Wednesday, June 30, 2004

Outside Processing Setup Checklist

Outside processing in Oracle Work in Process allows users to substitute vendor labor for in-house labor on a routing. The setup is long and complex. This paper provides a checklist of how to define OSP resources in Oracle to help users avoid some of the more common problems.


The Outside Processing process comes into play in Oracle Work in Process whenever all or part of the labor on a routing is performed by a third party vendor. More than one step on a routing can be performed by third parties. In Oracle, a link has been defined between Oracle Work in Process and Oracle Purchasing to automate the process of creating a purchase order to the vendor who will perform the OSP labor.

Because what is being purchased is LABOR, one requirement to using this process is to define a resource for each type of labor to be purchased. An item in the Item Master must also be defined for each type of labor to be purchased, and linked to the resource when it is defined. The item must be classified as an outside processing item.

Although this “resource” item is purchasable and transactable, it will never be received into or issued from a subinventory. Instead, receiving this item from the purchase order will cause a move transaction to occur on the WIP routing so that the outside operation step is completed when the items are received back from the vendor. It is important to note that the item must not only be received, but must also be delivered before the outside operation is deemed complete by the system.

When a routing operation uses an outside processing resource, movement into that operation step causes a purchase requisition to be generated for the “labor” resource to be purchased from the vendor.  Note that you are not purchasing the item (as you would a “buy” item), but instead you are purchasing the vendor’s labor as a substitute for using your own in-house resources to perform the labor. This is a subtle distinction, but it is necessary to understand this distinction in order to understand the Oracle process.

This purchase requisition is then imported from WIP into Purchasing.  At this point, the requisition is available (if approved, but that is another issue) to be autocreated into a purchase order. Or, if the buyer so chooses, the buyer may set up sourcing rules such that importing an approved requisition automatically creates a release against a blanket purchase order.

When the vendor returns the item, a receipt must be entered against the PO or release. The “item” is delivered not to a subinventory, but back to the shop floor for continued processing on the routing. If the outside processing step is the only step or the last step on the routing, the finished assembly will be available to be received into inventory using a WIP completion transaction.

Setup Steps


  1. REQUIRED. Define an item representing the outside processing vendor labor for Purchasing to place on the vendor PO.  In the Item Master Purchasing Attributes region, make sure the following attributes are set correctly:
    • Purchased = Yes (required).
    • Purchasable = Yes (required).
    • Outside Processing Item = Yes (required)
    • Outside Processing Unit Type = Assembly or Resource (Assembly is recommended if a tangible item) If the item has an Outside Processing Unit Type of Assembly and the outside resource has a basis of Item, you receive one outside processing item for each assembly you receive.  If the outside resource has a basis of Lot, you receive one outside processing item for each job or repetitive schedule.  If the outside processing item has an Outside Processing Unit Type of Resource and the outside resource has a basis of Item, you receive the extended quantity (using the outside resource usage rate or amount) of the outside processing item for each assembly you receive.  For example, if you purchase 3 hours of plating service for each assembly, (usage rate or amount is 3), then you receive a quantity of 3 hours for each assembly you receive from the supplier. If the outside resource has a basis of Lot, you receive 1 outside processing item extended by the outside resource usage rate or amount for each job or repetitive schedule.
    • Optionally enter a list price greater than zero – this will be used as a default in the PO (you could also set up a blanket PO with prices.)

    Note: the item with the above attributes must be defined in the org which is the Purchasing item validation organization as well as the actual production organization. Check Purchasing > Setup > Organization > Purchasing Options to determine which org has been defined as the validation organization.

  2. OPTIONAL. In the Item Master Lead Times attributes region, enter appropriate lead times. These will be used to automatically calculate the need by date for the requisition generated for the OSP item. (This step is not required, but is nice to have.) The need-by date will be automatically entered into the requisition generated by this process, and hence into the PO.

Bill of Material Module

  1. REQUIRED. Define an Outside Processing Department.  Enter the location where the outside processed item is to be delivered (example:  “Shop Floor” or “Assembly”) as you define the Outside Processing Department.  Note:  the location must have been previously defined under Purchasing > Setup > Organizations > Locations.
  2. REQUIRED. Define a separate outside processing resource for EACH labor “item”.

    • Enter the item number defined above in the Item Master for the labor “item”.
    • Make sure the variance account defined for the labor resource is the same as the Purchase price variance account defined in Parameters under Inventory setup. If you check the Costed box and the Standard Costing box, you can enter a standard value for this resource by clicking on the Rates button. Any difference between this standard value and the actual purchase price (in a standard cost organization) will be recorded in the Purchase Price Variance Account.
    • Make sure that the autocharge attribute is set to PO MOVE, not PO Receipt.  If you set this attribute to PO MOVE, then the PO receipt automatically generates the WIP Move transaction from the outside processing operation to the next operation on the routing.  If you use PO RECEIPT, you must manually perform the WIP Move transaction. The quantity of outside processing items you receive can relate to the assembly quantity on the job or repetitive schedule in several ways depending on the outside processing item’s Outside Processing Unit Type and the outside resource’s basis. In all cases, Purchasing charges the job or repetitive schedule using the extended quantity of the associated outside resource.
  3. REQUIRED. Add the outside processing resource to a step on the routing. If it is added to the last step, then the item can be received into inventory as soon as the PO receipt is entered and the transaction managers run.


  1. OPTIONAL. Create a blanket, and be certain to enter the line as an outside processing line type. If your item is not set up correctly, the system will not allow you to complete entry of the PO. Optionally, in the terms region of the PO, check the Supply Agreement box. In Purchasing-Supply Base-AutoSource Rules, link the item with the blanket PO document.  Or if you are using enhanced sourcing rules in Release 10.7, use the menu path “Supplier Scheduling-Supply Base-Approved Supplier List” to link the approved supplier for the item with the blanket PO in the Attributes region. (Note: Enhanced Sourcing Rules in 10.7 is controlled production and your client may not have been approved for using it).
  2. OPTIONAL BUT HIGHLY RECOMMENDED. In the PO line, set the over receipt tolerance for the item to zero so that no one can receive a quantity greater than on the PO. If a quantity greater than that in the work order is received, it will cause problems with the WIP move transaction to the next operation. THIS IS VERY IMPORTANT. There will be problems if more is received than is on the work order outside processing operation step. This is another reason to use a blanket PO.
  3. If you are using Supply Chain Planning, there is another little gotcha. Your item could have been set up with a ‘make’ sourcing rule or bill of distribution in the default assignment set.  You can create another assignment set with a ‘buy’ sourcing rule for the outside processing items and link it to the responsibility of the person who will do the requisition import.
  4. REQUIRED. The person who initiates the move transaction in WIP must be defined as an employee (in Purchasing or HR, depending on whether or not the HR Module is fully installed) and linked to the person’s user logon in the System Administration module. WIP includes an employee name on the requisition it creates through this process, and the employee name is linked to the move transactions that initiated the requisition. Hence the name of the person who initiated the move transaction will become the name of the “requestor” for the purchased vendor service.


  1. REQUIRED. Create a discrete job for the assembly. If the outside processing step is on the first step on the routing, releasing the job will trigger creation of the requisition. If the outside processing step is NOT the first step, then a move transaction must be performed using the Move Transaction window.  Move the quantity to be processed by the outside vendor into the Queue step of the outside processing operation step. This triggers creation of the requisition.
  2. REQUIRED. Run the Requisition Import process (Purchasing > Reports > Run > Requisition Import).
  3. REQUIRED. Create a purchase order from the routing.  Or, if using blanket POs, run the Create Release process (Purchasing > Reports > Run > Create Releases).
  4. REQUIRED. Receive the purchase order (note:  it must be DELIVERED as well as received. Until the item has been delivered the next step will not happen.) You might want to consider setting the receipt routing to “Direct Delivery” for such items in the Purchasing section of the Item Master unless you require inspection of the item from the vendor first.
  5. Once the PO has been received and delivered, and the Move transaction manager has run, you can see that the discrete job has been updated and the item is now in the “To Move” intraoperation step of the outside processing operation step. Go to WIP > Job/Schedule Details > Operations and select the Quantity alternative region. You should see the received quantity in the To Move intraoperation step of the outside processing operation step. If the Move transaction has failed or has not yet run, you will see it in WIP > Move Transactions > Pending Transactions.
  6. If the step is the last step on the routing, do a WIP completion transaction into inventory. Otherwise, continue with the routing steps until complete.

MRP Process

MRP will generate a planned order for the “make” assembly. MRP does not directly generate a requisition for the vendor labor to make the assembly. When the planned order is released as a WIP job, normal processing of the WIP job will result in generation of the purchase requisition for the vendor labor as per the process described above.

One Time WIP Setup for OSP

There is a setup step which should be performed in WIP to prevent users from entering a manual move transaction to the next step on the routing prior to entry of a PO receipt for the OSP item. This need be done only one time and should be part of your WIP setup.

  1. WIP > Move Transactions > Shop Floor Status > Shop Floor Status

  2. Define a status called ‘OSP’ - description ‘Outside Processing’ and UNCHECK the Allow Moves box.
  3. WIP > Setup > Parameters > Move Transactions Tab

  4. Enter the status created in Step 1 in the Shop Floor Status for PO Moves box.

After this setup has been done, no one will be able to do a move transaction to the next step after the OSP operation until the PO receipt has been entered. This is important, because it will prevent jobs from being closed prior to the PO receipt.

Monday, June 28, 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.

How to clear the Oracle Jinitiator Cache

This post talks about Jinitiator cache and the need to clear it on a periodic basis.

Today I was reminded about the necessity to clear your Jinitiator cache on a periodic basis. I was creating a worksheet in Oracle PSB and having selected the option to “Budget by Position”, when I tried to specify the data extract in the next field I received a rather bizarre error message - field does not understand operation. A quick check on Metalink revealed doc id. 248973.999 which suggested that I clear the Jinitiator cache. I checked the cache folder and found that it had a about 45MB worth of files - obviously it hadn’t been cleared in some time!!

My understanding of the Jinitiator cache is that it’s pretty much like the windows temp directory in that it needs to be cleared periodically. I thought it would be useful to highlight how to clear the cache files as well as remind users that this activity should be performed on a periodic basis as it may lead to obscure errors. I’ve also created a new category for Jinitiator for future posts specifically related to Jinitiator.

The first way to clear the Jinitiator cache is to simply delete all the files found in the cache directory. The cache directory is normally found on c:\program files\oracle\jinitiator 1.x.x\jcache. The second alternative is via the control panel, the steps are as follows: -

  1. Go to Start -> Settings -> Control Panel
  2. Double click on ‘JInitiator 1.x.x’
  3. Select Cache TAB from ‘JInitiator Control Panel’
  4. Click the Clear JAR Cache Button.

For an overview, setup and troubleshooting guide to Jinitiator for Oracle’s E-Business Suite 11.5.x (11i) refer to Metalink note 162488.1

For an overview, setup and troubleshooting guide to Jinitiator for Oracle’s E-Business Suite 10.7NCA and 11.0.x refer to Metalink note 206485.1

Friday, June 25, 2004

Implementing a major re-organization

This post contains information about guidelines for implementing a major re-organization.

I found this presentation on the New England Oracle Applications User Group site. The presentation was prepared by Kiran Mundy for OAUG spring 2004 conference.The abstract of the presentation reads “A Company Reorganization changed our company structure from a simple geographical hierarchy to a matrix organization where service organizations were organized by technical specialty and the client sector organizations were organized by Customer Category. Projects would be owned by the Client Sector Orgs and employees by the service orgs. Management needed to be able to view division P&L’s by either the service or Client Sector organization. This paper describes our solution and how we implemented the re-org in 3 months at year-end” I had a look at the presentation and thought that it might be useful for anyone implementing a major change in the organization structure.

New Oracle Projects and Manufacturing contributor

This post contains details of a new author who has joined OracleAppsBlog and will be blogging under the Manufacturing and Projects Categories

Nancy Beck, a Developer working for AAR Corp, is joining OracleAppsBlog and will be writing under the Projects and Manufacturing Categories. Nancy has over six years experience with Oracle as a manufacturing implementation consultant for Oracle E-Business suite, starting with 10.7 and ending with 11.5.9. You can read Nancy’s membership profile here or if you’re a member you can e-mail Nancy via the profile e-mail console.

I wanted to welcome Nancy to the Blog and introduce her to all the other members. Thanks in advance for all your future contributions, I am sure your experience will add some interesting content to the blog cool smile 

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