Upgrade

to R12 Now -
Improvements in Cost Management
Presented by: Douglas Volz

Upgrade to R12 Now OAUG eLearning

Sessions
Presenta(on

Date

Presenter

Upgrade to R12 Now A

Financials Overview

Jul 19, 2012

Lee Briggs

Upgrade to R12 Now A

Deep Dive into General
Ledger

Jul 26, 2012

Mohan Iyer

Upgrade to R12 Now The

InternaRonal and MulR-
NaRonal Arena

Aug 2, 2012

Marsha Edgell/
Thomas Simkiss

Upgrade to R12 Now

Improvements in Cost
Management

Aug 9, 2012

Douglas Volz

Upgrade to R12 Now

Manufacturing and Order
Processing

Aug 15, 2012

Bob Bullman

Upgrade to R12 Now

Realizing Enterprise Value
with Projects R12

Aug 23, 2012

Mike Lennon

Upgrade to R12 Now

Round Table Discussion

Aug 30, 2012

Thomas Simkiss

Company

Douglas Volz

Professional Summary
Helping people use Oracle since 1990 for Cost AccounRng
and related Financials, Manufacturing and EAM modules.
30+ years industry, design and consulRng experience,
specializing in the design, implementaRon and project
delivery for Cost Management business soluRons
Specic areas of experRse include prot in inventory, inter-
company, A/P accruals, mulR-org inventory reporRng, WIP
analysis, inventory reconciliaRon and margin analysis
Presenter at Collaborate (OAUG) and UKOUG since 1996
MulR-naRonal experience in twelve countries
QualicaRon Summary
Former co-designer for Oracle Cost Management
Lead the OAUG Cost Management Special Interest Group
Prior AccounRng and Cost Management industry
experience

+1 510 755 7050

doug@volzconsulting.com
www.volzconsulting.com

Sample Project Experience:

Slide 3

Contact InformaRon
Thomas Simkiss, JD, CPA
Tsimkiss@BizTech.com

Lee Briggs
Lbriggs@BizTech.com
Bob Bullman
Bbullman@BizTech.com

Mike Lennon
Mlennon@BizTech.com

Mohan Iyer
mohan@fscpsoluRons.com

Marsha Edgell
Medgell@BizTech.com

Douglas Volz
doug@volzconsulRng.com

4
4

Agenda
pR12 Cost Management Related Features

MOAC MulR-Org Access Control

Subledger AccounRng OPM & Discrete CosRng
Re-Designed A/P Accruals
COGS RecogniRon
Cost-Related BOM Features
Period Close Drilldown
As-of Dates for Inventory ValuaRon
ReconciliaRon Challenges
Cost Rollup Changes
Summary

Slide 5

R12 MulR-Org Access Control

Mostly aects operaRng unit level funcRons

Allows you to access informaRon across mulRple operaRng
units without changing responsibiliRes

Set up a security prole lisRng the operaRng units to access
Run Security List Maintenance concurrent program

Assign the security prole using the MO: Security Prole

Slide 6

R12 MulR-Org Access Control

Slide 7

SLA: Primary and Secondary Ledgers

pPrimary and Secondary Ledgers
In Release 12 Subledger AccounRng replaced Global AX
Primary to secondary ledger mapping is much beker

Corporate
Consolidated
Ledger

Corporate Consolidated Ledger

(USD)

Secondary
Ledger

Switzerland
(CHE)
Korea
(KRW)

Asia-Pac
LEs

Swiss PL
(USD)

European
LSPs
SLs
LSPs
European PL
(USD)

USA PL
(USD)

Slide 8

Oracle Discrete CosRng and SLA

p Flexible variance account recogniRon for:

Invoice price and purchase variances

Average cost adjustment
Standard cost adjustment
Manufacturing variances
Account aliases
Freight charges
Most other inventory, manufacturing and related
account entries

Slide 9

Oracle Process CosRng and SLA

p Converged inventory model (started in Release 11i)

p Inventory OrganizaRons that are Process will use Process
CosRng

p Process users are denied access to Discrete CosRng forms
Process Enabled organizaRons can not setup costs in the
Discrete CosRng applicaRon

p Sub Ledger Architecture (SLA) replaces OPM MAC

Slide 10

OPM MAC TransiRons to SLA

11i OPM
GMI
(OPM Inventory)

Cost Setup

Purchasing

Calculate Cost

Order
Management

Store Costs

GMD, GME

MAC

Oracle GL

Slide 11

OPM MAC TransiRons to SLA

R12 OPM
Oracle
Inventory

Cost Setup

Purchasing

Calculate Cost

Order
Management

Store Costs

GMD, GME

SLA

Oracle GL

Slide 12

OPM MAC TransiRons to SLA

OPM MAC

SLA

Completed material
and/or resource
transactions

Completed material
and/or resource
transactions

OPM Costing Engine

generates costs

OPM Costing Engine

generates costs

Cost Pre-processor
will create accounting
Events
OPM Subledger process
processes these
transactions to create
Journal entries

SLA accounting
program processes
the events to create
the journal entries

Slide 13

OPM MAC Transitions to SLA

p Most of the steps are automated using migration scripts
p All the Account Definitions are migrated as ADRs
p Manual Steps to be completed include:
Assign Account Derivation Rules to Journal Line Definitions
Validate Application Accounting Definition
Assign User Subledger Accounting Method to Ledger

Slide 14

OPM MAC TransiRons to SLA

p Historical OPM Subledger distribution data not migrated
to SLA
Data refers to OPM Inventory
p Historical data available in query mode

Slide 15

OPM MAC TransiRons to SLA

Update the Account Derivation Rule conditions.
Ex: Add Item/Item Class/Organizations

Validate the Application Accounting Definition

Run OPM Accounting Pre-Processor

Run OPM Accounting Pre-Processor

Run Create Accounting in Draft mode

Check Create Accounting report and Journal

Entries report

Run Create Accounting in Final mode to create GL

accounting entries

Slide 16

OPM MAC TransiRons to SLA

p NO LOSS of funcRonality by moving to SLA model

p New menus created under OPM Financials for new SLA forms

p Fiscal Policy and Event Fiscal Policy screens retained with minor
modicaRons. Most of the elds will be read-only.

p OPM Event model mapped to SLA event model

Slide 17

SLA Process Overview

p Subledger accounRng is an intermediate step between

subledger products and the Oracle General Ledger

p Each transacRon that requires accounRng is represented by a
complete and balanced subledger journal entry, stored in a
common data model.

Slide 18

SLA Setup and Process Overview

JOURNAL ENTRY SETUPS

PROCESS
Enter Transac(on(s)

Dene/copy and modify

account deriva(on rules

Cost Manager
Dene/copy and modify journal
line types
Create Accoun(ng*
Dene/copy and modify
descrip(ons

Transfer Journal Entries to GL

*Run Create Accoun(ng Cost Management concurrent request for

accoun(ng all transac(ons from the Cost Management SLA
responsibility.

Receiving Accoun(ng can be generated in the Purchasing and Cos(ng
responsibili(es using the Create Accoun(ng Receiving concurrent
request.

These requests have an op(on to transfer the entries into General Ledger,
as either unposted or posted. A separate G/L process is also available.

Slide 19

Subledger AccounRng

pSLA TransacRon Process Flow

Accoun(ng
Congura(ons
Subledger
Journal Entries

Transac(ons

GL
Journal Entries
and Balances

Accoun(ng
Program
Subledger
Balances

Accoun(ng Events
Journal Entry Setup

Cost Management

SLA

Slide 20

Subledger AccounRng

pSLA Basic Architecture

Enter Transac(on(s)

OPM and Discrete

Cost Managers

Same Cost
Transac(on
Accoun(ng
Tables as in R11i

One Common
Accoun(ng
Subledger Table

Transac(on
Accoun(ng Tables

Create
Accoun(ng

SLA Accoun(ng Tables

XLA_EVENTS

XLA_AE_HEADERS




XLA_AE_LINES


XLA_DISTRIBUTION_LIN

KS

GL_
INTERFACE

G/L Tables

GL_LEDGERS




GL_JE_BATCHES



GL_JE_HEADERS




GL_JE_LINES

Slide 21

R12 Cost AccounRng and Inquiries

(Discrete CosRng Example)

Even if you use Standard

CosRng in R12 you must
record accounRng entries by
cost element

Slide 22

Subledger AccounRng and Inquiries

(Discrete CosRng View AccounRng Example)

Slide 23

New SLA Reports:

Journal Entries & Account Analysis Reports
Menu path: System Administrator => Security => Responsibility => Request

Use System Administrator to put this on your custom menu and

custom Request Group

There are two G/L SLA

reports to try. You may
prefer the Account
Analysis Report as
it has the account
range parameters
already displayed
(XLAAARPT)

Slide 24

New SLA Reports:

Subledger ReporRng Across All Modules
Custom Menu Path: General Ledger, Vision OperaRons (USA) => Reports => Request => Standard => Account Analysis Report

Slide 25

New SLA Reports:

Subledger ReporRng Across All Modules
Custom Menu path: Cost Management => Report => TransacRons => Account Analysis Report

Tailor this report

in BI Publisher
to add or remove
available columns.

Slide 26

New SLA Reports:

Subledger ReporRng Across All Modules
Custom Menu Path: General Ledger, Vision OperaRons (USA) => Reports => Request => Standard => Journal Entries Report

Tailor this report in the

Concurrent Program
deniRon to display
addiRonal parameters
such as account
ranges. They are seeded
but not displayed
(XLAJELINESRPT)

Slide 27

New SLA Reports:

Subledger ReporRng Across All Modules
Custom Menu path: General Ledger, Vision OperaRons (USA) => Reports => Request => Standard => Journal Entries Report

Tailor this report

in BI Publisher
to add or remove
available columns.

Slide 28

New SLA Reports:

Subledger Reporting Across All Modules
Menu path: System Administrator => Concurrent => Program => Dene => Journal Entries Report

There are many available parameters for you to use.

Customize the BI Publisher template to enable these parameters

These same concepts work

for the Journal Entries Cost
Management Report as well

Slide 29

COGS RecogniRon
p In R12 customer shipment entries go to deferred COGS

p Revenue and COGS are explicitly matched

AR: Autoinvoice & Revenue RecogniRon Master Program

CST: Inventory Cost Processor or
Record Order Management
CST: Collect Revenue RecogniRon InformaRon
CST: Then Generate COGS RecogniRon Events

p New AccounRng Entries to clear deferred COGS

p Use the COGS Revenue and COGS Matching Report


Slide 30

COGS RecogniRon AccounRng Entries

p New AccounRng Entries to clear deferred COGS


Deferred

Inventory
COGS

1. Customer Shipment
10
10

10
2. COGS Recogni(on

p Use the COGS Revenue Matching Report

True
COGS

10

Slide 31

New Deferred COGS Account

Slide 32

COGS RecogniRon (ConRnued)

pDependencies

This new feature introduces a dependency in the Receivables and

CosRng period close processes

CosRng will process COGS recogniRon events in a closed inventory
period unRl the Receivables period status is set to CLOSED

You have to run Create AccounRng aqer you have closed your inventory
orgs

Having to remember to run COGS RecogniRon Processes followed by Create
AccounRng may create confusion at month-end
Slide 33

Related BOM Features

pFixed Component Usage Support:
Support for lot-based materials that have a xed usage regardless of the job size

for discrete WIP jobs, OSFM lot-based jobs and Flow Manufacturing

pComponent Yield Support:

You can now specify component yield factors which are separate from the

assembly shrinkage. The Cost Rollup and related WIP and Planning programs
support this new feature.

Slide 34

Period Close DiagnosRcs

pForms Drilldown
Using the same Inventory AccounRng Periods form you can drilldown to
associated forms to view the problem transacRons

pNew workow to noRfy of failing transacRons

pPeriod Close Pending TransacRons Report
Report for the transacRons holding up the inventory accounRng period

Slide 35

A/P Accruals
pPerpetual A/P Accruals are Completely Rewriken
Monthly load into summary tables
Excellent detail and summary reporRng
(same report/two templates)
A/P Accrual write-os go to your G/L
Works right out of the box!

pPeriod End Accruals:

Calculate Accrual Balances at PO DistribuRon Level
Period-end accrual entries stored in a separate accounRng table and
automaRcally reversed in the new month
Uninvoiced Receipts Report and Period-End Accruals use same underlying
code / same results

Slide 36

A/P Accruals
pChallenges with R12 Perpetual A/P Accruals

Only shows your net posiRon, only remaining balances

Must reconcile month-by-month, cannot go back

Can be dicult to idenRfy reconciliaRon issues

Intercompany A/P Accruals are now on the Miscellaneous A/P Accrual
ReconciliaRon Report

Slide 37

ReconciliaRon Improvements
pInventory Value Reports have an As of Date

Inventory Value Report

Receiving Value Report
Intransit Value Report
All Inventories Value Report

This new feature solves the report cut-o issues at period-end

Slide 38

ReconciliaRon Challenges
pSubledger AccounRng and Inventory ReconciliaRon

Most Release 12 ValuaRon Reports No Longer Show Accounts

Release
12 dropped the valuaRon accounts on most inventory reports as you

could change your SLA rules and aect your valuaRon accounts

These Reports Dropped Because of SLA Concerns:

Receiving Value by DesRnaRon Account Report
Subinventory Account Value Report
Cost Group Account Value Report
If you accrue expenses at Rme of receipt, you have limited visibility for
expenses remaining in your Receiving InspecRon asset balances
Journals from Inventory and WIP no longer display the Org Code on the G/L
Batch Header
Slide 39

ReconciliaRon Challenges (Contd)

pMaterial and WIP DistribuRon Inquiries and Reports
Release 12 Material and WIP distribuRon inquiries & reports do not
reect the SLA results

But SLA Journal Reports do not show operaRonal informaRon

(you can tailor the output, there are another 50+ hidden elds)

Release 12 records the Material accounRng and WIP accounRng

entries by cost element rendering the old 11i inquiries and reports
more dicult to use, especially for Standard CosRng.
If using Standard CosRng, in R12, all WIP & Material accounRng entries are
wriken by Cost Element / you can summarize in SLA but you dont have the
same detail reporRng in SLA
The material transacRon accounRng table may triple in size when you go
from R11i summary entries to R12 entries by Cost Element
Slide 40

Subledger AccounRng

pSLA Basic Architecture

Enter Transac(on(s)

Cost Manager

Same Cost
Transac(on
Accoun(ng
Tables

One Common
Accoun(ng
Subledger Table

Transac(on
Accoun(ng Tables

Create
Accoun(ng

SLA Accoun(ng Tables

XLA_EVENTS

XLA_AE_HEADERS




XLA_AE_LINES


XLA_DISTRIBUTION_LIN

KS

GL_
INTERFACE

G/L Tables

GL_LEDGERS




GL_JE_BATCHES



GL_JE_HEADERS




GL_JE_LINES

Slide 41

Cost Rollup Changes

The Supply Chain Cost Rollup and Cost Rollup have been combined

Slide 42

Cost Rollup Changes

When you specify an Assignment Set you run the

Supply Chain Cost Rollup
Slide 43

ReporRng Changes for R12

(12.1 & Above)

p Latest Release 12 has XML reports, lots and lots of them

(But not where you expect them)

Slide 44

Summary
p Subledger AccounRng solves many account classicaRon issues

p Yet Subledger AccounRng causes addiRonal reconciliaRon headaches
Yet one more interface and batch job
More levels of indirecRon: mulRple accounRng tables
Which accounRng table to tell your auditors and how to explain to them
it is dierent?
Must run Cost Management Subledger Period Close ExcepRons Report
(by ledger but you can use Ledger Sets as well)

Slide 45

Summary (ConRnued)
p COGS RecogniRon works well, just have to get used to have new inventory
COGS entries aqer you close the inventory accounRng periods

p New period close diagnosRcs
p Inventory reconciliaRon issues are improved and also hindered in Release 12

Inventory value reports have as as of date

But most inventory value reports have no valuaRon accounts
SRll only single warehouse
Period Close ReconciliaRon Report not mulR-org

(consider custom reports from period close snapshot table CST_PERIOD_SUMMARY)

pCost Management Reports Now Use BI Publisher

Slide 46

For More Information

OAUG Cost Mgmt SIG: www.volzconsulting.com/oaugcostsig.html
Collaborate Papers: www.volzconsulting.com/resources.html

p Collaborate and OAUG Cost Management Presentations

A/P Accruals (Cost Mgmt SIG):

March 2011 Presentation A/P Accruals for Release 12

COGS Recognition (Cost Mgmt SIG):

May 2011 Presentation Tracing Sale of Inventory Through Oracle

Inventory Reconciliation (Collaborate and Cost Mgmt SIG):

November 2010 Presentation Inventory Reconciliation

Subledger Accounting (Collaborate and Cost Mgmt SIG):

Collaborate09 Presentation Cost Accounting As You Want It EBS

R12 Cost Accounting with SLA

Overview of Discrete Costing (OAUG Discrete MFG SIG Nov. 2010):

Overview of Discrete Costing for Manufacturing

Slide 47

Acknowledgements

Oracle Cost Development

Partners in crime at my clients

Slide 48

Douglas Volz (doug@volzconsul(ng.com)

Professional Background
Doug
Volz is a Senior Architect and Advisor for Oracle ApplicaRon projects, with a parRcular interest in Project
and Cost Management. He has 30 years accumulated experience, including 5 years in Oracle Development (co-
designing Oracle Cost Management) and 12 years in industry in Cost and AccounRng Management posiRons. His
Manufacturing and Cost systems experience covers project management, soqware design/development,
delivery and consulRng services, for both Oracle CorporaRon, and mulRple internaRonal consulRng rms. Prior
to his systems career, Mr. Volz also held numerous management accounRng posiRons for telecommunicaRons,
defense, and electronics companies.

In his consulRng roles, Doug has served over 100 clients. Many of these were mulR-org, mulR-currency with
global footprints. Countries include US, Mexico, UK, Netherlands, Belgium, Taiwan, P.R.O.C., Norway, Japan,
Italy, Switzerland and Germany.

Doug leads the OAUG Cost Management Special Interest Group. He also advises and parRcipates on the Oracle
Customer Advisory Board for Fusion CosRng and for the SCM Financial OrchestraRon FuncRonal Forum.

Core Exper(se

Experience

MulR-organizaRon, MulR-currency ImplementaRons

Cost AccounRng Processes
Project Management and Senior Project Advisor
Core manufacturing & EAM processes
Cost Management
EAM
Inventory
Bills of Material
WIP
p Systems IntegraRon and Data Conversions

p Sample of clients served:

Beckman Coulter (US)
Matsushita (UK, Mexico)
Celgene (US, Switzerland)
Logitech (US, Taiwan, P.R.C.)
Matsushita (UK, Mexico)
NTL (now Virgin Media)
TCI InternaRonal (US)
Onninen AS (Norway)

p
p
p
p

Slide 49

Any Ques(ons?
Doug Volz
doug@volzconsul(ng.com