Oracle waives extended support fees for EBS 11i

ERP market is abuzz with the recent news of Oracle waiving the extended support fee for E-Business Suite 11i, this time until November 2013. Few unhappy ones are calling it as putting ketchup on burnt steak. The fees for Extended Support on 11i was initially set to start in November 2010 but was post-poned for year in November 2010 and then now for another 2 years taking it to all the way through November 2013.  Release 12 is out since year 2007.  Lot of customers still sitting on 11i might be waiting eagerly to see how the Fusion vision is falling in place.

I might just say :)  "Thanks for the tortilla chips while I wait for the dinner or supper"

Did you knew changes in Oracle Purchasing with Release 12 ?

Changes to existing tables

PO_HEADERS_ALL

1. Added columns (SUPPLIER_NOTIF_METHOD, FAX, EMAIL_ADDRESS) for capturing the Communication Details specified for a PO on the Create/Update Order page
2. Added the STYLE_ID column for capturing the style of each document
3. Added new columns: created_language cpa_reference last_updated_program
4. Added column SUBMIT_DATE to record the date when purchase order is submitted for approval

PO_LINES_ALL

1.   Added new columns: catalog_name supplier_part_auxid ip_category_id last_updated_program
2. Addition of the following Columns :

• RETAINAGE_RATE(Rate to withhold retainage from progress payments) 
• MAX_RETAINAGE_AMOUNT (The maximum amount that can be held as retainage against a contract)
• PROGRESS_PAYMENT_RATE(% of work completed which is eligible to be paid, when using financing)
• RECOUPMENT_RATE (This % is applied to the invoice amount to determine the total amount of previously paid financing payments that can be applied towards this invoice to determine the current amount due)

Use Demand Class in Forecasting

Accurate demand forecasting is vital for holding optimal inventory.  The better you forecast your demand, the less residual inventory you will hold. Forecasting your demands is the key to plan your capacity, inventory & pricing. No forecasting method is 100% correct. Multiple forecast methods are used - based on judgement & based on data. I don't intend to write a long one on forecasting in this note; rather focus on "demand class" concept used in forecasting in Oracle Planning suite.

Business might have requirements to forecast its demand in multiple dimensions to help analyze the trend in actual sales order demands that consume the forecasts. As business, you would want to forecast your demand for certain regions and analyze how your actual sales demands were. While analyzing the regional forecasts consumption, you also might want to forecast on the customer segment you receive orders from - like automotive, energy, pharma or FMCG based on your product.

Attach the demand class to the forecasts you define and mark the sales order demands with relevant demand class. In the above example, you can opt to attach a "region" demand class to order types defined for each region. You can use the demand class ATP functionality to check the availability for certain demand class. Demand class can be optionally attached to your Inventory organization definition. If demand class is not attached to the forecast, Planning engine takes the demand class from the organization to which the demand belongs. 

Remember the thumb rule, consumption takes place only if the demand class of the sales order and forecast match.

Questions? Drop me a note on applearn@gmail.com

Average cost variance

In average costing, each receipt of material to inventory updates the unit cost of the item received. Issues from inventory use the current average cost as the unit cost. 

Perpetual Inventory value = Avg unit cost X Quantity

In Oracle Inventory, Inventory balances can be driven negative if the Allow Negative Balances parameter is
set in the Organization Parameters. Inventory calculates the costs differently in case we have negative inventory balances.   

Lets say, we have an on-hand quantity of -40 and we are performing a receipt of 50 quantity that would drive the quantity positive 10. This transaction would be split in two parts as below

a. Quantity required to drive on-hand from negative to zero 

In our example, this quantity would be "40". Inventory receives this quantity of "40" with current average cost and does not use the transaction cost

b. Remaining Quantity

Remaining quantity of "10" (50 minus 40) is received at the transaction cost and hence a new average unit cost is re-calculated

Difference between total receipt cost and the cost debited to inventory is average cost variance

------------------------------------------------------------------------------------

You can write to us with suggestions to improve on applearn@gmail.com

----------------------------------------------------------------------

Measure Supply Chain Performance

Given the increased attention and scrutiny your investors are applying to the supply chain’s impact on a company’s financial performance, you need a yardstick to clearly measure your Supply Chain performance. One of the most followed and detailed performance metrics are encompassed in the Supply Chain Operations Reference (SCOR) model. The SCOR model provides an industry-standard approach to analyze, design, and implement changes to improve performance throughout five integrated supply chain processes — plan, source, make, deliver and return

Plan

Assess supply resources; aggregate and prioritize demand requirements; plan inventory for Distribution, production, and material requirements; and plan rough-cut capacity

Source

Receive, inspect, store, hold, issue, and authorize payment for raw materials and purchased finished goods

Make

Request and receive material; manufacture and test product

Deliver

Execute order management processes; generate quotations; configure product; create and maintain a customer database; maintain a product/price database; manage accounts receivable, credits, collections, and invoicing; execute warehouse processes, including pick, pack, and configure; create customer-specific packaging/labeling; consolidate orders; ship products; manage transportation processes and import/export

Return

Process defective, warranty, and excess returns, including authorization, scheduling, inspection, transfer, warranty administration, receiving and verifying defective products, disposition, and replacement

-------------------------------------------------------------------------------------------

You can write to us with suggestions to improve on applearn@gmail.com

-------------------------------------------------------------------------------------------

Crossdocking in Oracle WMS

It has become vital for every business that has to deal with necessary evil of inventory management to maximize inventory turns and have less of stock to manage. Crossdocking functionality in Oracle WMS allows warehouses to improve its operational efficiency by transferring material as soon as it's received to outbound location. In the process, it avoids the inventory holding function thereby reducing the cost of inventory management

Businesses also want to ship products as soon as its manufactured to avoid managing finished goods stock at their warehouses and invoice the customers earlier (i.e. ship early, Invoice early). This also can be achieved using Crossdocking & you can call it "Direct shipping with Cross docking" If we have back-ordered Sales Order demand line and the WIP Job gets completed to a LPN, task would created to deliver the products to the staging to ship it "directly". 

On similar lines, Oracle WMS routes products directly from the receiving dock to a staging lane without placing product into a put away location.  Before choosing a warehouse put away location, Oracle WMS attempts to supply any sales order demand from the staged receiving supply.  As a result, unnecessary material handling and movement are reduced, which, in turn, helps reduce operational costs and streamline the order fulfillment process.

Remember, Cross docking must be enabled in the organization

-------------------------------------------------------------------------------------------

You can write to us with suggestions to improve on applearn@gmail.com

-------------------------------------------------------------------------------------------

Using Forecasting in Oracle Applications

Forecasting is predicting the future using some proven methods. There is no single right forecasting method to use. Selection of a method should be based on your objectives and your conditions. To understand how Forecasting functionality works in Oracle, we need to be aware of few terms as below:

In Oracle, Forecasts are defined within a three-level hierarchical structure. It goes from the most specific to most general - forecast entries, forecasts and forecast sets. 

Forecast entry is for a specific item number, quantity and date

Forecast may be defined for a specific customer, customer site, customer type etc. You can have user defined classification using demand class. In summary, related forecast entries are grouped into Forecast

If we group Forecasts that are some way related, its called Forecast set. 

Oracle provides 3 different methods to load the Forecast data. 

1. Forecast entry form

2. Open Forecast interface

3. System generated forecast based on historical data

Forecast entry form and Open Forecast interface are used when forecast data is created externally (not in Oracle). Sufficient history needs to be available in Oracle to use 3rd option of system generating the forecast.

...

Handling standard wastage (Shrinkage rate) in Oracle

Lets say we have a requirement where in every manufacturing job of 100 quantity ends up producing 80 quantity. You can define a shrinkage rate to describe expected scrap or other loss. Using this factor, the planning process creates additional demand for shrinkage requirements for the item to compensate for the loss and maintain supply.

For example, if you have a demand for 100 quantity and a discrete job of 40 quantity, the planning engine would suggest a planned order of 60 quantity. This would happen when there is no value populated in the "Shrinkage rate" field on Item Master (MPS/MRP planning tab)

Now going back to the business requirement mentioned above where every manufacturing job of 100 quantity ends up producing 80 quantity. If a shrinkage rate of 0.2 is entered in Item master, planning engine assumes that you lose 20% of any current discrete jobs and 20% of any suggested planned orders. 

Demand quantity  = 100

a. Discrete Job = 40

    Shrinkage = 20% of 40 = 8 quantity

    Net supply from Discrete Job = 40 minus 8 = 32 quantity

b. Net requirement balance: Demand qty - Net Supply = 100 minus 32 = 68

    Planning engine suggests a planned order = 68 divided by 0.2 = 85

    

Total Demand = 100 (original demand) + 8 (discrete job shrinkage) + 17 (planned order shrinkage) = 125

Total Supply = 40 (discrete job) + 85 (planned order suggested by planning engine) = 125

Shrinkage is the wastage that happens while manufacturing finished goods.

----------------------------------------------------------------------

Please write to us on applearn@gmail.com for your inputs

----------------------------------------------------------------------------------------

What is EDI ?

EDI stands for Electronic Data Interchange

To understand the need for EDI, lets take a business flow and transactions involved. Company "C" is a manufacturer and regularly buys raw material from Supplier "S" that would typically involve below transactions for each purchase done. 

1. Buyer at Customer "C" enters a Purchase Order in his computer system
2. Buyer sends the PO through email or fax or mail to Supplier "S"
3. Sales team at Supplier "S" validates the PO to ensure that required information is provided
4. Sales team at Supplier "S" enters a Sales Order in his computer system
5. Sales team at Supplier "S" sends the Sales Order acknowledgment to Customer "C" through email or fax or regular mail

Imagine the cost, cycle time, money and risks of data entry errors involved in the above process. What if computer system at Customer "C" exchanges data with computer system at Supplier "S" using an intermediate communication link ? Yes, that's the idea behind EDI.


Organizations that send or receive documents between each other are referred to as "trading partners" in EDI terminology. Trading partners are free to use any method for the transmission of documents. Few of the transmission mediums used are Value Added Network (VAN), Internet/AS and Web EDI.


EDI translation software, popularly known as Translator, validates the partner and checks if the data received meets the standard formats defined before converting it to a desired file format which can be read and imported by the receiver's computer systems (for e.g. ERP)

EDIFACT & X12 are most widely followed EDI standards. The standards prescribe the formats, character sets, and data elements used in the exchange of business documents and forms. 

Oracle e-Commerce gateway (earlier EDI gateway) module helps organizations meet their EDI requirements with flexibility to use choice of your translator, EDI standard and yet tightly integrates with other modules from Oracle.

--------------------------------------------------------------------------------------------------------------
If this short note helped you in some way, do write to us on applearn@gmail.com
--------------------------------------------------------------------------------------------------------------

Creating warranty contract

When individuals or business buy products or equipments, manufacturers provide free warranty coverage for certain period of time. Oracle Applications provides a functionality to create warranty contracts on each serviceable products shipped from the manufacturer. 

To achieve the above functionality, you need to setup on the below:

1. Define Coverage (Service Contracts)

2. Mark the finished product as Install base trackeable & Enabled contract coverage (Inventory)

3. Define warranty item with warranty period (Inventory)

4. Include warranty item in the Finished Product Bill of Material (BOM)

Once you ship the finished product, it would create an item instance and subsequently create a warranty contract

Related Profile Options

OKS: Consolidate Warranty for Multiple Orders

Determines if an order for products with warranties, sold in Order Management, should be consolidated when the service contract is created. Similar warranties are grouped on a single contract rather than creating separate contracts

OKS: Contracts Validation Source

Allows the user to define the organization information that should be referenced when automatically creating a contract

-----------------------------------------------------------------------

Please write to us on applearn@gmail.com for your inputs

-----------------------------------------------------------------------