A day in the life of an Oracle Applications Consultant

Tuesday, June 29, 2004

Tips on Loading On-Hand Inventory at Go-Live

Tips on Loading On-Hand Balances into Oracle Inventory

The generally accepted method for transferring on-hand inventory from a legacy system to Oracle Inventory at ‘go-live’ is to enter a miscellaneous receipt transaction into the desired subinventory.  This can be done manually using the form, by means of the Transaction Interface (simulating a ‘miscellaneous receipt’ transaction),  or via a Dataloader. 

When loading initial on-hand balances into Inventory, the material valuation account of the receiving subinventory will be debited.  The credit must be entered by the user (since this is a ‘miscellaneous receipt’ transaction).  If general ledger balances are going to be brought over from a legacy system, then generally the credit account is the same as the debit account, giving a zero net value for the transaction, thus not changing the total GL value of on-hand inventory brought over from the legacy system. 

Oracle’s Cost Manager uses the item cost to establish the value of the various debits and credits that it creates when costing a transaction.  The method in which the item’s cost is established depends on the costing method selected for the inventory organization.  If the organization is using standard cost, then the item’s cost must either be entered when the record is first created, or updated using a pending cost and the Standard Cost Update.  When the item master record is saved, a zero cost is automatically entered for the item unless the standard cost is entered during the item creation process.  If items are being created via the Item Open Interface, then a value for the frozen standard cost can be entered when using the ‘Create’ option.  Note that the interface does not allow entry of a standard cost when using the ‘Update’ option.  If items are loaded without a frozen cost and not updated, then they will be valued at zero and any GL charges resulting from a transaction will also be valued at zero. 

In an average cost organization, the cost of an item is not static.  It changes continuously with every receipt into inventory via a weighted average cost recalculation.  It is not necessary to predefine a frozen standard cost prior to loading inventory. 

So the on-hand load process will vary depending on the organization’s costing method.  If using standard cost, create the items in the Item Master and then verify that they have a frozen standard cost other than zero.  If using average cost, establish the current average cost by entering the average cost from the legacy system into the cost field in the Miscellaneous Receipt transaction line.  (In a standard cost system, this field is grayed out.)  Note that if no cost is entered into the transaction line, the resulting cost in Inventory will be zero and this will cause the current average cost in future transactions to be too low.