[Oracle Applications] Average cost variance

In average costing, each receipt of material to inventory updates the unit cost of the item received. Issues from inventory use the current average cost as the unit cost. 

Perpetual Inventory value = Avg unit cost X Quantity

In Oracle Inventory, Inventory balances can be driven negative if the Allow Negative Balances parameter is
set in the Organization Parameters. Inventory calculates the costs differently in case we have negative inventory balances.   

Lets say, we have an on-hand quantity of -40 and we are performing a receipt of 50 quantity that would drive the quantity positive 10. This transaction would be split in two parts as below

a. Quantity required to drive on-hand from negative to zero 

In our example, this quantity would be "40". Inventory receives this quantity of "40" with current average cost and does not use the transaction cost

b. Remaining Quantity

Remaining quantity of "10" (50 minus 40) is received at the transaction cost and hence a new average unit cost is re-calculated

Difference between total receipt cost and the cost debited to inventory is average cost variance

------------------------------------------------------------------------------------

You can write to us with suggestions to improve on applearn@gmail.com

----------------------------------------------------------------------

--
Posted By OracleOnDemand to Oracle Applications at 3/16/2011 03:04:00 AM

[Oracle Applications] Measure Supply Chain Performance

Given the increased attention and scrutiny your investors are applying to the supply chain's impact on a company's financial performance, you need a yardstick to clearly measure your Supply Chain performance. One of the most followed and detailed performance metrics are encompassed in the Supply Chain Operations Reference (SCOR) model. The SCOR model provides an industry-standard approach to analyze, design, and implement changes to improve performance throughout five integrated supply chain processes — plan, source, make, deliver and return

Plan

Assess supply resources; aggregate and prioritize demand requirements; plan inventory for Distribution, production, and material requirements; and plan rough-cut capacity

Source

Receive, inspect, store, hold, issue, and authorize payment for raw materials and purchased finished goods

Make

Request and receive material; manufacture and test product

Deliver

Execute order management processes; generate quotations; configure product; create and maintain a customer database; maintain a product/price database; manage accounts receivable, credits, collections, and invoicing; execute warehouse processes, including pick, pack, and configure; create customer-specific packaging/labeling; consolidate orders; ship products; manage transportation processes and import/export

Return

Process defective, warranty, and excess returns, including authorization, scheduling, inspection, transfer, warranty administration, receiving and verifying defective products, disposition, and replacement

-------------------------------------------------------------------------------------------

You can write to us with suggestions to improve on applearn@gmail.com

-------------------------------------------------------------------------------------------

--
Posted By OracleOnDemand to Oracle Applications at 3/11/2011 01:53:00 AM

[Oracle Applications] Crossdocking in Oracle WMS

It has become vital for every business that has to deal with necessary evil of inventory management to maximize inventory turns and have less of stock to manage. Crossdocking functionality in Oracle WMS allows warehouses to improve its operational efficiency by transferring material as soon as it's received to outbound location. In the process, it avoids the inventory holding function thereby reducing the cost of inventory management

Businesses also want to ship products as soon as its manufactured to avoid managing finished goods stock at their warehouses and invoice the customers earlier (i.e. ship early, Invoice early). This also can be achieved using Crossdocking & you can call it "Direct shipping with Cross docking" If we have back-ordered Sales Order demand line and the WIP Job gets completed to a LPN, task would created to deliver the products to the staging to ship it "directly". 

On similar lines, Oracle WMS routes products directly from the receiving dock to a staging lane without placing product into a put away location.  Before choosing a warehouse put away location, Oracle WMS attempts to supply any sales order demand from the staged receiving supply.  As a result, unnecessary material handling and movement are reduced, which, in turn, helps reduce operational costs and streamline the order fulfillment process.

Remember, Cross docking must be enabled in the organization

-------------------------------------------------------------------------------------------

You can write to us with suggestions to improve on applearn@gmail.com

-------------------------------------------------------------------------------------------

--
Posted By OracleOnDemand to Oracle Applications at 3/10/2011 02:52:00 AM

[Oracle Applications] Using Forecasting in Oracle Applications

Forecasting is predicting the future using some proven methods. There is no single right forecasting method to use. Selection of a method should be based on your objectives and your conditions. To understand how Forecasting functionality works in Oracle, we need to be aware of few terms as below:

In Oracle, Forecasts are defined within a three-level hierarchical structure. It goes from the most specific to most general - forecast entries, forecasts and forecast sets. 

Forecast entry is for a specific item number, quantity and date

Forecast may be defined for a specific customer, customer site, customer type etc. You can have user defined classification using demand class. In summary, related forecast entries are grouped into Forecast

If we group Forecasts that are some way related, its called Forecast set. 

Oracle provides 3 different methods to load the Forecast data. 

1. Forecast entry form

2. Open Forecast interface

3. System generated forecast based on historical data

Forecast entry form and Open Forecast interface are used when forecast data is created externally (not in Oracle). Sufficient history needs to be available in Oracle to use 3rd option of system generating the forecast.

...

--
Posted By OracleOnDemand to Oracle Applications at 3/08/2011 03:23:00 AM

[Oracle Applications] Handling standard wastage (Shrinkage rate) in Oracle

Lets say we have a requirement where in every manufacturing job of 100 quantity ends up producing 80 quantity. You can define a shrinkage rate to describe expected scrap or other loss. Using this factor, the planning process creates additional demand for shrinkage requirements for the item to compensate for the loss and maintain supply.

For example, if you have a demand for 100 quantity and a discrete job of 40 quantity, the planning engine would suggest a planned order of 60 quantity. This would happen when there is no value populated in the "Shrinkage rate" field on Item Master (MPS/MRP planning tab)

Now going back to the business requirement mentioned above where every manufacturing job of 100 quantity ends up producing 80 quantity. If a shrinkage rate of 0.2 is entered in Item master, planning engine assumes that you lose 20% of any current discrete jobs and 20% of any suggested planned orders. 

Demand quantity  = 100

a. Discrete Job = 40

    Shrinkage = 20% of 40 = 8 quantity

    Net supply from Discrete Job = 40 minus 8 = 32 quantity

b. Net requirement balance: Demand qty - Net Supply = 100 minus 32 = 68

    Planning engine suggests a planned order = 68 divided by 0.2 = 85

    

Total Demand = 100 (original demand) + 8 (discrete job shrinkage) + 17 (planned order shrinkage) = 125

Total Supply = 40 (discrete job) + 85 (planned order suggested by planning engine)

Shrinkage is the wastage that happens while manufacturing finished goods.

----------------------------------------------------------------------

Please write to us on applearn@gmail.com for your inputs

----------------------------------------------------------------------------------------

--
Posted By OracleOnDemand to Oracle Applications at 3/01/2011 03:08:00 AM

[Oracle Applications] What is EDI ?

EDI stands for Electronic Data Interchange

To understand the need for EDI, lets take a business flow and transactions involved. Company "C" is a manufacturer and regularly buys raw material from Supplier "S" that would typically involve below transactions for each purchase done. 

1. Buyer at Customer "C" enters a Purchase Order in his computer system
2. Buyer sends the PO through email or fax or mail to Supplier "S"
3. Sales team at Supplier "S" validates the PO to ensure that required information is provided
4. Sales team at Supplier "S" enters a Sales Order in his computer system
5. Sales team at Supplier "S" sends the Sales Order acknowledgment to Customer "C" through email or fax or regular mail

Imagine the cost, cycle time, money and risks of data entry errors involved in the above process. What if computer system at Customer "C" exchanges data with computer system at Supplier "S" using an intermediate communication link ? Yes, that's the idea behind EDI.


Organizations that send or receive documents between each other are referred to as "trading partners" in EDI terminology. Trading partners are free to use any method for the transmission of documents. Few of the transmission mediums used are Value Added Network (VAN), Internet/AS and Web EDI.


EDI translation software, popularly known as Translator, validates the partner and checks if the data received meets the standard formats defined before converting it to a desired file format which can be read and imported by the receiver's computer systems (for e.g. ERP)

EDIFACT & X12 are most widely followed EDI standards. The standards prescribe the formats, character sets, and data elements used in the exchange of business documents and forms. 

Oracle e-Commerce gateway (earlier EDI gateway) module helps organizations meet their EDI requirements with flexibility to use choice of your translator, EDI standard and yet tightly integrates with other modules from Oracle.

--------------------------------------------------------------------------------------------------------------
If this short note helped you in some way, do write to us on applearn@gmail.com
--------------------------------------------------------------------------------------------------------------

--
Posted By OracleOnDemand to Oracle Applications at 2/20/2011 12:18:00 PM

[Oracle Applications] Creating warranty contract

When individuals or business buy products or equipments, manufacturers provide free warranty coverage for certain period of time. Oracle Applications provides a functionality to create warranty contracts on each serviceable products shipped from the manufacturer. 

To achieve the above functionality, you need to setup on the below:

1. Define Coverage (Service Contracts)

2. Mark the finished product as Install base trackeable & Enabled contract coverage (Inventory)

3. Define warranty item with warranty period (Inventory)

4. Include warranty item in the Finished Product Bill of Material (BOM)

Once you ship the finished product, it would create an item instance and subsequently create a warranty contract

Related Profile Options

OKS: Consolidate Warranty for Multiple Orders

Determines if an order for products with warranties, sold in Order Management, should be consolidated when the service contract is created. Similar warranties are grouped on a single contract rather than creating separate contracts

OKS: Contracts Validation Source

Allows the user to define the organization information that should be referenced when automatically creating a contract

-----------------------------------------------------------------------

Please write to us on applearn@gmail.com for your inputs

-----------------------------------------------------------------------

--
Posted By OracleOnDemand to Oracle Applications at 2/02/2011 08:19:00 AM