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Oracle Inventory Overview Mohammad Omar Salameh

Oracle Inventory Module


Overview
Authors: Mohammad Omar Salameh
Creation Date: December, 2012
Last Updated: December, 2012
Version: 1.00
Title: Senior Oracle ERP Consultant

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Oracle Inventory Overview Mohammad Omar Salameh

Introduction

Oracle Inventory is a complete inventory management solution that helps you


control your inventory, ensure that you have adequate supply, and increase
warehouse productivity. Oracle Inventory is part of Oracle Applications, an integrated
suite of business solutions designed to support continuous process improvement for
enterprises competing in time-critical markets.

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Oracle Inventory Overview Mohammad Omar Salameh

Oracle Inventory Module Overview:

1- Organization Structure

Financial View:

Set
Setof
ofBook
Book
(SOB)
(SOB)

Legal
LegalEntity
Entity
(LE)
(LE)

Operating
OperatingUnit
Unit
(OU)
(OU)

Inventory
InventoryOrganization
Organization
(Inv
(InvOrg)
Org)

Set of Book (SOB)


- This terminology in Oracle Application is much related to Oracle Financial
modules.
- Set of Book depends on the (3 C’s) because it depends on 3 factors: Chart of
Account, Calendar, and Currency.
- You create new Set of Book if one of the (3C’s) is changed like:
i) Chart of Account (No. of Segments, e.g. if you are using the same
instance of oracle applications for two companies, the first one has Project
segment in its COA while the other one doesn’t have this segment then
you have to define two set of books)
ii) Currency (USD, FCFA, JOD…)
iii) Calendar (12 accounting periods, 6 accounting periods…)

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Oracle Inventory Overview Mohammad Omar Salameh

iv) Accounting Convention (this is used to define the conventions that you will
utilize in your subledgers).

Legal Entity
- This terminology in Oracle Application is much related to Oracle Financial also.
- Legal entity represents a legal company for which you prepare tax reports;
you create new Legal Entity if the tax method is changed from company to
another company.
Operating Unit
- An operating unit represents an organization that uses any Oracle sub- ledger
application, for example, Order Management, Payables. It may be a sales
office, a division, or a department. Information is secured by operating unit
for these applications. Each user sees information only for their operating
unit.
- You create new operating unit if the information is secured by each sub-
ledger like payable (Each department deals with group of supplier and the
information for this group of supplier is secured on the department level, so
every department will use his own payable sub-ledger.

Inventory Organization
- This terminology in Oracle Application is very related to Oracle
Distribution which means
The following three modules
1- Inventory Module
2- Purchasing Module
3- Order Management Module

- Number of Inventory Organization is determined based on:

1- Costing Method (Average, Standard, LIFO, FIFO), since the


costing method is set on Organization level only.
2- Security or Organization Accesses, since the Inventory
organization security is set on Organization level only.
3- Accounts (Material Account; An asset account that tracks
material cost. this account holds your inventory values.

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Oracle Inventory Overview Mohammad Omar Salameh

Item View:

Master
MasterItem
ItemOrganization
Organization

Central
CentralWarehouse
Warehouse Regional
RegionalWarehouse
Warehouse

An item master organization is a logical entity that you can use just to define items.
The other organizations (child organizations) are the organizations where inventory
transactions occur. After you define an item in the item master item organization,
you can assign it to the child organizations where this item is used and accessed.
There is no functional or technical difference between the item master organization
and other organizations. However, for simplicity it is recommended that you limit the
item master to be the organization holding items definition only.
It is also recommended that you do not define multiple item masters. This can make
item definition and maintenance confusing.

Inventory View:

Central
CentralWarehouse
Warehouse

Sub-Inventory
Sub-Inventory“1” Sub-Inventory
“1” Sub-Inventory“1”
“1” Sub-Inventory
Sub-Inventory“1”
“1” Sub-Inventory
Sub-Inventory“1”
“1”
(Main)
(Main) (Rejected) (Damaged) (Lost)
(Rejected) (Damaged) (Lost)

An inventory organization, where you store and transact items can have one or more
Subinventories. Subinventories are unique physical or logical separations of material

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Oracle Inventory Overview Mohammad Omar Salameh

inventory, such as raw material inventory, finished goods inventory, or defective


goods inventory. In Oracle Inventory, all material within an organization is held in a
Subinventory. Therefore, you must define at least one Subinventory.
Item quantities can be tracked by Subinventory. Items can also be restricted to
specific Subinventories.

2- Inventory Items.

Item Status Attributes.

- The Item Status attribute has a defined set of yes/no values for the status
attributes. You apply the values to the status attributes when you choose an
item status code when you define an item. For example, in the beginning of a
product development cycle you set the Item Status attribute to Prototype with
all of the status attributes defaulted to yes except for Customer Orders
Enabled. When the item is ready, you change the Item Status attribute to
Active to enable all item functions.

- Status attributes enable and disable the functionality of an item over time.

- Each status attribute allows you to enable the item for particular use. For
example if you set the status attribute Purchasable to yes then you can place
the item on a purchase order.

- The status attributes are related to the item defining attributes. You cannot
enable a status attribute if you do not set the corresponding item attribute to
yes.

- Each status attribute is dependent on at least one other attribute. For


example you cannot have Stockable set to yes if you have Inventory Item set
to No.

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Oracle Inventory Overview Mohammad Omar Salameh

Item Control Level.

Master-Level Control:
An attribute you maintain at the master level has identical values across all
organizations that use the item.

Organization-Level Control:
An attribute you maintain at the organization level may have different values for
each organization that uses it.

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Oracle Inventory Overview Mohammad Omar Salameh

Unit of Measure.

Oracle Applications products provide powerful methods for defining and manipulating
units of measure. You can easily convert between the units you define. This allows
you to manufacture, order, or receive items in any unit of measure.

Unit of measure classes represent groups of units of measure with similar


characteristics. Creating unit of measure classes is the first step in unit of measure
management. Each unit of measure you define must belong to a unit of measure
class.

Each class has a base unit of measure. The base unit of measure is used to perform
conversions between units of measure in the class. For this reason, the base unit of
measure should be representative of the other units of measure in the class, and
generally one of the smaller units.

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Oracle Inventory Overview Mohammad Omar Salameh

Item Categories.

Category is a logical classification of items that have similar characteristics. A


category set is a distinct grouping scheme and consists of categories. When Oracle
Inventory is installed, it is mandatory to assign a default category set to each of the
following functional areas: Inventory, Purchasing.

The flexibility of that Oracle provides through category sets allows you to report and
inquire on items in various ways such as the following:
 User can define multiple segment structures for the Item
Categories. Each segment structure may have its own
display prompts and fields.

 Oracle provides two category structures by default (Item


Categories and PO Item Category).

 For Example in Telecom sector Inventory category consists


of two segments the first one is Item Type like (GSM, Fuel &
Lubricants...) and the second one is Item Subtype like (Sim
Card, Scratch Cards, Handsets, Diesel...).

 PO category as an example consists of two segments the


first one is Item Source which is (Imported or local) and the
second one is Country like (Jordan, Pakistan...).

 Each segment structure can display prompts and fields that


apply specifically to a particular naming convention. For
example, you might want one of your category sets to use
two segments for the names of categories. Another item
grouping scheme might use just one segment for the names
of categories. You choose a structure for every category set
and category that you define.

 Assign default category sets to each functional area.

Item Templates.

Item templates are used in Oracle inventory to ease the process of defining
inventory items, common attributes could be grouped in these templates so it will
reduce the efforts of defining new items in oracle inventory.

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Oracle Inventory Overview Mohammad Omar Salameh

Oracle Inventory has several predefined templates that you can use to define and
update items or you can create your own templates.

If you regularly define many items that share the same values for a number of
attributes, you may want to define item templates to avoid duplicating effort. You
can only use “Copy” once when adding an item. You can predefine templates with
relatively few attributes enabled because you can apply more than one template to
define one item.

For Warid Congo we defined three Item templates one for (Telco Items) which is
the items WARID is trading with such as SIM Cards, Scratch Cards, Wi-Max CPEs…
etc, and another Template for (Traceable Expense Items) which is the non-trade
items WARID is tracking as stackable items like all type of stackable oils, tracked
non-trade items will be received in the main warehouse and upon requests from the
different departments in WARID, and the third Template (None Traceable Expense
Items) Expense items are the items WARID is using as direct expenses such as
stationary.

3- Inventory Transactions.

A transaction is an item movement into, within, or out of inventory. A transaction


changes the quantity, location, planning responsibility, and/or cost of an item.

Oracle Inventory supports a number of predefined and user-defined transaction


types. Every material movement has a corresponding set of accounting
transactions that Oracle Inventory automatically generates.

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Receiving Transactions.

Receiving is a transaction that signals that the goods ordered on a purchase


order have arrived. Purchasing lets you control the items you order through
receiving, inspections, transfer and delivery.

Overview of Receipt Routing:

1. Direct Receipt (Direct to proper Subinventory):


One step; Goods are received and delivered in one step.

2. Standard Receipt (Location------Proper Subinventory)


Two steps; Goods are received at location in the first step and then delivered
at Subinventory in a second step. This allows for the Goods it takes Time to
move though your facility from the receiving docks. Quantity on hand in
Subinventories is not updated until the delivery is completed. The quantity
and cost is maintained in the inventory organizations receiving account until
the delivery is made.

3. Inspection Required (Location----------Inspection Location--------Proper


Subinventory)
Three steps; Used for goods that require a more skilled person to do a careful
review. Goods are received in first step. Inspection either accepts or rejects
the goods in the second step. A quality score can be assigned at that time.
Goods that are accepted are delivered in the third step, while goods that are
rejected are returned to the supplier.

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Oracle Inventory Overview Mohammad Omar Salameh

You can use the previous receipt routing Methods in case of:

1. PO Receiving (Receiving Parameters).


2. Receiving Intransit Shipment (Inter-Org Transfer
“Intransit”).

Miscellaneous Transactions.

With a miscellaneous transaction you can issue material to or receive material


from general ledger accounts in your current organization. This allows you to
issue material to groups that are not inventory, receiving, or work in process
such as a research and development group or an accounting department. You
can also make manual adjustments to the general ledger by receiving
material from one account to inventory, and then issuing that material from
inventory to another account.

You can use your user-defined transaction types and sources to further
classify and name your transactions. You can use this feature to issue items
to individuals, departments, or projects; or to issue damaged items to
expense accounts such as scrap. You can perform the receipts for items that
were acquired by means other than a purchase order from a supplier. You can
also use this feature to load all item on-hand quantities when you start
implementing Oracle Inventory.

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Transfer between organizations.

You can transfer material directly from your current organization to


another organization or from your current organization to in-transit
inventory.

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Oracle Inventory Overview Mohammad Omar Salameh

Transfer between Sub-Inventories.

You can transfer material within your current organization between Sub
inventories using Subinventory Transfer Functionality.

Move Order.

Move orders are requests for the movement of material within a single
organization.

4- Inventory Accuracy.

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Physical Inventory.

A physical inventory is a periodic reconciliation of system on-hand balances with


physical counts in inventory. You can perform physical inventories whenever you
choose to verify the accuracy of your system on-hand quantities. You can perform a
physical inventory for an entire organization or for particular Subinventories within
an organization. Physical inventories are usually performed once every six months
or once a year depending on the organization requirements.

Perform these steps to conduct the Physical inventory:

1. Define physical Inventory.


2. Take snapshot of on-hand quantities.
3. Generate tags.
4. Enter Counts.
5. Approve Counts.
6. Run Adjustment Program.

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