Cycle counting is a process used to periodically count selected items in the inventory to make sure that the actual inventory balances agree with the computer records. By setting up a cycle counting program, you can count practically all items in the inventory over a period of 12 months. This eliminates the need for an annual physical inventory, though some companies do both. In the Oracle Inventory application, the cycle counting process starts with assigning an ABC value to each item. Then you select the frequency of counts per year for each category of items. You want to count A class items more often than C class items.

Count Zero Quantity:Check to generate count requests for items reflecting a zero on-hand quantity on the system. Note: Checking this by itself will not generate counts for zero on-hand items. You must define item subinventory relationships to get a count for zero on-hands.

Cycle Counting Execution

The execution of cycle counting starts with the scheduling of the cycle count. This can be done with either an automatic scheduling process or a manual scheduling process. Manual schedules can be done in addition to, or instead of automatic scheduling. Manually scheduled counts have no impact on automatically scheduled counts; you can potentially count some items more frequently than what you initially planned.

The next step is to generate a cycle count request, and then print the count listing. The count listing will be used by the inventory stock clerk to record all counts taken.

After the items on the count listing report have been counted, the counts should be entered. You can use the same window to enter counts of items requested via automatic or manual cycle count scheduling. If unscheduled count entries are allowed for your cycle counts, you can enter those also.

location code is an address. Each inventory organization must be assigned at least one location (address) code.

Define units of measure classes

Unit of measure classes are groups of units of measure with similar characteristics. This is the first step in unit of measure management. Each unit of measure defined must belong to a unit of measure class.

Unit of measure classes are not organization specific.

Define Units of Measure

Units of measure are used by many functions and transactions to express the quantity of items. Defining units of measure is the second step in unit of measure management. The primary unit of measure is the stocking unit of measure for an item in a particular organization, which is an attribute that is specified when defining each item.

Units of measure are not organization specific.

Inventory Definitions

Category Set. A grouping of item categories. A category set is a user-defined entity for grouping items by category within the category set entity. Oracle inventory requires at least one category set be used. Product family, commodity, usage, or any other grouping and reporting requirements a user may have generally define category sets for grouping items. Category sets may be defined at the master organization level or the inventory item organization level.

Item Category. A code used for classifying or grouping items. Items are assigned to a category within a category set for reporting and grouping. To see the grouping, a user would specify a category set and one or more categories from that set.

Inventory Item. A part number or product code used to track goods or services. Inventory item numbers represent physical goods that are purchased, built or assembled. Inventory item numbers may also be created to represent services sold to customers. These numbers have attributes that describe or control how the item is used.

Inventory items are created in an Item Master Organization and then assigned to execution inventory organizations. Attributes for items may be set at the master level, so the value is consistent across all organizations, or at the organization level, so that the value may vary by organization. The attribute control level determines if an attribute is set at the master or organization level. An example of a typical master level controlled attribute is Item Description, which you may want to be the same across all organizations. Planner code, however, is set at the organization level, as each organization has a planner responsible for managing the item.

Inventory Organization. An entity used to represent a manufacturing or distribution site. Inventory organizations are where a user tracks on-hand balances, manufactures goods, and transacts the daily ins and outs of material movement. An inventory organization is the lowest level entity for costing goods, planning material requirements, and securing system access. Only a single address may be assigned to an Inventory Organization. An inventory organization is assigned a Set of Books which determines the chart of accounts, fiscal calendar, and base currency for all financial and value added activities that occur within the organization. Inventory Organizations are also assigned to a Legal Entity Organization and an Operating Unit Organization.

A variation on the inventory organization is the master item organization. Generally, with Oracle Applications a single inventory organization is created and designated at the master organization. Items are defined first in the master organization, then enabled in other inventory organizations as necessary. Some of the item attributes are set as controlled at the master organization and therefore the attribute values cannot be updated within individual inventory organizations. Category sets may also be designated as master organization level. Cross-references are also master level only or master level optional as well.

Legal Entity Organization. An entity used to represent a legal company. Fiscal and tax reporting are done at the Legal Entity level.

Location. A location is simply a name and address, and is assigned to an organization or used to indicate delivery information on a purchase order. You may define as many locations as you like, but only one location may be assigned to an inventory organization.

Multi-org. Multi-org often refers to an Oracle Applications setup used to enable multiple business units in a single install. With multi-org, a business enterprise may set up multiple business units with differing sets of books, operating units, and legal entities all within a single instance. With multi-org, goods my be sold out of one operating unit or legal entity and shipped out of another, and the system will process an intercompany sale to properly account for it.

Multi-org, however, should not be mistaken for installs with multiple inventory organizations. You do not have to use Oracle Applications multi-org to support multiple inventory organizations if all the inventory organizations share the same set of books, operating unit, and legal entity.

Operating Unit Organization. A business unit that shares a common Purchasing, Accounts Payable, Order Entry and Accounts Receivable setup. An operating unit may consist of multiple inventory organizations, with multiple manufacturing sites, distribution centers, and sales offices, but they share a common sales order and purchase order system. For example, a sales order may have lines shipping from different inventory organizations or a purchase order may have lines destined for different inventory organizations.

Set of Books (SOB). The financial entity that represents the chart of accounts, fiscal calendar, and base currency. The SOB is set up in the General Ledger

Stock Locator. A physical area within a stockroom. The stock locator is a key flexfield that is often defined as a multiple segment flexfield with the segments representing the physical layout of a stockroom. For example, a stockroom may be laid out in rows of shelves with bins on the shelves, each numbered so that a row/shelf/bin combination would direct someone to a particular material storage compartment. Such an implementation would define a locator flexfield as a 3 segment flexfield with segments for row, shelf, and bin.

Subinventory. Physical or logical locations for storing inventory. Subinventories are generally defined to represent the main stores area as well as stocking points on the production floor. Additional subinventories may be used to specify supply closets or cabinets and the cage area for discrepant material. Subinventories are flagged as to availability for planning (nettable), reservations, and available to promise checks, thereby determining the availability of the material stored in the subinventory. Subinventories are assigned material asset account numbers. As goods move in and out of a subinventory a transaction posts to the asset account.

Workday Calendar. The workday calendar indicates the manufacturing workdays for an inventory organization. The calendar indicates holidays as well as work shifts. Multiple calendars may be defined for an organization to represent differences in workdays by department or group.

Defini g new items

Overview

New item definition is a critical function. Items carry attributes that control how Oracle Applications manages the item. Items must be assigned to category sets with a category value. New items often need bills and routings set up, or may need suppliers identified, or need price lists created, and likely need to be costed. Much of the day to day activity within a company or organization purchasing material, building goods, selling products, and servicing what was sold, evolves around items. Accurate, timely, and comprehensive item definition smoothes the daily business flow and minimizes future problems.

Items are always defined in the master organization first, than enabled in the using inventory organizations.

tem Status Codes may be used to set or update the default values for certain item attributes. They can be used to control the functionality of an item. When you update the values for a status, all items that use that status will be updated also.

The Item Status Code controls certain item attributes designated as status attributes. They are:

BOM Allowed

Build in WIP

Customer Orders Enabled

Internal Orders Enabled

Invoice Enabled

Transactable

Purchasable

Stockable

Status attributes enable and disable the functionality of an item over time. Each status attribute allows you to enable the item for a particular use. For example, if you set the status attribute Purchasable to Yes, you can put the item on a purchase order.

Overview Item Template

Item templates are defined sets of attributes that can be used over and over to create many similar items. Templates make initial item definition easier. When you apply a template to an item, you overlay or default in the set of attribute values to the item definition.

You can apply the same or different templates to an item multiple times. The more recent attribute values from the last template applied override previous values unless the previous value is not updateable.

Note: Before defining an Item Template, make sure you are in the GLOBAL organization.

Item Typest

Item Types are a user defined code assigned to items as a user grouping for items. It is strictly a user defined entity with no functionality built around it.

R2i defines Item Types to match Item Templates. This is a common practice among the Oracle Inventory community and serves two purposes.

1. Item Templates tend to be defined by groups, or classes, of items. This is a natural grouping, as many item attributes are set based on this user defined grouping. For example, all purchased components may be grouped together with an Item Type, or it may be broken down further such as purchased commodity components and purchased custom components. Separate templates may be defined for each group, as select item attributes may vary, and separate item types defined for each to support custom reporting.

2. By assigning the user type to its corresponding template, the user type attribute is assigned the template name last used to define or update the item. If later a problem is found with an attribute setting, the user type will indicate the template used to update the item thereby assisting with problem resolution.

R2i includes item types to match the R2i templates. If you add new item templates, add a corresponding item type.

MIN-MAX PLANING

Overview

You must decide whether you will use Min-Max planning at the Organization or Subinventory level. If you plan at the Organization level, you will set up the planning attributes for your items in the item master setup. If you plan at the subinventory level, you will set up item/subinventory planning parameters.

Inventory Profile Option INV: Min-max Reorder Approval

Source Organization/SubinventoryIf you selected Source Type Inventory, you must designate an Organization from which to requisition replenishments. If you select Subinventory, you must enter a non-nettable subinventory.

RestockSelect Yes or No.

Yes causes Oracle to create purchase requisitions or requisitions for Internal Orders, depending on the Source Type selected in setting up the Item.

No causes no requisitions to be generated. For review pur

MISCELLANEOUS TRANSACTIONS

Overview

With miscellaneous transactions, material can be issued and received from general ledger accounts. This allows material to be issued/received from non-inventory areas such as engineering, facilities, or any other requesting department. Manual adjustments can also be made for accounting purposes by receiving material from one account to inventory, and then issuing that material from inventory to another account.

Overview MOVEORDERS

A Move Order is a request for subinventory transfer or account issue (also called an account transfer). When using an account transfer, the actual movement is an issue not a transfer from subinventory to subinventory.

These transactions are one time occurrences with no way to plan these intra-organization material movements. Move Orders allow planners and facility managers to request the movement of material within the four walls of a warehouse or facility for replenishment, material storage relocations, quality handling or other purposes.

Individual users can request move orders and Oracle Inventory will automatically create move orders when warranted for inventory replenishment and order picking.

This document will cover the move orders created through minmax planning.

NOTE: If you want to bypass the move order approval process and automatically approve move order requisitions, enter 0 days in the Move Order Timeout Period field and select Approve automatically in the Move Order Timeout Action field.

Total Available = Nettable Quantity On-hand + On Order - Open Demand, where

Nettable:

Quantity On-hand is nettable quantity in the subinventory specified.

On Order is the sum of open purchase orders, requisitions, and internal orders and shipments scheduled for receipt prior to or on the Supply Cutoff Date. Orders referencing other subinventories, or with no subinventory specified, are not included if the report is run for a subinventory.

Open Demand is the sum of open sales orders scheduled to ship prior to or on the

Demand Cutoff Date: Sales order demand referencing other subinventories, or without a specified

subinventory, are not included if the report is run for a subinventory.

If Total Available < Minimum Quantity, suggest a new order, where

Minimum Quantity is the value for the Min-Max Minimum Quantity item attribute.

Overview

A Move Order is a request for subinventory transfer or account issue (also called an account transfer). When using an account transfer, the actual movement is an issue not a transfer from subinventory to subinventory.

These transactions are one time occurrences with no way to plan these intra-organization material movements. Move Orders allow planners and facility managers to request the movement of material within the four walls of a warehouse or facility for replenishment, material storage relocations, quality handling or other purposes.

Individual users can request move orders and Oracle Inventory will automatically create move orders when warranted for inventory replenishment and order picking.

. This document will cover creation of a manual requisition and approving it.

Define a planner for the item under the General Planning tab of the Items window. If you do not

assign a planner to the item, the move order will be automatically approved.

There are five types of move orders;

a. Move Order Requisition

b. Move Order Replenishment (Minmax or reorder point planning)

c. Pick Wave Move Order (Order Management)

d. Receipt Move Order (Future release)

e. WIP Issue Move Order (Future release)

RE-ORDERPOINTPreprocessingEnter the number of days required to place an order

Overview

Reorder point planning can be used as an alternative to MRP or Min/Max planning. Reorder point planning uses demand forecasts to decide when to order a new quantity to replenish inventory. Reorder 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 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.

If the forecast is correct and the order arrives on time, the inventory level should be right at the safety stock level at the time of receipt. 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.

When an order is triggered, the EOQ is the size of the triggered order.

EOQ = square root of: [(2 X annual demand X order cost) / (carrying cost percent X Unit cost)]

Oracle Inventory calculates annual demand as the current demand rate annualized by multiplying the current period demand forecast by the number of periods per year (12 or 13).

Leadtimes

PreprocessingEnter the number of days required to place an order

ProcessingEnter the number of days required to acquire or manufacture the item

PostprocessingEnter the number of days required to receive the item into inventory after initial receipt from the supplier

Subinventories

Overview

Subinventories are subdivisions of an organization and may represent physical locations such as warehouses or storerooms within warehouses. Inventory transactions from and to subinventories post to accounts assigned to the subinventory in the Define Subinventories form. A subinventory can be associated with an asset account or an expense account.

Inventory Accuracy Overview

Inventory Accuracy

One of the major components of a companys assets is its inventory. Accurate system on-hand quantities are essential for managing supply and demand, maintaining high service levels, and planning production. The control of and accounting for inventory is a crucial part of daily operations. Two processes are provided in Oracle Inventory to validate on-hand quantities and values. They are Cycle Counting and Physical Inventory.

Cycle Counting

Cycle counting is the periodic counting of individual items throughout the course of the year to ensure the accuracy of inventory quantities and values. Cycle counting can be used in lieu of taking a complete physical inventory, or both techniques can be used side-by-side.

The Oracle Cycle Count functionality supports the counting of all material residing in quantity tracked subinventories. The process selects and ranks items for cycle counts. Daily, weekly, or monthly cycle count listings are then printed to use in performing the cycle count. After the items are counted, the count quantities are entered into the system and reconciliation reports are run. Once the variances are reviewed the item should be recounted or if the variance is acceptable, the cycle count is approved. Upon approval the system will create an adjustment transaction adjusting the on-hand quantities.

Physical Inventory

A Physical Inventory usually entails a wall to wall count of all stores inventory. If the count is to support fiscal year end financial reporting, tight controls are necessary to ensure that all inventoried goods, subassemblies and components are accounted for. Generally, the movement of goods in and out of stockrooms is cut off during the count, with exceptions allowed for emergency shipments only.

The Oracle Physical Inventory functionality supports the counting of all material residing in quantity tracked subinventories. To assist in controlling the count, tag numbers are assigned for each suggested count. Count tags may be printed and used to record counts. Once tags are entered, reconciliation reports may be run to ensure a complete count. Once the variances are reconciled, the physical inventory is approved. Upon approval the system will create an adjustment transaction adjusting the on-hand quantities.

Inventory Planning Overview

This process covers different ways to replenish inventory. All of the automated methods use the Requisition Import concurrent program to move information from Inventory and Manufacturing to Purchasing.

Min-Max planning is a method which reorders items that meet the following condition: on-hand quantity + on-order quantity is less then minimum quantity. When this condition is met, then the system will generate a requisition to bring the quantity up to the maximum quantity. The min-max inventory planning method may be done at the organization level or the subinventory level. This is the only planning process that offers a subinventory level option. To begin this process, run a concurrent request that loads the Requisition Import tables with all items that meet the requirements. This is the recommended R2i approach.

Reorder Point planning method is used to determine when and how much based upon Customer Service level, safety stock, carrying cost, order setup cost, lead time, and average demand.

For expensed items, Replenishment Counting can be used to generate requisitions. This is required on items that you do not track on hand balances (expense items). Replenishment Counting is not included in base R2i.

MRP Planners Workbench is the process for planners workbench. Either MRP or MPS must be run to use this planning method. For more information on MRP Planners Workbench, see the R2i MRP Planning documentation.

Oracle Inventory Organizations

Oracle Applications uses multiple types of organizations to build the business execution structure. At the top of the structure is the accounting set of books (SOB), defined in the General Ledger. Next, different types of organizations are used to further define the organization structure and relationships. In addition to a set of books R2i includes a Legal Entity organization, an Operating Unit organization, and an inventory organization. All organizations are defined and updated with the Define Organization form.

Set of Books. A General Ledger SOB, linked to the inventory organization, controls the financial accounting of inventory transactions. A SOB is made up of a chart of accounts, a financial calendar, and a currency. The general ledger secures transactions (journal entries, balances) by SOB. R2i includes a SOB called R2i US Client. This name should be updated with the clients company name. See the R2i General Ledger documentation for more information.

Legal Entity. A legal entity organization defines the tax and fiscal reporting level. The legal entity represents the legal company. R2i includes a Legal Entity organization named R2i LE. This name should be updated with the clients company name.

Operating Unit. An operating unit organization defines the Purchasing, Order Entry, Accounts Payable and Accounts Receivable level of operation. An operating unit may span multiple manufacturing facilities, distribution points and sales offices, or it may be limited to a single site. An operating unit has a single SOB and a single Legal Entity relationship. R2i includes an Operating Unit named R2i OU. This name should be updated with the clients company name.

Inventory Organization. Two flavors of inventory organizations are found in Oracle Applications. They are defined the same, and both are assigned a set of books, a legal entity organization, an operating unit organization, and a location. An item master organization is used for item number maintenance and validation. This master organization serves as a data repository storing items and item attributes, master level categories and category sets, master level cross references, and numerous data defaults. On-hand balances, inventory movements, and other on-going inventory activities are not performed in an item master organization. Generally, the master organization is used as the validation organization for Purchasing and Order Entry. It is recommended that a single item master organization be defined, even in multiple organization, multiple sets of books environments. R2i includes an item master organization called GLOBAL. Generally, this name is used by the client and not changed as part of the R2i setup.

In addition to the item master organization there are one or more non-master inventory organizations. Like the item master inventory organization, the non-master organizations are assigned a set of books, a legal entity organization and an operating unit organization. The non-master inventory organization points to a master organization and looks to the master organization for master level item attributes, master level categories, and other master level controlled data. Note that each organization has its own set of books/legal entity/operating unit relationship, so inventory organizations with differing SOBs or operating units may share the same master organization.

These non-master inventory organizations are the execution level organizations. They hold on-hand balances and transaction history. Here is where inventory users execute their daily activities, such as receiving and issuing material, performing cycle counts, and viewing material availability and transaction history. A single organization therefore generally represents a single manufacturing site or distribution center. R2i includes a single non-master item inventory organization called Company. This name should be updated with the clients company name.

Locations. A location code is an address. Each inventory organization must be assigned at least one location code. R2i includes a single location code of HDQTRS. This code should be updated to the clients company name and the address should be added.

Subinventories. A subinventory is used as a holding point for on-hand inventory and generally represents a stockroom, stocking area or cage used for storing material. Subinventories are defined within inventory organizations. An inventory organization may have any number of subinventories, and an asset account is assigned to each subinventory. Since the subinventory entity is logical, as there is not an address or physical location description associated with it, clients may define subinventories for any physical or logical grouping of inventory.

The R2i inventory organization, Company, includes 4 predefined subinventories:

3. Stores. Used for the primary stockroom for storing raw materials and sub-assemblies

4. FG. Used for Finished Goods inventory if finished goods are stocked

5. WIP. Used for raw material and sub-assemblies stored in production areas and issued at operation or job completion (backflush).

6. MRB. Used for Material Review Board goods. This is generally material that requires engineering review before disposition as scrap, rework, return to supplier or use as is.

Stock Locators. Stock locators are an optional entity that may be used to represent physical locations within a subinventory. You may choose to use stock locators for selected subinventories or selected items within selected subinventories. If locators are used, subinventory and locator track on-hand balances. Therefore, if locators are defined to represent a shelf within a stockroom, on-hand balances on the system would show the item and quantity down to the physical location within the facility.

Oracle Inventory uses a key flexfield for stock locators. This presents a few limitations for its use. Only one locator flexfield definition is allowed per install. Therefore, if the stockroom (subinventory) wants to track material by row, bin and shelf, it will likely define a three-segment flexfield with segments for row, bin, and shelf. If locators are desired for another subinventory, even in another organization, the structure will again be 3 segments for row, bin and shelf. In addition to this limitation, locators must be unique within an organization; you cannot use the same locator in different subinventories within an organization, but you can use the same locator in subinventories in a different organization.

Miscellaneous Transaction Process

With miscellaneous transactions, material can be issued and received from general ledger accounts. This allows material to be issued/received from non-inventory areas such as engineering, facilities, or any other requesting department. Manual adjustments can also be made for accounting purposes by receiving material from one account to inventory, and then issuing that material from inventory to another account.

Step 1.0 Fill Out Material Transfer Form

Fill out the appropriate Material Transfer (MT) form to request material from a subinventory. Gather all of the required approvals.

Step 2.0Deliver Material Transfer Form to Stores

Deliver the MT form to the correct destination.

Step 3.0Verify that Material is On Hand

Using the View On Hand Quantities form, check to make sure that material is in stock. If locator control is turned on for the subinventory, the form will also show at what location the material is located.

Step 4.0Return Material Transfer Form to Requestor

If there is none of the requested material in stock, return the MT back to the requestor. Please note on the returned form if another subinventory has the material in stock.

Step 5.0Stock Clerk Physically Retrieves Material

If the system shows that the requested material is in stock, pull the material from the subinventory. If the material cannot be located, return the request form back to the requester.

Step 6.0 Process Miscellaneous Transaction

Choose the type of transaction that needs to be processed as well as the other required information on the initial form. For Account Alias Issues/Receipts, enter the alias name in the Source field. For Account Issues/Receipts, enter the account number in the Source Field; it will transfer to the Account field. For Miscellaneous Issues/Receipts, the account number can be entered in the Account field or on the Transaction Lines screen.

Click on the Transaction Lines button in the Miscellaneous Transaction window. The Transaction Lines Detail folder window appears. Enter the inventory item to issue or receive. The revision must be entered if the item is under revision control. Enter the subinventory from which the material is being transacted. For an issue transaction, you cannot enter a subinventory that does not have Quantity Tracking turned on. Enter a locator if the subinventory is under locator control. Optionally, enter a lot number for the item. If you want to enter multiple lot numbers, complete the remaining steps then choose the Lot/Serial button to display the Lot Entry window. Enter the quantity of the inventory item to issue or receive. If the system is using average costing, enter the unit cost of the item to receive or issue, or leave this field blank to use the system average cost at the time of the transaction. Optionally, enter a reason code for the transaction. For example, reason codes allow you to mark exceptional charges to support quality data collection. Optionally, enter up to 240 characters of free text that describe the transaction, usually the MT number. Enter the general ledge account to be used in the transaction if you are using a Miscellaneous Issue/Receipt or User-Defined transaction type.

Step 7.0 Deliver Material to the Requester

Deliver the requested material to the requester.

Step 8.0File Paper Copy of the Material Transfer Form

File the paper copy of the Material Transfer form into the file cabinet.