Oracle E-Business Suite: Creating Items in Inventory

Oracle E-Business Suite 12 Financials is a solution that provides out-of-the-box features to meet global financial reporting and tax requirements with one accounting, tax, banking, and payments model, and makes it easy to operate shared services across businesses and regions.
we will start with recipes for creating Items.
 We will cover:
                  -- Creating Items

• Exploring Item attributes
• Creating Item templates
• Exploring Item controls

Introduction

An organization's operations include the buying and selling of products and services. Items can represent the products and services that are purchased and sold in an organization. Let's start by looking at the Item creation process.
The following diagram details the process for creating Items:










1. The Item Requester (the person who requests an Item) completes an Item Creation Form, which should contain information such as:\

• Costing information
• Pricing Information
• Item and Product Categories
• Details of some of the Item attributes
• The inventory organization details

1. Once complete, a message is sent to the Master Data Manager (the person who maintains the master data) to create the Item. The message could be sent by fax, e-mail, and so on.
2. The Master Data Manager reviews the form and enters the details of the Item into Oracle E-Business Suite by creating the Item. Once complete, a message is sent to the Item Requester.
3. The Item Requester reviews the Item setup on the system.

Let's look at how Items are created and explore the underlying concepts concerning the creation of Items.

Creating Items

Oracle Inventory provides us with the functionality to create Items. Sets of attributes are assigned to an Item. The attributes define the characteristics of the Item. A group of attributes values defines a template, and a template can be assigned to an Item to automatically define the set of attribute values.
An Item template defines the Item Type. For example, a Finished Good template will identify certain characteristics that define the Item as a finished good, with attributes such as "Inventory Item" and "Stockable" with a value of "Yes". Let's look at how to create an Item in Oracle Inventory. We will also assign a Finished Good template to the Item.

Getting ready

Log in to Oracle E-Business Suite R12 with the username and password assigned to you by the System Administrator. If you are working on the Vision demonstration database, you can use OPERATIONS/WELCOME as the USERNAME/PASSWORD:

1. Select the Inventory Responsibility.
2. Select the V1 Inventory Organization.

How to do it...

Let's list the steps required to create an Item:


 Navigate to Items | Master Items. Please note that Items are defined in the Master Organization.

1. Enter the Item code, for example, PRD20001.
2. Enter a description for the Item:

 Select Copy From from the tools menu (or press Alt+T). We are going to copy the attributes from the Finished Good template:

 

1. We can also copy attributes from an existing Item.
2. Enter Finished Good and click on the Apply button (or press Alt+A) and click on the Done button.
3. Save the Item definition by clicking on the Save icon (or press Ctrl+S).

How it works...

Items contain attributes and attributes contain information about an Item. Attributes can be controlled centrally at the Master Organization level or at the Inventory Organization level.

There's more...

Once the Item is created, we need to assign it to a category and an inventory organization.

Assigning Items to inventory organizations

For us to be able to perform transactions with the Item in the inventory, we need to assign the Item to an inventory organization. We can also use the organization Item form to change the attributes at the organization level. For example, an Item may be classified as raw materials in one organization and finished goods in another organization.

1. From the Tools menu, select Organization Assignment.
2. Select the inventory organization for the Item. For example, A1–ACME Corporation. Click on the Assigned checkbox.

 Save the assignment.

Assigning Items to categories

When an Item is created, it is assigned to a default category. However, you may want to perform transactions with the Item in more than one functional area, such as Inventory, Purchasing, Cost Management, Service, Engineering, and so on. You need to assign the Item to the relevant functional area. A category within a functional area is a logical classification of Items with similar characteristics.

    

1. From the Tools menu, select Categories.
2. Select the Categories Set, Control Level, and the Category combination to assign to the Item:       

Save the assignment.

Exploring Item attributes

There are more than 250 Item attributes grouped into 17 main attribute groups. In this recipe, we will explore the main groups that are used within the financial modules.

How to do it...

Let's explore some Item attributes:
Search for the Finished Good Item by navigating to Items | Master Items:

1. Click on the Find icon. You then enter the Item code and click on the Find button to search for the Item.
2. Select the tabs to review each of the attributes group:

1. In the Main tab, check that the Item Status is Active. We can also enter a long description in the Long Description field.
2. The default value of the primary Unit of Measure (UOM) can be defined in the INV: Default Primary Unit of Measure profile option. The value can be overwritten when creating the Item. The Primary UOM is the default UOM used in other modules. For example, in Receivables it is used for invoices and credit memos.

In the Inventory tab, check that the following are enabled:

• Inventory Item: It enables the Item to be transacted in Inventory. The default Inventory Item category is automatically assigned to the Item, if enabled.
• Stockable: It enables the Item to be stocked in Inventory.
• Transactable: Order Management uses this flag to determine how returns are transacted in Inventory.
• Reservable: It enables the reservation of Items during transactions. For example, during order entry in Order Management. 

   

 In the Costing tab, check that the following are enabled: 
Costing: Enables the accounting for Item costs. It can be overridden in the Cost Management module, if average costing is used.
Cost of Goods Sold Account: The cost of goods sold account is entered. This is a general ledger account. The value defaults from the Organization parameters.

1. In the Purchasing tab, enter a Default Buyer for the purchase orders, a List Price, and an Expense Account. Check that the following are enabled:
   • Purchased: It enables us to purchase and receive the Item.
   • Purchasable: It enables us to create a Purchase Order for the Item.
   • Allow Description Update: It enables us to change the description of the Item when raising the Purchase Order.
   • RFQ Required: Set this value to Yes to enable us to require a quotation for this Item.
   • Taxable: Set this value to Yes with the Input Tax Classification Code as VAT–15%. This can be used with the default rules in E-Tax.
   • Invoice Matching: Receipt Required–Yes. This is to allow for three-way matching.
2. In the Receiving tab, review the controls.

 In the Order Management tab, check that the following are enabled:

• Customer Ordered: This enables us to define prices for an Item assigned to a price list.
• Customer Orders Enabled: This enables us to sell the Item.
• Shippable: This enables us to ship the Item to the Customer.
• Internal Ordered: This enables us to order an Item via internal requisitions.
• Internal Orders Enabled: This enables us to temporarily exclude an Item from internal requisitions.
• OE Transactable: This is used for demand management of an Item.

 In the Invoicing tab, enter values for the Accounting Rule, Invoicing Rule, Output Tax Classification Code, and Payment Terms. Enter the Sales Account code and check that the Invoiceable Item and Invoice Enabled checkboxes are enabled.

Inventory Setup

Inventory:

1.       Items

-          The items in the oracle application represent product or services that you sell their components.

2.       Item Master Organization

-          It is an Inventory Organization that holds the definition of the item that are

·         Master Level – Single Value across all Child Organization

·         Organization Level – Different values in each of the organization where the item is enabled.

3.       Item Templates

-          Templates allow you to define an item easily. A template contains a list of item attributes with pre defined values.

4.       Item Attributes

-          A Collection of item attributes are additional Information about an item. Some of the item attributes identify critical item information such as planning method for an item etc…

5.       Item Attribute control

-          W can specify the control level for the item in the item attribute control window the two levels are Master and Organization level.

6.        Item Status Attributes

-          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

-          The status attributes are related to the item defining attributes. You cannot enable a status attribute if you do not set the corresponding item defining attribute to Yes

Status Attribute	Item Defining Attribute	Functional Area / Oracle Product	Functionality
Stockable	Inventory Item	Inventory	Allows you to store the item in an asset subinventory.
Transactable	Inventory Item	Inventory, Order Entry, Purchasing, Work in Process	Allows you to transact the item in Oracle Inventory, Oracle Order Entry, Oracle Purchasing and Oracle Work in Process.
Purchasable	Purchased	Purchasing	Allows you to place the item on a purchase order.
Build in WIP	-	Work in Process	Allows you to build the item on a discrete job, and/or repetitive schedule.
Customer Orders Enabled	Customer Ordered Item	Order Entry	Allows you to place the item on a sales order.
Internal Orders Enabled	Internal Ordered Item	Inventory, Order Entry, Purchasing	Allows you to create an internal sales order for the item
BOM Allowed	Inventory Item	Bills of Material	Allows you to create a bill of material for the item
Invoice enabled	Invoiceable Item	Receivables	Allows you to create an invoice for the item
Process Enabled	Process Items	OPM / INVENTORY
Recipe Enabled	Process Items	OPM / INVENTORY

Interdependences for Status Attributes

Each status attribute is dependent on the value of at least one other attribute. For example, you cannot set Stockable to Yes if you set Inventory Item to No. The interdependences for the status attributes are:

Attribute	Must be set to	If
Stockable	No	Inventory Item is set to No
Transactable	No	Stockable is set to No
Purchasable	No	Purchased is set to No
Build in WIP	No	Inventory Item is set to No OR BOM Item Type is NOT set to Standard
Customer Orders Enabled	No	Customer Ordered Item is set to No
Internal Orders Enabled	No	Internal Ordered Item is set to No
BOM Allowed	No	Inventory Item is set to No
Invoice Enabled	No	Invoiceable Item is set to No

Item Defining Attributes:

                An Item defining attribute describes the nature of an item and identifies the functional areas that all associated with the item. All the item defining attribute except MPR Planning method are check boxes.

                7 Item defining attributes are there.

Column1	Functional Area	Item-Defining Attribute
1)	Inventory	Inventory Item
2)	Procurement	Purchased Item (or) Internally ordered Item
3)	Planning	MRP Planning method
4)	Costing	Costing Enabled
5)	Engineering	Engineering Item
6)	Order Management	Customer Ordered Item
7)	Service	Serviceable Product

ITEM CROSS REFERENCE:

                It refers the item with old legacy item.

ITEM RELATIONSHIP:

                In Item relationship, we can relate two oracle items by related, substitute upsell, cross sell, and superseded.

ITEM REVISIONS:

                When you make slight modification to your item, without changing the form, fpt or function of the item, you may want to define a new revision for that item for tracking purposes. You can define any number of revisions for it.

 ITEM CATALOGS:

                Item catalogs are used to add descriptive information to an item. Use these descriptive elements to search for the items through out the application and to avoid duplicating part that already exists.

UNIT OF MEASURE:

                UOM is used for all material transactions first define class and then define conversions between UOM.

Standard:  Standard conversions define conversions that are not specific to the item.

Intra Class:  Intraclass conversions identify the relationship between the two UOM’s of same class, with respect to an item.

Inter Class: Inter class conversions identify the relationship between the two UOM’s of different classes, with respect to an item.

                While defining an item you specify the conversions * Standard * Item Specific * Both.

                Transactions are performed in the unit of measures we specify –

                Conversion happens automatically and the item quantities are updated in the primary unit of measure of the item.

LOT CONTROL:

                It is one of the inventory control technique for enforcing the use of lot numbers for a specific batch of an item and we can track that batch of items throughout their movement and out of the inventory.

SERIAL CONTROL:

                A serial number is an alphanumeric piece of information you assign to an individual unit of an item, by which we can track that item during material transaction clearly.

LOCATOR CONTROLS:

                It is a physical areal represents by a row, rack and bin. If you turned on the locator control for a sub-inventory, you must specify a locator when transacting any item in and out of that sub-inventory. Also we can turn on at Item level.

-       Flexfields – Flexifields are special text fields used by oracle to gather important information set in the enterprise.

- KFF: KFF are intelligent flexfields used to collect important data like Accounts.

MIN-MAX PLANNING

                In Min-Max planning, we can specify the maximum and minimum inventory level for an item and can maintain the on-hand balances between these two levels.

                Any planning method answers two questions

When to Order:

                When the available quantity falls below the minimum Inventory level.

How much to Order:

                The difference between the maximum stockable quantity and current available quantity.

  

Planning Level
Organization Level	Sub-Inventory Level
A) In Item Attributes choose "Inventory Planning Method"  => Min-Max	A) In Item Attributes "Inventory Planning Method" => Min-Max
B) In the Item Attributes give the	B) In the Item/Sub inventory give the
1) Min & Max Qty	1) Item
2) Order Min & Max Qty (If)	2) Min & Max Qty
3) Lot Multipliers	3) Lot Multiplier
4) Source Type	4) Order Min & Max Qty (if)
	5) Source Type
C) Run the Concurrent "Min-Max Planning"	C) Run the Concurrent "Min-Max Planning"
Planning Level : Org	Planning Level : Sub-Inventory

Under Item Master Purchasing tab, List price must be defined in the Attribute.

Restock	YES
Demand Cutoff Date	ENABLED
Supply cutoff Date	ENABLED
Allow PO	ENABLED
Allow WIP	ENABLED

                                                               

RE-ORDER POINT PLANNING

When to Order:

                When the available quantity falls below the RE-order point,

 “Re-order Print = Safety stock + Forecast demand during load time”

                                              

How much to order:

                EOQ is calculated i.e., Economic order quantity.

EOQ => √ (2 x Annual demand x Ordering cost ÷ Inventory carrying cost % x Unit Cost).

Planning level is only at Organization Level.

Set up:

1)      In Item Attributes

a)      “Inventory Planning method” : Re-Order Point

b)      Lead Time

c)       Inventory carrying cost

d)      Ordering Cost

e)      Source Type

2)      Define forecast set and forecast name

3)      Define Safety stock

a.       Manual

b.      User-defined percentage

c.       Mean-absolute deviation

4)      Run the concurrent “Re-order point”

“Create requisition” => yes.

                                                                KANBAN

When to Order:

                When the container or bin becomes empty

How much to order:

                The quantity equivalent to kanban size.

                                Kanban is a self regulating pull system that leads to shorter lead time and reduced Inventory.

Stet-ups:

1)      Create an Item “ Release time fence” = Kanban (Do not release)

2)      Define Kanban pull sequence

Item, Kanban source, Kanban location and enable check box Auto request.

3)      Generate cards and give kanban size.

4)      Replenish

Kanban card status	Kanban supply status
1. Active	1. New
2. Hold	2. Full
3. Cancelled	3. Empty
	4. Wait
	5. In process
	6. In transit
	7. Exception

Signal

Red:       Empty Transit state

Yellow: Wait

Green:  Full

Replenish Count

In sub-inventory where we are not maintaining perpetual on-hand balances, we can use replenishment counting to plan our inventory. This replenish technique is for expense and non critical     item that we don’t indent to keep track of we can use the replenishment counting only at the sub-inventory level.

Setup

For this we have to specify item/sub-inventory relationship

-  In Item sub-inventory to specify

1)      Item

2)      Min-Max Quantity (if)

3)      Enable check box Min-Max (if)

4)      Order Min-Max qty (if)

5)      Lot Multiplier (if)

6)      Source type

-  Navigate to replenish count window

1)      Enter the count name

2)      Enter the sub-Inventory in which replenish count is going to performed.

3)      Go to Lines tab, Enter the Item and specify the count type.

-  Trigger “ Process replenish Count” and “Item Replenish count report” which will trigger requisition 

Count Type

1)      On-Hand

2)      Order Maximum

3)      Order qty

Receipt types

                Substitute Receipts:

We can receive substitute Item which we define in the Item relationship, While receiving…

Setup:

-  Enable check box – Allow substitute receipt In Purchase order

-  Enable check box – Allow substitute receipt in Supplier for

-  Enable check box – Allow substitute receipt in receiving Option

Blind receipt:

After raising a purchase order if we need extra quantity against purchase order we go for Blind receipts.

-  Enable check box – Allow substitute receipt in Receiving Option

Navigate to Receiving transaction à Receipts

We can change the quantity here if Blind receipt is checked

Note:  PO match should be “3-Way”