Oracle R12 Upgrade Assessment

Inventory Management Overview

September 17, 2008
Table of Contents
Introduction
Inventory Organizations
Inventory Management
Defining & Maintaining Items
Inventory Items (Material ID)
Item Attributes/Status
Item Category Functionality
Inventory Planning & Management
Item Conversion Strategy
Recommendations
Summary

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Inventory - Organizations Model
Before using Oracle Inventory it is necessary to define one or more Inventory Organizations.
Organizations describe distinct entities in a company and may include separate
manufacturing facilities, warehouses, distribution centers, and branch offices.

Inventory Organization Features & Recommendations

 Items are defined in one Inventory Organization for Definition & Maintenance
 The one Inventory Organization is referred to as the “Master” Inventory Organization
 It is recommended that only ONE Item Master be defined
 An “Operating Unit” can contain as many Inventory Organizations as desired
 The Item Master is actually considered to be a separate Organization itself
 Organizations must be specified wherever Oracle Inventory is to be accessed
 Items in the Master Organization can be shared with all other “Child” Organizations

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Inventory - Organizations Model

Consolidated Enterprise/
Business
Human resources information Group

Chart of Accounts/Currency/Calendar
Set of Books
Fiscal and tax reporting

Legal Entity
Office/Division/Department

Plant/Warehouse Operating Unit

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Inventory Organization
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Inventory Organizations – Set Up

Classify the
Choose Inventory Organization
Organization

Set of Books Tie each Inv Org to an operating unit

Item Master Default information, set up first

Control options &

Before item setup or transactions
Account defaults

Receiving Parameters Receiving items on purchase orders etc.

Unique short code Use this code to identify the org

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Other Shipping, WIP, Project parameters

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Defining and Maintaining Items - Defining Items
Always define Items in the master organization => to enable in child organizations
Steps to define items (using Item Templates):

2. Use the
3. Enter values for
1. Create item templates and
additional
templates existing items to
item attributes
define new items

5. Enable the item

4. Assign a status and 6. Update the org-level
in
categories to the item* attribute values
other organizations

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* Please reference Item Category Reference Materials

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Defining and Maintaining Items – Material ID
Oracle Inventory commonly refers to the Material ID as the Inventory Item Number – this
number is a unique value that is used throughout all organizations to identify this product.

Inventory Item Number Overview & Recommendations:

 The Material ID or Item Number should be a “non-intelligent” number with no logic
 The Inventory Item Number should be sequentially generated using Oracle Sequences
 A typical Material ID/Item Number is between six and ten digits in length
 Item Numbers should not be used for logical groupings
 Item Categories, Statuses, and Attributes can be utilized for Item Grouping, etc.
 An Item Conversion will be required if a New Implementation is selected
 Item Conversions can be completed using Standard Oracle API’s for importing external data

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Defining and Maintaining Items - Unit of Measure
The ability to maintain multiple Units of Measure for Inventory Items has been expanded with
the Release 12 of Oracle Applications. Below are standard practices and recommendations
for using Unit of Measure functionality appropriately in Oracle:

 Unit of measure (UOM) is a value that specifies the quantity of an item

 Unit of measure class is a group of UOM with similar characteristics
(e.g. weight can be a class with UOMs such as kilogram, pound, and ounce)
 UOM conversion is a mathematical relationship between different UOM’s
 Conversion is conducted using the base UOM which needs to be defined for each class
 Intra conversion inside a class and Inter conversion between classes is available
 Each item must be assigned a Primary UOM

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Defining and Maintaining Items – Item Attributes & Status
Item status describes the point in product lifecycle through attributes - Status Attributes
enable and disable the functionality of an item.
Each status attribute allows you to enable the item for particular use. For example, when the
status attribute purchasable is set to yes the item can be placed a purchase order.

Oracle inventory enforces particular relationships between some of the attributes:

 Required attributes: Must enter a value based on related attributes
 Interdependent attributes: Can only enter certain values based on related attributes
e.g. Transactable cannot be set to Yes if Stockable is set to No
 Updateable attributes: Can update values under certain conditions
 Control level dependencies: Can update the control level only under special conditions

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* System functionality changes status attributes according to the item status

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Defining and Maintaining Items - Item Attributes
There are over 200 Item Attributes for Inventory Items within Oracle. These Attributes can
be controlled at both the Organization (Location) and Master Inventory Levels. It is
recommended that the Default Attributes Controls be utilized within Oracle Inventory. The
level of control for Item Attributes can be modified at any time.

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Defining and Maintaining Items - Item Statuses and Attributes

Attribute/Status Design Active Phase-Out Inactive

Stockable

Transactable

Purchasable

Build in WIP

Customer Orders
Enabled
Internal Orders
Enabled

BOM Allowed

Invoice Enabled

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Defining and Maintaining Items - Item Templates
Oracle Inventory has several predefined templates that can be used to define and update
items. Personal templates can be also created according to business requirements. The
use of Item Templates ensures that Item Attributes are set correctly on an ongoing basis.

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Defining and Maintaining Items - Item Categories
Item Categories can be used within Oracle to logically group Items into categories that can
be utilized within Oracle Reports, Forms, and Processes. There are many type of
Categories that can be utilized within Oracle as well as developing completely new Category
Structures custom for your business requirements.

Inventory Item Category Overview & Recommendations:

 Item Categories should be logical groupings of Items and not granular to Item Level
 Multiple Item Category Sets should be used for various Business Requirements
 The UNSPSC Product Classification Standards should be utilized as a Best Practice
 Purchasing Forms and Reports only use one Category Structure
 Categories can be used to restrict Buyer Access within Oracle
 An Item to Category Mapping Conversion will need to be developed prior to R12 Upgrade

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*Please refer to the R12 Item Categories Presentation for Setup & Best Practices Information

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Inventory Controls – Sub-inventories
Sub-inventory is a physical or logical separation or sub-set of material within an Inventory
Organization. An couple of examples of a Sub-inventory could be Finished Goods, Returns,
Work in Process, etc.

 One Sub-Inventory must be setup for each Organization

 A Sub-Inventory should be a logical grouping of item within a
Organization/Location
 Oracle Reports can utilize Sub-Inventory Information such as
On-Hand Balances, Transactions, etc.

Name Status
Each sub-
Cost Group inventory Parameters
must contain:
Lead Times Sourcing & Account Info

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Inventory Controls - Locator Control
Stock locators are structures within Sub-inventories and are the third level in the enterprise
structuring scheme of Oracle Inventory. Locators are used as determinants of Physical
Storage Locations within an Inventory Organization or Location.

 Stock Locators could represent Aisle, Row, & Bin Location Information
 Locators could also represent Height, Width, & Length Attributes
 Locators can streamline the Receiving of Items into Inventory
 Locators can also be used for Inventory Accuracy and Reporting Purpose
 Typically Locators only have 3 Levels of Location Data

Item level Specify a locator when transacting that item from any sub-inventory

Sub-inventory level Specify a locator when transacting any item from that sub-inventory

Control types None, Prespecified, Dynamic entry, Item level

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Inventory Controls - Revision Control
A Revision is a particular version of an item, bill of material, or routing. A Revision is to be
used when the form, fit, or function of an item is changed. A number or letter can be used to
signify the revision of the particular Item.

 Revision quantity control can be used to track item quantities by item revision and to
specify a revision for each material transaction
 Enable Revision Control for items that must be tracked with version changes

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Inventory Controls - Lot Control
A lot identifies a specific batch of an item received and stored in an organization
Lot control is a technique for enforcing the use of lot numbers during material transactions,
thus enabling the tracking of batches of items throughout their movement in and out of
inventory.

 If lot control is turned on for an item, the lot number must be indicated when performing a
receipt and a transaction
 An inventory receipt can be split to several lots if necessary and quantities can be added
to existing lots
 The lot numbering is completely system supported within Oracle
 Lots can be placed under lot expiration (shelf-life) control by assigning a number of shelf
life days or by entering a lot expiration date at the item level
 If a transaction from an expired lot is attempted, Oracle Inventory displays a warning but
does not prevent the transaction
 The expiration date controls the availability of the lot for transacting and planning
purposes
 Typically an Item only utilizes Lot Control only if required by legislative controls

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Inventory Controls - Serial Number Control
Serial number is an alphanumeric piece of information assigned to an individual unit of an
item - Serial numbers are used to track individual item units to maintain control.

Serial number control can be activated in different stages:

 No control: No serial number control enforced
 Predefined: Serial numbers must be predefined for an item
 At inventory receipt: optionally predefined
 At sales order issue: optionally predefined

Oracle inventory uses the starting serial number prefix and number specified in
the item window to load the serial numbers requested.
The process of generating serial numbers is done through a concurrent report.
This process does not assign numbers, it simply reserves specific numbers for
an item for later use within Oracle Inventory.

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Summary & Open Issues

 Will Account Aliases be used at Client X on Day One?

 Can Locations be extracted, cleansed, and loaded into R12?
 Continue with Average Costing or transform to Standard?
 Days Early Setup in Receiving Options?
 Transition to Standard Receipt from Direct Delivery?
 Convert Receipts and PO’s from 11i?
 Review UOM and UOM Classes for Migration
 Items Conversion Plan for R12?
 Item Category Structures to be solidified

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