osp with india localization

7/21/2019 OSP With India Localization

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Handling Outside Processing

In

Discrete Manufacturing Organizations

With India Localization

In Oracle Applications

Author : Amogh Dike

Document Version : 1.0

Date : 21-Jul-2011


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Outside Processing with India Localization in Oracle Apps

Table of Contents1.Introduction ......................................................................................................................................... 3

2.Setup .................................................................................................................................................... 3

2.1Additional Information ...................................................................................................................... 3

2.2OSP Subinventory .............................................................................................................................. 3

2.3OSP Item ............................................................................................................................................ 3

2.4Excise Items Classification.................................................................................................................. 3

2.5OSP Resource ..................................................................................................................................... 3

2.6Department ........................................................................................................................................ 3

2.7WIP Parameters ................................................................................................................................. 3

2.8Routing ............................................................................................................................................... 3

2.9Bills of Material .................................................................................................................................. 3

3.Transactions ......................................................................................................................................... 3

3.1Job Creation and material issue ......................................................................................................... 3

3.2Move Transaction .............................................................................................................................. 3

3.3Auto Create Purchase Order .............................................................................................................. 3

3.4Approve 57F(4) Dispatch ................................................................................................................... 3

3.5Print OSP Challan ............................................................................................................................... 4

3.6Receive Material and Approve 57F(4) Receipt .................................................................................. 4

3.7Dispatching Partial Quantity .............................................................................................................. 4

4.Reports ................................................................................................................................................. 4

5.Issues Identified and Their Resolution ................................................................................................. 4

5.1Cannot enter Item while creating manual 57F(4) Challan ................................................................. 4

5.2Value in the Item Rate Field is not updatable and defaults from purchase order rate ..................... 45.3Value defaulting in the Tariff field is the tariff of the OSP item ........................................................ 4

6.Conclusion ............................................................................................................................................ 4


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1. IntroductionBecause of certain reasons such as manufacturing constraints, cost considerations, etc.

manufacturing organizations may not be able to carry out certain processes out within their own

premises. In such cases, the processing is done from outside. The process performed outside is

called as job work. Job work in India is governed by provisions under the Rule 57F(4) - removal of

inputs as such or partially processed inputs in respect of which Modvat credit has been availed.

Oracle Financials for India provides the functionality of tracking the goods sent to a sub-contractor

for Job work. This document explains the setup required and the transactions flow required for

achieving the same.

The setup and transactions given in this document are based on Oracle E Business Suite Rel. 12 and

12.1

2. Setup2.1 Additional InformationSetup Preferences tab of Additional Organization Information (Navigation: India Local Inventory

SetupAdditional Information)

Since there is no need to pay duty while sending goods for sub contracted operations, the user

needs to input zero in this field. If any other value is given in this fields, appropriate duty will get

calculated whenever a 57 F4 Challan is prepared.

2.2 OSP SubinventoryDefine a Subinventory with name OSP.


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2.3 OSP ItemCreate an item with template @Outside Processing Item. This item needs to be associated with the

OSP resource. The unit type in Purchasing tab should be Resource. Allow Description Update in

Purchasing Tab helps to enter more meaningful description of subcontracting operation description

in the purchase order. Enter a list price for the OSP item. If not entered then the purchase

requisition will not be created.


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2.4 Excise Items ClassificationFor the components to be sent for subcontracting, make Excisable Flag as Yes (Navigation: India

Local InventoryIndia LocalizationSetupItem SetupVAT/Excise Item Classification)

All the items OSP Item, assembly item and components in the BOM must be excisable.


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2.5 OSP ResourceCreate a resource for OSP. Check Outside Processing flag for this resource. Associate OSP item with

this resource. Charge type should be PO Receipt or PO Move. If charge type is PO Move, Oracle will

automatically perform mover transaction after receipt is made. If charge type is PO Receipt, Move

Transaction needs to be performed explicitly.


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2.6 DepartmentCreate a department and attach appropriate location to the department. Associate the OPS resource

with this department.

2.7 WIP ParametersSetup Requisition Creation Time in WIP Parameters to At Job/Schedule Release or At Operation. If it

is set to At Operation, requisition for OSP operation will be created when the discrete job is moved

to Queue intraoperation step. If it is setup as At Job/Schedule Release, purchase requisition will be

created automatically when the job / schedule is released. If it is setup as Manual, then purchase

requisition needs to be created manually. (Navigation: Work in ProcessSetupParameters)


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3. Transactions3.1 Job Creation and material issueCreate discrete job for the assembly item, release it and make material issue transaction for this job.

If the material control is Operation Pull, Oracle will do the material transaction.

3.2 Move TransactionMove the job from the first operation to Queue intraoperation step of the operation that needs to

be subcontracted.


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After saving the move transaction, requisition will be automatically created. The requisition can be

queried from Requisition Summary window by querying for Import Source as WIP

3.3 Auto Create Purchase OrderAutocreate the purchase order from purchase requisition and approve it. The line type of thepurchase order is Outside Processing. The job and operation details can be seen in Distribution

The purchase order needs to be approved only from India Localization because after approving the

purchase order 57F4 details gets updated.

3.4 Approve 57F(4) DispatchApprove 57F(4) Challan. (Navigation: India Local PurchasingIndia LocalizationOutside

ProcessingApprove 57F(4) Dispatch). Enter PO Number and Click on Create 57F4 button

Update the details of Item and Quantity being dispatched and click on Approve button.


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After Approving, 57F(4) Challan number is generated and is populated in the field Form Number.

3.5 Print OSP ChallanNavigate to India Local PurchasingOutside ProcessingPrint control 57F(4). Enter appropriate

selection criteria and click on Find. Select on Original / Duplicate and save record.


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Go to ViewRequestsSubmit New RequestsIndia - Outside Processing Challan. Enter

appropriate parameters and submit the request.

3.6 Receive Material and Approve 57F(4) ReceiptCreate a receipt against purchase order. After creating the receipt approve 57F(4) Receipt.

Navigation: India Local PurchasingOutside ProcessingApprove 57F(4) Receipt.

Approve 57F(4) Receipt should be done only if you are sure that you will not receive any more

material from the vendor. 57F(4) receipt will no longer be available for approving once approved

once.


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3.7 Dispatching Partial QuantitySometimes material is dispatched to the subcontractor in a staggered manner. In such a case first

create and approve 54F(4) Challan as explained in point no. 2.4 above. In the first Challan enter the

partial quantity being dispatched in the first lot.

For the subsequent dispatches, create Manual 57F(4) Challan (Navigation: India Local Inventory

India LocalizationOutside ProcessingApprove 57F(4) Dispatch). Enter the PO Number and click

on Manual button

This will open 57F4 Form details screen. Primary form number will appear in the subsequent forms.

Enter the necessary details of Job Number, Item Number and dispatch quantity and save the record.


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After this, click on Approve Dispatch Button. This will generate a new form number.

4. ReportsFollowing reports are available with respect to Outside Processing:

1. India - OSP Pending Despatch Report: This report gives all OSP material pending for dispatch57F(4) challan is created; however it is not approved

2. India - OSP Pending Receipt Report: This report gives details of unapproved 57F(4) receipts Receipt transaction is done; however Approve 57F(4) transaction is not done.

3. India - OSP Stock Register: This report gives stock register of goods sent for Processing/jobworking under Rule 57F(4)


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5. Issues Identified and Their Resolution5.1 Cannot enter Item while creating manual 57F(4) ChallanWhile creating manual 57F(4) Challan we have to enter item number of the item to be dispatched in

the Item field. When enter the item, we get error Item not found. The list of values is also empty.To resolve this error, first enter the item number of OSP item in the parent item field and then enter

the item number of the item to be dispatched in the Item field. Before saving the record, the value

entered in Parent Item field can be deleted.

5.2 Value in the Item Rate Field is not updatable and defaults frompurchase order rate

The value in the Item Rate Field in 57F(4) Challan defaults from the PO rate. Defaulting from PO rate

is not correct because the PO rate is the rate for converting the material from one form to another.

The payment to the subcontractor needs to be made on the basis of this rate. The item rate in the

57F(4) Challan is the rate of the item for the purpose of valuation from excise perspective.

Moreover, the current form provided by India Localization does not allow to update the item rate.

These issues can be resolved by personalizing the Approver 57F4 Dispatch form.


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Defaulting of item rate can also be modified by personalization


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The query to be used for getting value of item rate from list price is:

select LIST_PRICE_PER_UNIT from mtl_system_items_b where inventory_item_id =

:JA_IN_57_F3_LINES.ITEM_ID and organization_id = :JA_IN_57_F3.ORGANIZATION_ID

In this query, the rate is taken from list price of the item. It can be suitably modified, if required.

5.3 Value defaulting in the Tariff field is the tariff of the OSP itemThe value that defaults in the Tariff field of the 57F(4) Challan is the tariff of OSP item. It is quite

possible that the tariff of the item being dispatched is different from that of OSP item. Correct tariff

must be entered on the Challan. This can be achieved by personalization.


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The query to be used for picking the appropriate tariff code is:

select attribute_value from JAI_RGM_ITEM_ATTRIB_V where inventory_item_id =

JA_IN_57_F3_LINES.ITEM_ID and organization_id = :JA_IN_57_F3.ORGANIZATION_ID and

attribute_code = 'ITEM TARIFF'

6. ConclusionThe OSP functionality provided by India Localization in Oracle e Business Suite is good for meeting

the legal requirements in discrete manufacturing organizations. The setup involved is minimal and

users do not have to make lengthy transactions. There are certain lacunas; however they can be

easily taken care of by form personalization with little efforts.

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