Oracle R12 Inventory Overview Workshop1AgendaOracle Inventory OverviewOrganizational StructuresInventory Item ManagementInventory Level ManagementMaterial Transaction ManagementInventory Accuracy ManagementMaterial Replenishment PlanningDemand ForecastingOther Functionality-2-2Oracle Inventory OverviewOracle Inventory IntroductionOracle Inventory IntegrationOracle Multi-Org StructureOracle Inventory Capabilities-3-Supply Chain Inventory Overview3Oracle Inventory IntroductionInventory can be defined as on-hand stock that can be used in a required process. Below are several areas where Oracle Inventory can support the enterprise.

Receive Inventory

Issue Inventory

Transfer Inventory

Purchase order receiptsInternal requisitionsIn-transit receiptsReturn material receiptsUnexpected receiptsMiscellaneous account receiptsReceipts from projectsUser-defined receiptsInter-org transfersPurchasing

Inventory

Oracle shipping Execution can be used to generate a transfer to move materials from a storage to a staging area for shipping.ShipInventoryTransfer material between orgsTransfer between orgsReplenish materialsRequest transfers

Oracle Order Mgmt (OM) can be used to generate transfer to move material from storage to shipping staging area for delivery.Order Mgmt

Oracle Purchasing can generate an inventory issue though:Sales OrdersInternal OrdersPurchasingInventoryIssue stock though:User defined materialsInter-org transferCycle count negative issueIssue requests

Oracle OM can generate an inventory issue for: Return vendor materialsOrder Mgmt

-4-Ask what you mean by Inventory. Audience answer something.

In our daily activity when we walk into a store or even shop online..there is a constant movement of inventory going on. Items are being issued from the inventory or received into the inventory. For most of us it all happens behind the scenes. Some of the processes which happens behind the scene are.. Talk about receipt to issue. And in order for companies effectively service their customers demand they ck effectively manage this process they must track inventory, maintain accurate on-hand balances, Plan Material Replenishment, forecast anticipated demand etc.

We have done large scale implementations where we have worked with our clients to manage these behind the scene activities using Oracle Inventory so that buys like us get what we need in timely fashion and also let our clients make money

Therefore using Oracle Inventory you can do the following:Oracle Inventory IntegrationOracle Inventory Integrates with the following applications:

SuppliersAssetsPayablesProcurementGeneral LedgerEAMInventoryOrder ManagementReceivablesProjectsAccountingInternal RequisitionsRequisitionsReceiptsRequisitions/POsProject/TaskItemsInventory LevelsInventoryActivityInvoicesAssetsOthersSC ModulesLegend-5-5LedgerInventoryOrganizationsM1Legal EntityOperating UnitVision OpsVision OpsM2D2V1Master OrganizationOracle Multi-Org StructureMulti-Org structure enables consolidation of operations under one installation of Oracle Applications on a single global instance. It also enables the organization to keep transaction data secure by line of business.

-6-You must plan how Oracle Inventory represents your company's inventory sites and business units. This includes defining organizations, locations, subinventories, and locators.

Now one of the pre-requisites before we start doing any transactions in Oracle EBS is that we establish or setup our organization structure in Oracle before and then start defining items. Oracle Inventory CapabilitiesBelow are listed Oracle Inventory capabilities that will be covered during this workshop.

Organizational Structure ManagementInventory AccuracyManagement

15

Material TransactionManagement4AS18947 = 1000 on-handInventory Level ManagementDemand Forecasting

73

AS18947Inventory Item Management

Material Replenishment Planning62-7-7Organizational Structure ManagementManage Organizational StructuresDefining an Organizational StructureDefining an Inventory Org Structure-8-Supply Chain Inventory Overview8Manage Organizational Structures1What is an Inventory Organization?An inventory organization is a facility where you store and transact items. These have to be defined prior to using the inventory module.Inventory organizations represent distinct entities in the enterprise, and can be the following:Physical Entity: Manufacturing facility, warehouse, or distribution center (DC).Logical Entity: Item master organization, which can be used to define items.An inventory organization can have several of this attributes: Its own location, ledger, costing method, workday, calendar, and itemOrgs can share one or more of these attributes with other orgs-9-

9Manage Organizational Structures (cont)1Inventory Organizations are composed of one or more Sub Inventories, which are unique physical or logical segmentations of materials. All materials are held in one Sub Inventory. Optionally, Sub Inventories may have Locators, which are physical areas where items are stored. BusinessUSUKIND2M1M2M3B1Sub1StagingReceivingFGShippingStagingReturn

RowBinRackOperating UnitInventory OrganizationSub InventoryLocators (optional)-10-10Defining an Inventory Org Structure1Oracle Inventory allows can be tailored to represent your company's inventory sites and business units. This includes defining organizations, locations, sub-inventories, and locators.-11-Defined in HRMSLocations can represent companys physical addressDefine LocationDefine a workday calendarSet Org parametersDefine Inventory OrgsDefine locator control and other parametersDefine Sub InventoriesDefine flexfieldsDefine locatorsDefine LocatorsSetup Process

Inventory Item ManagementItem Management Overview Overview of Oracles Item MasterDefining Inventory ItemsItem Attribute GroupsUnits of MeasureItem TemplatesItem CategoriesItem Mfg Part NumberInventory CatalogLot Control and Serial Number Control-12-Supply Chain Inventory Overview12Item Management Overview 2Inventory is capable of utilizing items in various ways. These are some actions for which Items are used throughout the enterprise: Purchasing, Selling , Lending, Manufacturing, Stocking, and Distributing.Oracle has built in flexibility that allows for Item serialization and SKU (Stock Keeping Unit) management.-13-

AS18947

Finished goods

Raw materials

Spare parts

ServicesSample Types of Items13Overview of Oracles Item Master2Item Master manages the core entity Item that is the basis for all of Oracle Manufacturing and supply chain functions. Item Master allows customers to manage their items information such as item attributes, status control attributes Transactable, Purchasable, Stockable, flex attributes, and others. In addition, item related information is supported file attachments, related items, cross-references, etc. Item Master supports multi-organization capabilities and gives the ability to define control attributes at Master Organization or child organization as the business case demands.Item revision capability offers ability to maintain item revisions and data specific to item revisions. Users can create user item types and usage of items in various business scenarios such as managing manufacturing items, assets, services, etc. Items are defined in Master Organization. Other organizations (child organizations) refer to the Item Master for item definition. Once an item is defined in the Item Master, it can be assigned to multiple organizations.It is recommended that at least one Item Master organization must be defined. It also recommended to not define multiple item masters. This can make item definition and maintenance confusing.

-14-14Defining Inventory ItemsWe will further explore the following attribute groups:MainInventoryBOMAsset MgmtCostingPurchasing

ReceivingGeneral PlanningLead TimesWork in ProcessOrder MgmtInvoicing

2To set up an Inventory Item, we must look into the various attribute groups that make up an Item. The diagram below depicts the process-15-Steps Required to Setup an ItemDefine StatusControl LevelsDefineUOMsDefineCategoriesDefine Item CostDefineCatalogsDefineStatusesDefineCategorySetsDefineDefault Category SetsDefine Mfg Part No.15Item Attribute Groups2MainUnit of Measure: Oracle has dual UOM to support OPM. This is the stocking and selling unit of measure. Any necessary conversions are based on this unit of measure. This attribute is not updatable and assigned at the organization level. Also, the primary unit of measure is the default for invoices and credit memos entered in Oracle Receivables.User Item Type: Oracle provides several types by default at installation. Select one of these values, or one you defined with the Item Type window.Item Status: Item status codes set or default the values for attributes under status control. User-defined status codes control certain item attributes designated as status attributes.InventoryLot Expiration: Lot Expiration control governs how long items in a given lot remain available.Lot Controlled: You can establish lot number control only for an item that has no quantity on hand. If Lot Control is controlled at the Master Item level, the system checks for on hand quantity in all child organizations.Cycle Count Enabled: Turn this option on for automatic cycle count scheduling.Serialization: At receipt: Create and assign serial numbers when receiving the item. At sales order issue: Create and assign serial numbers when shipping the item against sales order. No control: Serial number control not established for this item. Predefined: Assign predefined serial numbers when receiving the item.Grade Control: Indicate whether the item is grade controlled in addition to lot controlled. A grade code represents specific characteristics of a lot.

-16-16Item Attribute Groups (cont)2BOMBOM Allowed: Allows you to define a bill of material for an item, or to assign the item as a component on a bill.BOM Item Type: This attribute is controlled at the Master level only. There are various BOM item types such as: Standard, Model, Option Class, Planning, and Engineering.Base Model: Displays the model from which an ATO configuration was created. In Oracle Order Management, you can place an order for an ATO model, choosing from the list of options.Asset MgmtAsset Item Type: This attribute identifies the asset item as an Asset Group, Asset Activity, or Re-buildable item.Activity Type: This indicates the type of maintenance for this asset activity. You use it to define a generic maintenance work order. For example, Inspection, Overhaul, Lubrication, Repairs, Servicing, or CleaningActivity Cause: Specifies what situation caused the work to be generated. For example, Breakdown, Vandalism, Normal Wear, or Settings.Activity Source: This specifies the reason the activity needs to be executed. For example, Warranty Compliance, OSHA Compliance, or Military Specification Requirements.Shutdown Type: Indicates if this maintenance activity requires a shutdown. For Example, Required and Not Required.

-17-17Item Attribute Groups (cont)2CostingCosting Enabled: the item is automatically assigned to the default category set for the Oracle Cost Management functional area.Cost of Goods Sold (COGS) is controlled at the organization level only and general ledger accounts are used as a source for the COGS Account. The default COGS account is defined in the organization parameters.PurchasingPurchased: If this is option on, the item is automatically assigned to the default category set for the Oracle Purchasing functional area. And is enabled for Purchasing.Expense account: This attribute is used only when Inventory Asset Value is turned off. Oracle Purchasing debits this account when an item is received into inventory.Outsourced Assembly: Identifies whether an item is Outsourced Assembly item or notDefault Buyer: Contingent worker can also be assigned .PO Buyer validations are enhanced to accommodate this.ReceivingReceipt Days Early: Number of days before the promise date you can receive an item without warning or rejection.Receipt Days Late: Number of days after the promise date you can receive an item without warning or rejection.Receiving Sub-inventory: Sets the default sub-inventory for incoming shipments.

-18-18Item Attribute Groups (cont)2General PlanningSafety Stock Method can be MRP Planned % if either of Planning Method = MRP / MPS Planned, or DRP Planned = Checked is true.Subcontracting Component: Indicates whether the sub-contracting type associated to this item when it is used as a sub-contracting component in Chargeable Subcontracting.Pre-positioned: The item is a subcontracting component sold to a manufacturing partner independently of subcontracting components.Synchronized: The item is a subcontracting component sold to a manufacturing partner and is synchronized with a specific order.Lead TimesPreprocessing: Days you must add to purchasing or manufacturing lead time to place an order.Processing: Days required to procure or manufacture an item. For manufactured assemblies, processing days equals manufacturing lead time.Post-processing: Days required to receive a purchased item into inventory from the initial supplier receipt. -19-19Item Attribute Groups (cont)2Order MgmtCustomer Ordered: Indicate whether to allow an item to be ordered by external customers.Internal Ordered: Indicate whether to allow an item to be ordered on an internal requisition.Shippable: Indicate whether to ship an item to a customer. Shippable items are released by Shipping Execution's Pick Release program.OE Transactable: Indicate whether demand can be placed for an item by OM and whether shipment transactions are interfaced to inventory.Default SO Source Type: If an item is to be drop-shipped or internal.Pick Components: Whether an item has a BOM with items to be picked from finished goods inventory. PTO items must have this attribute enabled.Assemble to Order: is on if an item is generally built for sales order demand.Charge Periodicity: The time the system uses to price a persistent or recurring service or product.InvoicingInvoiceable Item: Indicates whether to include an item on an Oracle Receivables invoice. Invoice Enabled: Indicates whether to activate an item for invoicing in Oracle Receivables. Invoicing Rule: Enter an invoicing rule to determine the period in which you send an invoice when you recognize revenue over time.-20-20Units of Measure2A Unit of Measure (UOM) is a value that specifies the quantity of an item.

-21-Volume

Each

Box of 4

Box of 8

Weight

Temperature

Sample Unit of Measure ClassesSample UOM Conversion DefinitionCollection of UOM in a the same group e.g. length, weight etcDefine UOM classIndividual UOM, e.g. Pounds, MeterDefine UOM codesStandard - Common to any item Intra Class - For a specific item within a unit of measure classInter Class - Specific item between unit of measure classesDefine ConversionsBase UOMYesNoNoUOMlbskggUOM Class = Weight1 kg = 2.208 X lbs1 g = 0.002208 X lbsUOM Conversion2WeightlbsKeyboardQuantityEach2 Each = 1 lbUOM Interclass ConversionConversionItemDestinationBase UOMDestinationUOM ClassSourceBase UOMSourceUOM Class21Item Templates2If you define many items sharing the same values for a number of attributes, you may want to define item templates that help you avoid duplication of effort. An item template is a standard set of attribute values that you use to define or update items. When you apply a template to an item, you set the item attribute values to the template attribute values for those attributes you enable in the template. -22-

22Item Categories2Item categories and category sets can be used to group items for various reports and programs. A category is a logical classification of items that have similar characteristics. A category set is a distinct grouping scheme and consists of categories. The flexibility of category sets allows users to report and inquire on items in a way that best suits the users needs.-23-Define flex field structureStructureDefine all the codes using segment valuesCategory CodeProvide a unique nameProvide the structure name and default category codeCategory Sets

Computer CategoryPeripherals Category

Sample Hardware Category SetOracle Inventory allows users to assign items to a specified category set.

Computer Category23Item Mfg Part Number2Users can define manufacturer part numbers and assign items to these. You can use this information for reporting purposes; and in catalog searches for particular items. -24-

24Inventory CatalogDefining Item Catalogs:To define your catalog, you set up as many distinct item catalog groups as you need to partition your Item Master. Each group has unique characteristics (called descriptive elements) that completely describe items belonging to the group.

Benefits of Item CatalogsProvide standard language in referring to items, enabling companies in the same industry to communicate effectively without needing to name their items identically.Store a detailed description of what an item is without having to embed that meaning in the item number.Use descriptive elements as search criteria for items.Update the item description with a concatenated value of the item catalog group information.Find common existing parts when developing an engineering prototype.2Item Catalogs enable users to add descriptive information to items and to portion an item master into groups of items that share common characteristics.-25-25Lot Control and Serial Number Control2-26-Lot ControlA lot can represent a quantity of an item that shares the same specifications, one or more receipts from the same vendor, or whatever you choose. You can divide each lot into child lots that can reflect whatever characteristics you choose for items within the lot.When you allocate stock for production, you can allocate specific lots to a production batch based on the potency, age, or other item characteristics. Oracle Inventory provides complete lot number support for inventory transactions.

Lot 403B

Serial Number ControlOracle Inventory provides complete serial number support for inventory transactions. For items that are under serial number control, one can assign unique serial numbers to individual units, enabling you to have tight control over every unit of every item in your inventory.Oracles Serial Numbers window allows you to update supplier information that is associated with your serial numbers. Users can view all serial numbers that have been created and the state and supplier lot information that is associated with your serial number.Serial #5847329

26Item Management DemoObjective: To review the setup for an existing inventory item:Attribute GroupsUOMItem TemplatesItem CategoriesCatalogMfg Part Numbers

Task: Watch as we demonstrate the setup for an existing inventory item, its attributes and characteristics.

Demo-27-27Inventory Level ManagementOn-hand Quantity OverviewReservations OverviewInventory Availability OverviewMaterial Workbench Overview-28-Supply Chain Inventory Overview28On-hand Quantity OverviewOn-hand quantity is the physical quantity that resides and a sub-inventory. For example, the Bulk inventory has 15 items that reside in it. Therefore there are 15 available on-hand items for the bulk inventory.

3Oracle Inventory enables you to view on-hand quantities, reservations, and availability information. Oracles Material Workbench allows users to review these items.-29-AS18947 = 1000 on-hand

FGI Sub-inventoryLocator: 1.1.1On-hand Quantity: 100FGI Sub-inventoryLocator: 1.1.2On-hand Quantity: 10Returns Sub-inventoryLocator: 1.1.3On-hand Quantity: 18Bulk Sub-inventoryLocator: 1.1.4On-hand Quantity: 1529Reservations Overview3A reservation is a link between a supply source and a demand source. A reservation creates a permanent data link between a supply source and a demand source, and represents a guaranteed allotment of material to a specified demand source. Item reservations prevent the allocation of material you previously set aside for a sales order, account, account alias, inventory allotment, or user-defined sources. Users can also create reservations for different types of supplies such as on hand inventory, purchase orders, internal requisitions, discrete jobs, shop floor jobs, and process manufacturing batches.

-30-

Book Inventory TransactionReceive MaterialSupply SourceDemand SourceReservation30

On-hand Quantity

ReservationPending Transactions

Inventory Availability Overview3Users can use the Material Workbench to view item availability. The system can calculate item availability for a given item at the sub-inventory, locator, lot, serial, or revision level.

-31-Item Availability=--

31Material Workbench Overview3Oracle Material Workbench enables users to view material in receiving, on-hand quantities, and in transit material. Users can also view materials across organizations. In addition, you can create and save queries, create move orders, and request cycle counts, as well as change material statuses.The Material Workbench shows the details of the item, quantity, location in inventory and it allows you to drill down into item status, availability, and attribute information.

-32-

Material in ReceivingMaterial Inbound

On-hand Quantity32View On-hand Quantity DemoObjective: To view the on-hand quantity of an inventory item in the Material Workbench.

Task: Watch as we demonstrate how to search and view the on-hand quantity of an inventory item.

Demo-33-33Material Transactions ManagementMaterial Transactions OverviewReceiving Transaction and ReturnsTransferring Between sub-inventoriesMiscellaneous TransactionsInter-org TransactionsTransferring Between OrganizationsPlanning transfer transactionsConsignment Inventory and VMIMaterial shortagesMove orders

-34-Supply Chain Inventory Overview34Material Transactions OverviewWe will examine the following transactions scenarios: Receiving transaction and returnsTransferring between sub-inventoriesMiscellaneous transactionsInter-org transactionsTransferring between organizationsPlanning transfer transactionsMaterial shortagesMove orders4Inventory transactions allows users to control the flow of material from the time you receive items to the time you ship goods to a customer.-35-

35Manage Material Transaction (cont)4-36-Receiving Transactions and ReturnsUsers can receive all or a partial list of open lines on any purchase order by using the Receipts window. Users can also receive substitute items and goods or services you have not ordered. Oracle Inventory allows you to match goods you receive on the receiving dock to a purchase order they might be fulfilling. Also users can then record transfers and deliveries in the Receiving Transactions window, record inspections in the Inspections window, record Returns in the Returns window, and record adjustments and corrections in the Corrections window.

Transferring Between Sub-inventoriesUsers can transfer materials within current organizations between subinventories, or between two locators within the same sub-inventory. Users can also transfer from asset to expense subinventories, as well as from tracked to non-tracked subinventories. If an item has a restricted list of subinventories, users can only transfer material from and to subinventories in that list. Oracle Inventory allows you to use user-defined transaction.

Raw MaterialsFinished Goods36Manage Material Transaction (cont)4-37-Miscellaneous TransactionsWith a miscellaneous transaction users can issue or receive material from general ledger accounts in your organization. This allows you to issue material to groups that are not inventory, receiving, or work in process such as a research and development or an accounting department.User-defined transaction types and sources can be used to further classify and name transactions. This feature is used to issue items to individuals, departments, or projects; or to issue damaged items to expense accounts such as scrap.

Inter-org TransactionsUsers can define multiple inventories, warehouses, and manufacturing facilities as distinct organizations. With Oracle Inventory you can perform inter-organization transfers as direct or in-transit shipments.Oracle Inventory allows users to transfer one or more items in a single transaction, as well as transfer partial quantities of the same item to different subinventories and locators in a single transaction. The transferred items must exist in both organizations. Inter-org transactions also allow users to transfer expense and asset items from one organization to another using in-transit inventory.

MfgPackaging37Manage Material Transaction (cont)4-38-Transferring Between OrganizationsOracle Inventory allows users to transfer material from any organization to another organizationSimilarly, users can transfer between current organization to in-transit inventory.Materials which are in-transit inventory belong to the organization identified by the FOB point. Additionally, users must move the material from in-transit inventory to this organization with an in-transit inventory receipt.

Planning Transfer TransactionsOracle Inventory allows you to plan transfers involving VMI and consignment items.Planning transfers enables you to assume the planning responsibility from the supplier. This transaction does not move goods, it changes the planning organization from the supplier site to the internal organization that holds the goods. After you perform a planning transfer and run collection, your supplier can no longer see the transferred quantity in the on hand quantity column.

Lets take a closer look at VMI and Consignment inventory.38Consignment Inventory and VMI4This type of inventory practice differs ownership until items are used.39Consignment Inventory VMIThis type of inventory functions similarly to Consignment, but the Supplier has access to it, and is responsible for maintaining inventory level.Delegate key inventory management functions to a Supplier.Supplier determines the items, quantities, and delivery schedules on behalf of the enterprise, based on information the Supplier receives from internal inventory and procurement systems.Suppliers can manage inventory levels from the iSupplier Portal.

39Manage Material Transaction (cont)4-40-Material ShortagesA material shortage occurs whenever unsatisfied demand exceeds available quantity for incoming supply of material. Oracle Inventory verifies, during a receipt transaction, to see if the material received is needed elsewhere in the organization. If a shortage exists, the system notifies you, either by a real-time, material shortage alert or a workflow-based notification. The following receipt transaction forms generate shortage alerts and notifications when receiving items for which the system has detected a shortage: Receipts, Receiving Transactions, Miscellaneous Transactions, and others

Move OrdersMove orders are requests for the movement of material within a single organization. Move orders allow planners and facility managers to request the movement of material within a warehouse or facility for purposes like replenishment, material storage relocations, and quality handling. Users can generate move orders manually or automatically depending on the source type.Move orders allow users to distinguish between inventory management processes and the actual material transaction process, providing: quick response, warehouse visibility, and tracking.

40Material Transaction DemosObjective: To view the following material transactions:Receive InventoryInventory Return to SupplierTo perform the following material transaction:Sub-inventory MoveInter-org TransferMiscellaneous Issue Miscellaneous Receipt

Task: Watch as we demonstrate how to manage theinventory transactions aforementioned.

Demo-41-41Inventory Accuracy ManagementInventory Accuracy Tools and Methods ABC AnalysisPhysical InventoryCycle Counting-42-Supply Chain Inventory Overview42Inventory Accuracy: Tools and Methods5Oracle Inventory lets you manage inventory accuracy by leveraging various methods.-43-

ABC Analysis

Physical Inventory

Cycle CountingLets take a closer look at these methods.43ABC Analysis"ABC" refers to the rankings you assign your items as a result of this analysis, where "A" items are ranked higher than "B" items, and so on.You can optionally use the ABC analyses you compile to drive your cycle counts, where you might count items of high value (A items) very frequently, items of lower value less frequently, and items of lowest value very infrequently. 5An ABC analysis is leveraged to manage inventory accuracy by determining the relative value of a group of inventory items based on a user-specified valuation criterion.-44-

Define and run ABC compilationsDefine ABC classesDefine ABC group, assign items to ABC classes within a groupUpdate item assignmentsPurge ABC informationABC Analysis Process44Physical InventoryOracle Inventory allows you to define and maintain an unlimited number of physical inventories. A physical inventory is identified by a unique name and it is to identify any activity, such as adjustments, pertaining to this physical inventory.You can define multiple physical inventories to count selected portions of your inventory, or you can count your total inventory. For example, if your warehouse has two large stockrooms, each represented by a sub-inventory, you can define two physical inventories, one for each sub-inventory, and then perform your physical inventory of the first stockroom, independent of the second. 5Oracle Inventory provides a fully automated physical inventory feature that you can use to reconcile system-maintained item on-hand balances with actual counts of inventory.-45-

45Cycle CountingCycle counting is the periodic counting of individual items throughout the course of the year to ensure the accuracy of inventory quantities and values.You can perform cycle counting instead of taking complete physical inventories, or you can use both techniques side-by-side to verify inventory quantities and values.

Cycle count benefits include: Enables inventory accuracy by correcting errors between system on-hand and actual quantities.Aids in identifying patterns in errors found as well as helps prioritize activities in training, tools, and processes.5Accurate measurement of on-hand quantities are essential for managing supply and demand, maintaining high service levels, and planning production.-46-

Define cycle countEstablish tolerance and limitsLoad items to be counted into cycle count classesSchedule counts and generate count requestsEnter counts and report resultsCycle Count ProcessApprove / reject cycle countManage count interface processes46Material Replenishment PlanningMaterial Replenishment OverviewMin-Max PlanningReorder-point Planning-47-Supply Chain Inventory Overview47Material Replenishment OverviewInventory planning involves answering two questions:When should you place a new order?How much should you order?

To answer these two questions Oracle Inventory utilizes the following types of replenishment plans:Min-Max planningReorder-point planningOracle Inventory provides additional methods for planning and replenishing inventories. Replenishment Counting is a method used typically for items on non-tracked subinventories. 6Oracle Inventory lets you manage inventory levels using any combination of the system's planning and replenishment features.-48-

We will take a closer look at Min-Max and Reorder-point Planning48Min-Max PlanningWhen the inventory level for an item (on-hand quantities plus quantities on order) drops below the minimum, Oracle Inventory suggests a new purchase requisition, internal requisition, move order, or job to bring the balance back up to the maximum.Oracle Inventory performs min-max planning for your items at either the organization level or the sub-inventory level. When you execute a min-max plan at the organization level, you can optionally include the following transactions as demand in the min-max planning calculation: unreserved sales orders, reserved sales orders, account issue move orders, and work in process component requirements. 6Min-Max planning is used to maintain inventory levels for all of your items orselected items. With min-max planning, you specify minimum and maximum inventory levels for your items.-49-

Minimum Inventory Level

Maximum Inventory LevelInventory Level Below MinimumTrigger Time to Reorder49Reorder-point PlanningReorder point planning suggests a new order for an item when the available quantity-on-hand quantity plus planned receipts drops below the item's safety stock level plus forecast demand for the item during its replenishment lead time.The suggested order quantity is an Economic Order Quantity (EOQ) that minimizes the total cost of ordering and carrying inventory. Oracle Inventory can automatically generate requisitions to inform your purchasing department that a replenishment order is required to supply your organization. Order lead time is the total of the item's processing, preprocessing, and post-processing lead times. In cases where the desired safety stock level changes during the order lead time, Oracle Inventory uses the largest safety stock quantity during the lead time.6Reorder point planning uses demand forecasts to decide when to order a new quantity to avoid dipping into safety stock.-50-

50Min-Max Planning DemoObjective: To review the process of setting up a Min-Max plan for an inventory item.

Task: Watch as we set up an Inventory Item for Min-Maxplanning.

Demo-51-51Demand ForecastingForecasting OverviewForecast Types & Setup Process-52-Supply Chain Inventory Overview52Forecasting OverviewInventory Forecasting OverviewForecasts contain information on the original and current forecast quantities, the confidence factor, and any specific customer information. Users can assign any number of items to the forecast and use the same item in multiple forecasts. Also, for each item, users can specify any number of forecast entries.Oracle inventory utilizes historical transactions to generate forecasts. When creating forecasts, users can select the type of transactions that want to be used. Users can also determine how far in the future they would like to make the predictions.Primary to creating the forecasts, these can be used to modify Reorder-points Planning, and other planning scenarios applicable to the enterprise.

7Inventory forecasting is the process of extrapolating the expected demand of an item over a number of periods in the future.-53-

53Forecast Types & Setup ProcessFocus forecasting enables you to simulate various methods of calculating demand and you can select the best forecasting model to suit the needs of Company X. Statistical forecasting enables you to use detailed history and applies weighted factors to exponentially smooth the data. It also enables you to apply exponentially weighted trends and seasonality factors to better predict demand of inventory items.

7To generate a forecast, Oracle Inventory uses mathematical algorithms to calculate a prediction of future demand. Users can estimate demand by using historical data as well as statistical forecasting techniques.-54-

Focus ForecastingStatistical ForecastingForecast Setup ProcessForecast TypesDefine Forecast SetDefine Forecast RulesGenerate ForecastsMaintain ForecastsApply / Utilize Forecasts54Other FunctionalityCost Control and AccountingIntercompany InvoicingInventory Reporting-55-Supply Chain Inventory Overview55Cost Control and AccountingAccounting Close Cycle:Oracle Inventory provides the features needed to summarize costs related to inventory and manufacturing activities for a given accounting period, and distribute those costs to the general ledger.Accounting Periods:Oracle Inventory uses accounting periods to group material and work in process transactions for accounting purposes.Oracle inventory allows the enterprise to maintain and manage accounting close cycle as well as accounting periods-56-

56Intercompany InvoicingTransactional OverviewIntercompany invoicing indicates a financial flow that may differ from the physical flow of materials.The intercompany accounts receivable (AR) invoice is the transaction Oracle uses to record intercompany receivable accounting for the shipping organization, debits intercompany AR at transfer price, charges tax, and freight and, credits intercompany revenue.The intercompany accounts payable (AP) invoice is the transaction Oracle uses to record the payable accounting for the selling organization, debits intercompany COGS and freight, and credits the intercompany payable account.Oracle Inventory supports intercompany invoicing processes that are generated throughout the use of intra-organization inventory transfers. -57-57Business Enablers and BenefitsBusiness Enablers:Automatically create intercompany payable and receivable invoices to record intercompany revenue, payables, and receivables.Eliminate intercompany profit in the general ledger.

Business Benefits:Reduce procurement costs.Reduce the complexity of interactions with suppliers.Centrally control the amount and or timing of funds dedicated to procurement activities on behalf of subsidiaries.Secure supply commitments on the basis of parent company credit ratings.Expedite delivery by avoiding unnecessary intermediate delivery locations-58-58Intercompany Invoicing ProcessThe following steps comprise the overall intercompany invoice business process. Some variations exist for internal orders.

-59-59Inventory ReportingSub-inventory Quantities:This report shows a screenshot of on-hand inventory item quantities by sub-inventory.Transaction Register:This report can be used as an audit report, to review the transaction date versus the exact date an item was transacted, to review the reason an item was moved into a sub-inventory by running the report for reason only and limiting the from and to sub-inventory, to check the value of inventory, to report the categories of items that have shipped and the total unit cost for the category, and to trace serial numbers by location.ABC Descending Value ReportThis report is used to view the results of an ABC compile. The report is sorted by descending value or quantity, depending on the compile criterion.Material Account Distribution Detail:This report is used to view the accounts charged for inventory transactions. You can review inventory transaction values transferred to the general ledger by GL batch. This feature helps you reconcile your inventory accounting to your general ledger.Oracle Inventory provides a wide range of reports that come standard with the application. Some examples include:-60-60Questions ?Supply Chain Inventory Overview-61-61