hexaware oracle process costing solution (1)
DESCRIPTION
Hexaware Oracle Process Costing Solution (1)TRANSCRIPT
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Oracle Process Costing Solution
Industry : Manufacturing
Product : Oracle Process Manufacturing
Date: 11/13/2013
Hex 2151
Presenter: Sachin Utage
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2 Hexaware Technologies. All rights reserved.
Agenda
Objective
OPM High Level Integration
General Concept
Process Costing Solution
Process Manufacturing Costing Flow
Cost Logic
Production Variance
Account Creation & Period Closing
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Objective
Understand the Process costing Solution
Use Sub-ledger Accounting and Processes in Process Costing
Leverage Process Costing Solution
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OPM High Level Integration
Integrated
Intelligence Cost
Analysis Productivity
Planning
Planned Orders Schedule Changes Material Substitutes Resources
Substitutes
Product
Lifecycle Mgmt
Warehousing /
Transportation
Service
Asset
Maintenance
Demand Schedules Sequencing Configured Order
Lot / Serial Genealogy Tracking, Electronic Signatures
Quality Management
Discrete Flow
Process Lot-Based
Mixed Mode
Production Status Material Availability Mfg Capacity Schedules/Changes Ship Notices Invoices/Payments
Enterprise
Shop Floor Customer
Partner
Collaboration
Subcontractors
Real-Time
WIP Visibility
Subcontractors Model
Shop
Floor
Suppliers
Suppliers
CTO
ETO
MTS
MES APIs,
Direct
Access
Analyze Adjust Sample
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Process Manufacturing Blocks
Costing
Analysis
Inventory
Quality
Product
Development Process
Execution
Regulatory
Management OPM MES
Process
Planning
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Process Costing
Costing
Analysis
Inventory
Quality
Product
Development Process
Execution
Regulatory
Management OPM MES
Process
Planning
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Process Costing Solution
Enables you to :
Optimize profits and margins
Capture precise product costs
Facilitate proactive cost management
Assure proper accounting of resources & materials
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Key Features
Support Multiple Simultaneous costing methods
Flexible costing elements
Transfer from Process to Discrete
Unlimited costing:
Calendars
Periods
Classes / Types
Analysis codes
Co-product & Byproduct costing
Costing engine independent of, but tightly linked to the General Ledger
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OPM Costing Flow
Cost Setup Calculate Cost Store Costs SLA Oracle GL
Oracle
Inventory Purchasing GMD, GME
Order
Management
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Organization Structure Changes
Inventory Org
Ledger
Legal Entity
Locator
Subinventory
Operating Unit
Release 12
OPM
Warehouse
Locator
Plant or Lab
OPM Company
11.5.10
Parent
Company
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OPM Industry Standard Terminologies
11i Terminology 12 Terminology
PM Batch Detail (Actual cost
transaction view)
Production Batch
Burdens Overheads
Percentage Burdens
Percentage Overheads
Cost Method
Cost Types
PCO account
COGS account
Cost Component Class Usages:
Cost Detail FM Route - Burdens Material Resource - Overhead
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OPM Costing
Indirect Acquisition Overhead Resource Material
Actual Lot Standard
Cost
Development Monitoring Allocation Analysis Valuation
PWAC PMAC LAC PPAC
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Actual Cost Averaging Algorithms
P-n P-2 P-1 Current
Period (P)
Period Moving Average (PMAC)
Perpetual Weighted Average (PPAC)
Period
Weighted
Average
(PWAC)
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Actual Costing Logic - PWAC
The PWAC cost is calculated based on this logic:
[Batch costs + Value of Incoming Transfers+ Value of Receipts+ Cost Adjustment Value + GL Expense Allocations]
[Product Yield +Transfers + Receipts +Average Cost Adjustment Quantity]
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Actual Costing Logic - PMAC
The PMAC cost is calculated based on this logic:
[(Prior Period Cost * Prior Period Closing balance) +Batch costs + Value of Incoming Transfers+ Value of Receipts+ Cost Adjustments Value + GL Expense Allocations]
[Prior Period Closing Balance + Product Yield +Transfers + Receipts +Average Cost Adjustment Quantity]
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Actual Costing Logic - PPAC
The PPAC cost is calculated based on this logic:
[(Prior Period PPAC Cost * Prior Period PPAC Quantity) +Batch costs + Value of Incoming Transfers+ Value of Receipts+ Cost Adjustments Value + GL Expense Allocations]
[Prior Period PPAC Quantity + Product Yield +Transfers + Receipts +Average Cost Adjustment Quantity]
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Actual Costing Logic Last Invoice & Transaction
Last Invoice
Cost from most recent invoice in the period for the raw material
Last Transaction
Cost from the most recent invoice or receipt in the period for the raw material
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Simultaneous Multiple Cost Methods
Effectively compare costs by using various methods
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Costing Definition
Ability to define different
Cost types
Ability to define different
type for Raw Material &
Products
Lot Cost Type
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Cost Component Classes
The unit cost of an item is usually broken down into several buckets that can be attributed to the various sources that form the basis of the
cost, for detailed tracking and analysis purposes.
Cost Component Classes are used to identify the individual buckets or component costs that make up the total cost, for example, direct
material costs, freight costs, labor costs, production or conversion
costs and so on. They are classified into elements or usage
Material
Resource
Overhead
Expense Allocation
Standard Cost Adjustment Type
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Cost Analysis Code & Component Group
Cost Analysis Code
Cost component class can be further broken down using cost
analysis code for more granular
tracking
Used to group component costs from multiple cost component
class types to provide an
alternate view of the total cost
Eg: define direct or indirect analysis codes for each cost
component
Component Group
Lets you collect specific material or resource component costs for
category grouping
Eg: material cost, resource cost
Can also be used for custom reporting and Analysis
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Cost Granularity
CW
2013/ACT/BUD/WHAT IF/FUTURE
Q1/DAY 1/WEEK 1/YEAR
MATL/PKG/RESOURCE
VALUE-ADD
Item
Organization
Period
Cost Type
Calendar
Element
Analysis
Code
STND/ACT/LOT
999A
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Production Batches Accounting Flows
Production batch has 4 steps
Release
Step completion (resources)
Completion (materials)
Close
Accounting entries:
Release: Inventory to WIP
Step completion: RCA (absorption account) to WIP
Completion: WIP to inventory
Close: variance calculation
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Production Variances - Material
Usage Variance (USG) occurs when the actual ingredient quantity is
different from the cost formula scaled quantity
Substitution Variance (SUB) occurs when actual ingredients used
and the cost formula ingredients are different
Yield Variance (YLD) occurs
If product quantity is different
If new products are yielded
If some product yields missing
Closing Variance (CLS) is used to clear out the WIP entries created
in batch release and complete events
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Production Variances - Resource
Resource Usage Variance occurs when the actual resource usage
is different from the scaled formula resource usage
Resource Substitution Variance (RSV) occurs when the actual
resources used and the costing formula resources are different
Resource Manning Variance (RMV) occurs when the actual
resource count is different from the costing formula resource count
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Subledger Accounting
OPM Costing engine
generates cost
SLA processes these
events to create
journal entries
Completed material and
resource transactions
OPM Costing with SLA
Cost Preprocessor
creates
accounting events
Define
Journal Line
Types
Journal Entry
Descriptions
Account
Derivation
Rules
Journal Lines
Definitions
Application
Accounting
Definitions
Subledger
Accounting
Methods
Assign
Application
Accounting to
the Ledger
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How Does Oracle Create Journal Entries
Costing Transactions
from OPM,
INV, PO, OM
etc
1. Allocation Process
2. Cost Update Process
Preliminary
3. OPM Sub ledger Pre Processor
4. Cost Update Final
5. Create Accounting
6. Transfer to the GL
General Ledger SLA Definitions
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Cost Update Process
Costing
The Cost Update Process copies the OPM cost
from costing to the GL Item Cost to be used in generating the journal entries
Act / STD/ Lot
Cost
Item Cost
Legal Entity
Calendar
Period
Cost type
GL Item Cost X
Transaction Qty GL Item Cost
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OPM Subledger Pre Processor Update
The Sub ledger Pre Process
calculates the currency value of
the transaction(s)
Transaction
QuantityGL Item Cost
Journal Template
Transactions
from OPM,
INV, PO, OM
etc
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How does Oracle create Journal Entries
SLA Definitions
Order
Management
(Shipping):
COGS
Purchasing:
Receiving
receipts and
returns
Inventory:
Adjustments
and Transfers
of Inventory
OPM
Production:
Capitalization
of Inventory
Subledger Accounting
Engine: Processes all
transactions and
produces balanced
journal entries ready to
be interfaced to the
General Ledger
General
Ledger
Other Financials
Subledgers
- Payables
- Receivables
- Assets
- Projects
- Etc
OPM
Costing:
Inventory re-
Valuation
The Create Accounting process
builds and assigns account code
combinations to the journal
templates
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Complete & Close
POC Steps &
Production Batches
Complete Sales
Shipment & Close
AR
Complete Inv.
Adjustments
Complete
Purchasing, Receiving
and Close AP
Run Inventory Close
Processing (Preliminary)
Run Actual Cost
Process
Make Actual Cost
Adjustments
Run GL Expenses
Allocation
Process
Enter/ Modify Expenses
Allocation
Run Test Subsidary
Ledger Run Cost Update
Preliminary
Run Final Cost Update
& Subsidary Ledger
Update
Run Inventory
Close
Process (Final)
&
Close Cost
Period
Transfer
Sub Ledger
Journals
to GL
Account Creation & Period Closing
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MAC To SLA Transformation
OPM MAC SLA Comments
Source Process Category
Event Event Entity
Sub-Event Event Class
Account Titles Journal Line Types (JLT)
Accounting Template Application Accounting Definitions (AAD)
Account Mapping Attributes (SLA) Sources
Priorities and Account Mapping Account Derivation Rules (ADR)
Test Mapping Test Accounting Builder (TAB)
OPM Currency, OPM Ledger, OPM
Exchange Rates Use GL set ups
Test and Actual Subledger Accounting Draft and Final Accounting -
Subledger Program Accounting Pre-Processor
Run Subledger for multiple valuation/cost
methods for a ledger. Supports multiple valuation methods
SLA supports multiple
representations at the same time.
Detailed Subledger Report Is retained and has been modified
to use SLA repository
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Procurement Accounting Flows
1. Enter PO: Accounting Impact Nil
2. Enter a receipt:
-------------Debit --------Inventory Receiving Account (ISP)
-------------Credit-------- AP Accrual Account
3. Inspect and Accept: Accounting Impact Nil
4. Delivery to stock:
-------------Debit ---------Inventory Account
-------------Credit --------Inventory receiving account (ISP)
-------------Debit ---------Purchase Price Variance (PO-Unit Cost)
5. Enter PO Matched Invoice - Out Side OPM
-------------Debit ---------AP Accrual Account
-------------Credit --------Supplier Liability Control Account
6. Enter payments against the invoice Outside OPM -------------Debit ---------Supplier Liability Account
-------------Credit --------Cash / Bank Account
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Inventory Accounting Flows
1. Miscellaneous Receipts, Account Receipts, Account Alias Receipts
----------Debit --------Inventory
----------Credit -------Inventory Adjustment Expense
2. Miscellaneous Issues, Account Issues, Account Alias Issues
----------Debit -------- Inventory Adjustment Expense
----------Credit -------Inventory
3. Inventory Org transfer :
-Direct Transfer
-In transit Transfer
The two transfer are supported in Same OU and across OU.
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Production Batches Accounting Flows
1. Batch Release
----------Debit --------WIP
----------Credit -------Inventory
2. Step certification
----------Debit --------WIP
----------Credit -------RCA
3. Batch Certification
----------Debit --------Inventory
----------Credit -------WIP
4. Batch Close
----------Debit / Credit ------WIP
----------Credit / Debit ------CLS
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Order Management Accounting Flows
1. Sales Order : No Accounting Impact
2. Ship items
-----------Debit ---------Deferred COGS
-----------Credit --------Inventory
3.1 Enter invoice when customer is Billed In AR Module -----------Debit ---------Receivables
-----------Credit --------Deferred Revenue
3.2 When Portion of Revenue is recognized In AR Module -----------Debit ---------Deferred Revenue
-----------Credit --------Revenue
3.3 Additional Entry in OPM to reflect earned revenue
-----------Debit ---------COGS
-----------Credit --------Deferred COGS
4.1 RMA Returns (Before revenue recognition) -----------Debit ---------Inventory
-----------Credit --------DCOGS
4.2 After portion of revenue recognized
-----------Debit --------- Inventory
-----------Credit --------- Deferred COGS
-----------Credit -------- COGS
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OPM LCM Integration Overview
The objective to use the accurate landed costs in OPM
cost calculations and accounting
Support of Landed cost for all receiving transactions
Receive, Deliver
Correction, Return
Landed cost by Cost components
Item cost details consists of component wise cost in
OPM
Support Actual Landed Costs
Item, freight, charge invoices
Support LC adjustments in Actual cost Process
Support LC Adjustments in Lot Cost Process
GMF: Landed Cost Adjustments Transfer Method to Inventory In
Actual Costing with
Apply whole LC Adjustment to Inventory
Apply LC Adjustment based on the Period Opening Bal
Post LC Adjustment journal entries in OPM Accounting Pre-
Process
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Process Costing Solution
Enables you to :
Optimize profits and margins
Multiple cost methods: standard, actuals, lot
Capture precise product costs
Co-products, unlimited cost elements, cost allocations
Facilitate proactive cost management
Cost monitoring, cost analysis
Assure proper accounting of resources & materials
Flexible account mapping, sub-ledger flow, drilldowns
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Awarded the prestigious Golden Peacock Award for Excellence in Corporate Governance
Listed on Forbes Asias 200 Best Under a Billion List Winner of the prestigious UK Oracle User Group PeopleSoft
Partner of the Year Award for the year 2012
Winner of the Information Mastermind Award 2012, by IDG Listed among the Top 100 Innovative service Provider by Global
Services 100 Listing
Ranked among leading IT service providers in International Association of Outsourcing Providers (IAOP) Global Outsourcing
100 list.
Winner of BPO Excellence Awards 2012- 2013 [Subsidiary : Caliber Point]
Winner of the EMC Transformers Award for its Cloud and Disaster Recovery (DR) implementation
Recognized and awarded the Best in Corporate Responsibility Practice award by Indy's Awards
Received the prestigious CIO100 Award, by IDG.
Hexaware Overview: Key Facts
8,950 Employees globally (Sep 13)
53 Million dollar clients (Sep 13)
35 Offices worldwide
224 Active Clients served worldwide
(Sep 13)
364 $ mn Revenues in CY 12
Mumbai Chennai Nagpur Pune Coimbatore Bengaluru
Industry Recognitions
Golden
Peacock Award
Certifications CMMI Level 5, ISO 9001 & ISO
27001, SAS 70 Type II, ISO 20000
Delivery Centers
New Jersey Dallas Mexico Singapore
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Oracle @ Hexaware
Oracle E-Business Suite
Oracle Tools/J2EE
Technology Siebel CRM
o SOA, Portals, Mobility, Composite Apps, Legacy Modernization
o Fusion Ready
o Voted as one of the leading BI services vendor by Gartner
o Over 100+ BI customers
o Over 100+ Projects worldwide
o One of the earliest to implement Oracle R12
E-Business Suite
o #1 offshore PeopleSoft partner
o PeopleSoft development partner before the acquisition
PeopleSoft Business Intelligence Technology
Executed over 600 projects for 150+ customers 2500+ trained Oracle consultants Expertise across Human Capital Management, Finance, Supply Chain, Manufacturing and CRM
PeopleSoft Seibel CRM
Oracle
E-Business Suite Technology
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