory org OM workflow purchase requisition to request OM workflow purchase requisition to request

purchase of an item to orderpurchase of an item to order Workaround to change into an internal Workaround to change into an internal

requisition if item’s source type = ‘Inventory’requisition if item’s source type = ‘Inventory’ Internal requisition triggers creation of internal Internal requisition triggers creation of internal

sales order from source org to selling sales order from source org to selling organizationorganization

ATO job is created and completed in mfg orgATO job is created and completed in mfg org


Internally Sourced ATO Item Internally Sourced ATO Item ProcessProcess

Internal sales order is picked, shipped and Internal sales order is picked, shipped and put into in-transit inventoryput into in-transit inventory

Inventory is reserved to the customer sales Inventory is reserved to the customer sales order line upon internal requisition receiptorder line upon internal requisition receipt

Partial shipments allowedPartial shipments allowed Auto-split SO linesAuto-split SO lines

ATO standard items supportedATO standard items supported Workaround to internally order configuration Workaround to internally order configuration

itemsitems Same item can be make ATO in one org & Same item can be make ATO in one org &

buy ATO in another orgbuy ATO in another org


Book Customer Order in Selling Op Book Customer Order in Selling Op UnitUnit

Line 1.1 is an internally sourced ATO Buy Item

Line 2.1 is a supplier sourced ATO Buy Item


Progress Order Line to Create Progress Order Line to Create RequisitionRequisition

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


PO Req Requested from OM PO Req Requested from OM WorkflowWorkflow


Import RequisitionImport Requisition

Selling Op Unit PO responsibility

Import Source = ‘CTO’


ATO Supplier Buy ItemATO Supplier Buy ItemCreate standard PO or blanket releaseCreate standard PO or blanket release


PO Created Workflow StatusPO Created Workflow Status

Line 1.1 is an internally sourced ATO Buy Item

Line 2.1 is a supplier sourced ATO Buy Item


Create Internal Sales Order In Mfg Op Create Internal Sales Order In Mfg Op UnitUnit

Run PO ‘Create Internal Orders’ in the Run PO ‘Create Internal Orders’ in the selling op unit selling op unit Inserts internal sales order information in Inserts internal sales order information in

the OM interface tables in the sourcing op the OM interface tables in the sourcing op unitunit

Run OM ‘Order Import’ in the sourcing Run OM ‘Order Import’ in the sourcing op unitop unit Validates and creates internal sales order in Validates and creates internal sales order in

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


Internal Sales OrderInternal Sales Order

3 day calendar day transit time Ship from sourcing inv org to selling inv org


Line ‘Actions’ Button

• Or run ‘AutoCreate Final Assembly Orders’ in WIP responsibility

• Creates ATO discrete job

Progress Order Line to Create Progress Order Line to Create JobJob


ATO Discrete JobATO Discrete Job


Viewing SupplyViewing Supply

Reservation Details•Purchase requisition, purchase order or WIP Job


Viewing SupplyViewing Supply

Supply to Order Workbench•Purchase requisition, purchase order or WIP Job


Fulfilling ATO Supply RequestFulfilling ATO Supply Request Internally sourced ATO itemInternally sourced ATO item

Build ATO job in a manufacturing orgBuild ATO job in a manufacturing org Pick and ship internal orderPick and ship internal order Receive internal requisitionReceive internal requisition

Supplier sourced ATO itemSupplier sourced ATO item Receive purchase orderReceive purchase order


Internal Order Shipment Internal Order Shipment Accounting Entries in Shipping Org Accounting Entries in Shipping Org

Material Transaction Accounting DistributionsMaterial Transaction Accounting Distributions


Internal Order Receipt Internal Order Receipt Accounting Entries in Receiving Accounting Entries in Receiving

OrgOrgMaterial Transaction Accounting DistributionsMaterial Transaction Accounting Distributions


Create Inter-Company AR Create Inter-Company AR InvoiceInvoice

In Supplying Op UnitIn Supplying Op UnitRun ‘Create Inter-company AR Invoices’ in InventoryRun ‘Create Inter-company AR Invoices’ in Inventory

- Inserts into AR invoice interface tables- Inserts into AR invoice interface tables

Run ‘Autoinvoice’ in ARRun ‘Autoinvoice’ in AR- Creates AR inter-company invoice from interface - Creates AR inter-company invoice from interface


Inter-Company AR InvoiceInter-Company AR InvoiceIn Sourcing Op UnitIn Sourcing Op Unit

Revenue Accounting EntryRevenue Accounting Entry


Create Inter-Company AP Create Inter-Company AP InvoiceInvoice

In Selling Op UnitIn Selling Op UnitRun ‘Create Inter-company AP Invoices’ in InventoryRun ‘Create Inter-company AP Invoices’ in Inventory- Inserts into AP expense report tables- Inserts into AP expense report tables

Run ‘Expense Report Import’ in APRun ‘Expense Report Import’ in AP- Creates AP inter-company invoice from interface - Creates AP inter-company invoice from interface


Inter-company AP InvoiceInter-company AP Invoice In Selling Op UnitIn Selling Op Unit

Invoice DistributionsInvoice Distributions


Challenges and IssuesChallenges and IssuesATO Buy ItemsATO Buy Items

SO line cancellations/splits/qty changesSO line cancellations/splits/qty changes PO/requisition must be de-linked firstPO/requisition must be de-linked first Workflow creates new requisition if Workflow creates new requisition if

background autocreate process is scheduled - background autocreate process is scheduled - put line on hold firstput line on hold first

Cancel original requisitionCancel original requisition New requisition created for changed/split linesNew requisition created for changed/split lines Cannot re-link an existing requisition or POCannot re-link an existing requisition or PO Partial shipments will automatically split line Partial shipments will automatically split line

and retain reservationand retain reservation ‘‘WSH: Retain ATO Reservations’ profile optionWSH: Retain ATO Reservations’ profile option


Challenges and IssuesChallenges and IssuesATO Buy ItemsATO Buy Items

Requisition import grouping rulesRequisition import grouping rules Wanted all external sales order lines on Wanted all external sales order lines on

one requisition, not supported in std one requisition, not supported in std functionalityfunctionality

SO schedule date changesSO schedule date changes Date changes allowed, does not update Date changes allowed, does not update

requisition or purchase order.requisition or purchase order. For internal requisitions, must sync up For internal requisitions, must sync up

internal requisition, internal order, ATO internal requisition, internal order, ATO discrete job datesdiscrete job dates


Challenges and IssuesChallenges and IssuesInternally Sourced ATO ItemsInternally Sourced ATO Items

Requisition typeRequisition type ATO configurations ATO configurations

Create configuration item first, then create Create configuration item first, then create internal reqinternal req

Config item data in sourcing organizationConfig item data in sourcing organization Item org assignment, BOMs, routings, internal Item org assignment, BOMs, routings, internal

price lists, standard cost price lists, standard cost Mapped shipping methods to internal Mapped shipping methods to internal

customer locationscustomer locations


Challenges and IssuesChallenges and IssuesInternally Sourced ATO ItemsInternally Sourced ATO Items

Used descriptive flexfields for visual Used descriptive flexfields for visual link from external sales order to link from external sales order to requisition to internal sales order to requisition to internal sales order to discrete jobdiscrete job

External sales order data not flowing to the External sales order data not flowing to the internal orderinternal order Ship setsShip sets Customer credit checkingCustomer credit checking Shipping notesShipping notes

PO Reservation up on receiptPO Reservation up on receipt


Inter-Company Invoicing and Inter-Company Invoicing and Internal Order Accounting Internal Order Accounting

NotesNotes COGS recorded for customer shipment COGS recorded for customer shipment

in inventoryin inventory Inter-co margin is recorded using 2 Inter-co margin is recorded using 2

entries entries A credit at standard cost is recorded to A credit at standard cost is recorded to

margin upon internal order ship confirmmargin upon internal order ship confirm A second entry debits margin at transfer A second entry debits margin at transfer

price through the inter-company AP invoice. price through the inter-company AP invoice. Margin = Transfer price – Standard costMargin = Transfer price – Standard cost



IssuesIssues Inter-company invoices uses an Inter-company invoices uses an

internal order price list internal order price list Shipping network setup should not use Shipping network setup should not use

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

out each other out each other



IssuesIssues RMA requires manual entry to correct RMA requires manual entry to correct

accountingaccounting Oracle does not have functionality to Oracle does not have functionality to

return product directly to the return product directly to the manufacturing org. manufacturing org.

Oracle’s solution is to sell inventory Oracle’s solution is to sell inventory back to manufacturing orgback to manufacturing org


Contact InformationContact Information Maggie ColemanMaggie Coleman

Margaret Coleman ConsultingMargaret Coleman Consulting Email: Email: [email protected] Phone: 415-215-1112 Phone: 415-215-1112

mailto:[email protected]

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