How to Setup, Transact and Use Outside

Processing

OAUG Cost Mgmt SIG Meeting

May 20, 2014

Sue Doughty
Group Business Analysis / Cost
Emerson Network Power Systems North America
Sue.Doughty@emerson.com

Douglas Volz
Douglas Volz Consulting
doug@volzconsulting.com
Introduction

‡ Learn about the outside processing processes with Oracle EBS

‡ Find out about alternate methods

‡ Note some of common workarounds

‡ Discuss current problems you may have

Slide 2
Agenda
‡ Welcome to Our Session!
‡ Cost Management SIG Business
‡ How to Setup, Transact and Use Outside Processing
ƒ Scenario
ƒ OSP Setup
ƒ OSP Transactions: PO Receipt/OSP into WIP
ƒ OSP Transaction Inquiries for Receiving & WIP
ƒ OSP Value and Distribution Reporting
ƒ Alternate OSP Solutions

‡ Conclusions

Slide 3
OAUG Cost Management SIG Business
- Oracle Conferences (http://oaug.org/communities/announcements-news)
‡ Below is a sample, for the latest information go to:
ƒ http://oaug.org/communities/announcements-news

‡ OAUG Connection Point® — AppsTech

ƒ July 22-23, 2014
ƒ Pittsburgh Marriott City Center, Pittsburgh, PA

‡ 2014 NorCal OAUG Training Day

ƒ August 26, 2014
ƒ San Jose DoubleTree Hotel, San Jose, CA

‡ OpenWorld 2014
ƒ September 28—October 2, 2014
ƒ Moscone Center, San Francisco, CA

Slide 4
OAUG Cost Management SIG Business
- June Elections
‡ June Elections for OAUG Cost SIG Officers:
ƒ President, Vice-Presidents (2), Membership Chair (1)

‡ President (SIG Coordinator):

ƒ Runs the Cost Mgmt SIG, organizes speakers for monthly webinars
ƒ Sets Up SIG meetings at Collaborate and Oracle OpenWorld
ƒ Meets with Oracle Cost Development on enhancements and product issues

‡ Vice-Presidents:
ƒ Shares in the above tasks, substitutes for President on monthly webinars as needed
ƒ (New! Desired!) LinkedIn OAUG Cost Management Q&A Forum
ƒ (New! Desired!) Organizes Enhancement Request Feedback from Members

‡ Membership Chair:
ƒ Keeps track of membership lists
ƒ Updates OAUG Cost Management Website

Slide 5
 OAUG Cost Management SIG Business
- Cost Management SIG 2014 Election Timeline

Activity Date
Send email notice to all members announcing the opening for the May 26
call for candidates
Send reminder email to all members regarding call for candidates June 4
Close call for candidates & collect candidate bios by: Midnight
June 6
Send out ballots June 11
Send out ballot reminder June 18
Close elections Midnight
June 20
Notify candidates of results June 23
Election results notice to all members June 26

Slide 6
Scenario and Overall Process

Slide 7
Why, What, How?

ƒ Why have outside processing?

ƒ You receive goods into receiving, inspect and deliver?

• Process PO Receipt/OSP into WIP

ƒ How can you see its progress?

ƒ How can you see the results?

ƒ What is the financial accounting?

Slide 8
Outside Processing Process Flow For Assemblies
Buyer
Suppliers
Receiver
Control
Prod

Slide 9
Types of Supported OSP:
‡ Discrete Work Order OSP
• Work order task requires services from outside supplier
• Looks like a P/R, PO setup but receive a service into WIP

‡ SubContract Manufacturing
• New functionality starting in Release 12.1
• Requires separate licensing from Oracle
• Four flavors:
– Partial Outsourcing
– Buy/Sell Outsourcing
– Full (Non-Chargeable) Outsourcing
– Chargeable / Skikyu Outsourcing (PacRim countries)
• From Collaborate14 see the following presentation:
– Outsourced Manufacturing for Discrete Manufacturing Industries in
Oracle E-Business Suite

‡ OSP Not Supported For:

• Flow Manufacturing (Oracle MetaLink/MOS Doc ID 732866.1)
• Work-Orderless (Oracle MetaLink/MOS Doc ID 1464310.1)

Slide 10
 Background Information for Purchase Orders

‡ May have multiple lines per PO HEADERS

(PO_HEADERS_ALL)
PO

‡ May have multiple scheduled

receipts and PO releases per PO LINES
(PO_LINES_ALL)
line

‡ May have multiple PO

distributions per line or PO SHIPMENTS PO RELEASES
(PO_LINE_LOCATIONS_ALL) (PO_RELEASES_ALL)
scheduled receipt

‡ Four stored accounts per PO PO DISTRIBUTIONS

distribution (PO_DISTRIBUTIONS_ALL)

Slide 11
Types of Receipts

‡ Items Vs. No Items:

• Expense Receipts may or may not have an item number
• Inventory Receipts may be for an expense item or inventory asset item
• WIP/OSP is for both an OSP item and a WIP resource at the same time

‡ Three Types of PO Destinations:

• Inventory
• Shop Floor (WIP / OSP)
• Expense

‡ Direct Vs. Two-Step (Receive then Deliver separately):

• The receiving routing (item master setting) allows you to pre-select if inspection
is required

‡ Unplanned:
• You can receive goods or services temporarily as an unordered receipt

Slide 12
PO Account Sources
(Standard Workflow / Account Generator Rules)

Expense Inventory / WIP

Type of Account Destination Destination

Cost Center or Matl / WIP Job

Charge Account Expense Account OSP Account
Expense A/P Inventory A/P
Accrual Account Accrual Account Accrual Account

Cost Center or Inventory IPV

Variance (IPV) Account Expense Account Account

Default
Budget Account Expense Budget Subinv/Org
Account Encumbrance
Account

Slide 13
OSP Setup

Slide 14
Outside Processing Setup

1. Enable the OSP Workflow

2. Create the OSP item in the Master Organization
3. Create one OSP resources for scheduling to be used on all OSP
routings (optional)
4. Create a unique OSP resource for each assembly being built
(needed for costing and needed for the Import Requisition program
to create the purchase requisition)
5. Create the OSP routing
6. Rollup the new routings and Cost Update
7. Create the work order
8. Move into the outside processing operation (and run Import Reqs)
9. Run AutoCreate POs

Slide 15
Outside Processing Item Controls
- Two Concepts at the Same time

‡ WIP/OSP is for both:

• An OSP item
• And a WIP resource

‡ OSP Item Controls:

• User Item Type: Outside Processing
• Not Stockable
• Not an Inventory Item
• Not Transactable
• Not Costed
• No Inventory Value (represents a service)

Slide 16
Outside Processing Profile Controls
- WIP: Enable Outside Processing Workflow
Menu path: System Administrator => Profile => System

After lines are created by the OSP Shop Floor Move in the PO_REQUISITION_INTERFACE, this
profiles enables the OSP workflow to fire the Requisition Import concurrent program automatically.

Slide 17
Outside Processing Item Controls
- Main Item Controls
Menu path: Inventory => Items => Organization Items => Main tab

Can be helpful to put “real” item

number in the description of the
resource, for example, use the
same inventory number with a
suffix like a -S

Standard Oracle OSP procedures requires a unique OSP resource for each OSP item

Slide 18
Outside Processing Item Controls
- Inventory Item Controls
Menu path: Inventory => Items => Organization Items => Inventory tab

Slide 19
Outside Processing Item Controls
- Cost Controls
Menu path: Inventory => Items => Organization Items => Costing tab

Costs are from

the OSP
resource, not
the item

Slide 20
Outside Processing Item Controls
- Purchasing Controls
Menu path: Inventory => Items => Organization Items => Purchasing tab

List Price
defaults to the
purchase
requisition
Unit Type: Assembly or Resource
Assembly: You purchase an outside processing item based on
the number of assemblies you ship to the supplier.
Resource: You purchase an outside processing item based on the number
of assemblies times the resource usage rate or amount
Slide 21
Outside Processing Item Controls
- Lead Times
Menu path: Inventory => Items => Organization Items => Lead Times tab

Use the item lead

times to schedule the
OSP service, including
the time it takes to
create the P/R, PO and
receive the service
from the Supplier.

Slide 22
Set Up the OSP Resource
Menu path: Cost Management – SLA => Setup => Sub-Elements => Resources

You can also use a non-costed resource for

scheduling lead times on the routing. Non-
costed resources have a time-based UOM for
scheduling purposes. Could be DAY, HR, etc.

Slide 23
Set Up the OSP Resource
Menu path: Cost Management – SLA => Setup => Subelements => Resources

For OSP resources, the

Absorption
Account defaults
to the Receiving Account.
This is normal behavior.
See what happens when it
is changed!

This example assumes OSP resource has the standard rate checked. If the resource
definition has standard rate checked (Yes), then the WIP job earns OSP at the standard cost.
Slide 24
Set Up the OSP Resource
Menu path: Cost Management – SLA => Setup => Subelements => Resources

‡ OSP Resource Limitations:

ƒ Need to create a unique OSP resource for each assembly being built
(for costing and for the Import Requisition program to create the P/R)
ƒ Should use a naming convention for OSP resources for your company.
An example would be to start every OSP Resource with OP and a
sequential number.
ƒ But be careful, Resource Name field is limited to 10 positions.

‡ OSP Resource Units of Measure:

• Don’t use a time-based UOM for Costing (HR, DAY, etc.), the resource
unit cost will vary with the hours on the routing
• Don’t use a currency based resource (USD, GBP, CAD, EUR, etc.) as
the purchase requisition will not be created
• Use fixed, per item UOMs, such as EA, EACH and such

Slide 25
Set Up the Routing
Menu path: Bills of Material => Routings => Routings

Slide 26
Set Up the Routing
Menu path: Bills of Material => Routings => Routings

Slide 27
Set Up the Routing
Menu path: Bills of Material => Routings => Routings

This ensures the Cost Rollup

will cost the OSP operation
into your results.

Slide 28
Set Up the Routing Resources
Menu path: Bills of Material => Routings => Routings => Operation Resources

In WIP, when you move into the OSP operation a requisition line
is sent to the Open Requisitions table
Slide 29
Rollup Up the New Routing
Menu path: Cost Management – SLA => Supply Chain Costing => Supply Chain Cost Rollup

Slide 30
 Rollup Up the New Routing
Menu path: Cost Management – SLA => Supply Chain Costing => Supply Chain Cost Rollup

Rollup ID: 196392 Report Date: 07-MAY-2014 10:24:10

Supply Chain Bills of Material Indented Cost Report Page: 2
Cost Type: Pending
Buy Cost Type: Revision Date: 2014/05/07 23:59:59
Assignment Set: Alternate BOM:
Conversion Type: Corporate Alternate Routing:

Organization: M1 Seattle Manufacturing Currency Code: USD

Assembly: MC31749 Standard Steel Case Category: COMPONENT.MECHANICAL UOM: Ea

Include In Rollup
| Based On Rollup Currency
| | Asset/Costed Code
Op Item/ Description/ Org/ Last | | | Yield/ Planning % Quantity/ Shrink/ Extended Qty/ Item Unit Cost/ |
Level Seq Cost Element Sub-Element Department Rev | | | Phtm Basis | UOM Rate Or Amount Basis Factor Rate Or Amount Res Unit Cost Extended Cost |
----------- ---- -------------- ------------- ---------- ---- --- --- --- ---- ---------- ----- --- -------------- ------------ -------------- --------------- --------------- ---
0 MC31749 Standard Stee M1 A Yes Yes No Item Ea 1.00 0.00 1.00 28.55833 USD
10 Resource SHEAR METAL_FAB Yes Lot HR 2.00 0.05 2.00 55.00000 5.50000
10 Overhead Indirect METAL_FAB Res value USD 0.15 5.50 0.15 0.82500
10 Overhead Mgmt METAL_FAB Res value USD 0.03 5.50 0.03 0.16500
10 Resource PRESSBRAKE METAL_FAB Yes Lot HR 2.00 0.05 2.00 45.00000 4.50000
10 Overhead Indirect METAL_FAB Res value USD 0.15 4.50 0.15 0.67500
10 Overhead Mgmt METAL_FAB Res value USD 0.03 4.50 0.03 0.13500
10 Resource LBR-FAB METAL_FAB Yes Lot HR 2.00 0.05 2.00 6.50000 0.65000
10 Overhead Benefits METAL_FAB Res value USD 0.25 0.65 0.25 0.16250
10 Overhead Equip/Tool METAL_FAB Item USD 0.10 1.00 0.10 0.10000
10 Overhead Facility METAL_FAB Item USD 0.10 1.00 0.10 0.10000
20 Resource DRILL METAL_FAB Yes Item HR 0.17 1.00 0.17 40.00000 6.66667
20 Overhead Indirect METAL_FAB Res value USD 0.15 6.67 0.15 1.00000
20 Overhead Mgmt METAL_FAB Res value USD 0.03 6.67 0.03 0.20000
20 Resource LBR-FAB METAL_FAB Yes Item HR 0.17 1.00 0.17 6.50000 1.08333
20 Overhead Benefits METAL_FAB Res value USD 0.25 1.08 0.25 0.27083
20 Overhead Equip/Tool METAL_FAB Item USD 0.10 1.00 0.10 0.10000
20 Overhead Facility METAL_FAB Item USD 0.10 1.00 0.10 0.10000
30 Outside Proces ANODIZING OUTSIDE Yes Item Ea 1.00 1.00 1.00 1.50000 1.50000
40 Resource LBR-TEST TESTING Yes Item HR 0.03 1.00 0.03 10.00000 0.34000
40 Overhead Benefits TESTING Res value USD 0.25 0.34 0.25 0.08500
40 Overhead Equip/Tool TESTING Item USD 0.10 1.00 0.10 0.10000
40 Overhead Facility TESTING Item USD 0.10 1.00 0.10 0.10000

.1 10 RW94713 Sheet Metal M1 A Yes No Yes No Item 1.00 100 FT2 7.00 0.00 7.00 0.60000 USD
Material Material Item USD 0.60 1.00 4.20 4.20000

--------------- ---
28.55833 USD

Slide 31
Rollup Up the New Routing
Menu path: Cost Management => Item Costs => Item Costs => Views => Sub-element by Operation

The $1.50 comes from the

Pending Cost Type for the
resource.

Cost Element Standard Cost Report Value Difference Percent

-------------------- ---------------- ---------------- ---------------- ----------
Material 4.20000 4.20000 0.00000 0.0
Material Overhead 0.00000 0.00000 0.00000 0.0
Resource 18.74000 18.74000 0.00000 0.0
Outside Processing 1.50000 1.50000 0.00000 0.0
Overhead 4.11833 4.11833 0.00000 0.0
---------------- ---------------- ---------------- ----------
Total 28.55833 28.55833 0.00000 0.0
================ ================ ================ ==========

Slide 32
Create the Work Order
Menu path: Work in Process => Discrete => Discrete Jobs

Both Count Point and

Autocharge need to be checked

Slide 33
Work Order Scheduling
Menu path: Work in Process => Discrete => Discrete Jobs

4 days lead time is from the

OSP item OP98997

Slide 34
Move into the OSP Operation to Start P/R Process
Menu path: Work in Process => Move Transactions => Move Transactions

Requisition Import Run Report Date: 07-MAY-14

-------------------------------------------------
Number of approved requisitions created = 1
Number of unapproved requisitions created = 0
Number of interface lines in error = 0
-------------------------------------------------
End of Report

Automatically kicked off when

moved into Queue

Slide 35
Move into the OSP Operation to Start P/R Process
Menu path: Work in Process => Discrete => Discrete Jobs

New for Release 12, have to

be set up as an employee to
perform the shop floor move.

Slide 36
Purchase Requisition Creation
Menu path: Purchasing Super User => Requisitions => Requisition Summary

Requisition Import Run Report Date: 07-MAY-14

-------------------------------------------------
Number of approved requisitions created = 1
Number of unapproved requisitions created = 0
Number of interface lines in error = 0
-------------------------------------------------
End of Report

Slide 37
Purchase Requisition Creation

‡ P/R Creation Timing:

• The timing of the creation of the purchase requisition is
based on the setting of the WIP parameter Requisition
Creation Time.
• At Job/Schedule Release, a purchase requisition is created for
all outside processing operations on a job or schedule when you
release the job or schedule.
• At Operation, a purchase requisition is created when you move
into the Queue intraoperation step of an outside processing
operation.
• You then use Purchasing's Autocreate feature to convert these
requisitions to purchase orders or releases against blanket
agreements.
• Manual, requires you to manually create purchase requisitions
in Oracle Purchasing.

Slide 38
Purchase Order Creation
Menu path: Purchasing Super User => Purchase Orders => Autocreate

List Price was set to

zero

Can also add to existing PO

or Release

Slide 39
Purchase Order Creation
Menu path: Purchasing Super User => Purchase Orders => Autocreate

Slide 40
Purchase Order Creation
Menu path: Purchasing Super User => Purchase Orders => Autocreate

1) Change unit
price

2) Approve PO

Slide 41
Purchase Order Creation
Menu path: Purchasing Super User => Purchase Orders => Autocreate

“Shop Floor” destination types

is for OSP

PO Shipment is for
the OSP Item

PO Distribution holds the Accrual,

Variance (IPV) and Charge accounts.
Charge account for OSP is not used;
OSP Account on the work order is used.

Slide 42
Purchase Order Creation
Menu path: Purchasing Super User => Purchase Orders => Autocreate

PO Distribution tied
to the work order,
operation and OSP
resource

Slide 43
Purchase Order Review
Menu path: Purchasing Super User => Purchase Orders => Purchase Order Summary

For Purchasing, OSP is an OSP item that you receive. Purchasing calls Outside Processing a
For WIP, OSP is an OSP resource that you earn. “Shop Floor” Destination

OSP is both an item and a resource at the same time.

Slide 44
Purchase Order Review
Menu path: Purchasing Super User => Purchase Orders => Purchase Order Summary => Shipments

Slide 45
Purchase Order Review
Menu path: Purchasing Super User => Purchase Orders => Purchase Order Summary => Shipments => Distributions

Slide 46
WIP Outside Processing PO Receipt

Slide 47
 Receive the OSP Service
Menu path: Purchasing Super User => Receiving => Receipts

Don’t forget to click here. If

you do not you will create a
PO Receiving “Shipment
Header” transaction but no
Receiving Shipment lines and
no receiving transaction.

Slide 48
Receive the OSP Service
– Transaction Processing Options
Menu path: System Administrator => Profile => System

‡ RCV: Processing Mode Profile

• Batch – the receiving forms insert transaction information into the receiving interface tables. The
receiving forms take into account all pending transactions, but Purchasing does not update the
transaction history, source documents, and supply information until the transactions are processed
from the receiving interface tables.
• Immediate – when you save your work, the receiving forms call the Receiving Transaction
Processor for the group of transactions you have entered since you last saved your work.
• On-Line – gives best online messages but may hold up the screen refresh, the receiving forms
calls the Receiving Transaction Processor when you save your work, for each transaction.

Slide 49
Where Can You See This OSP Receipt?
Menu path: Cost Management – SLA => View Transactions => Receiving Transactions

PO Receive transactio
has the PO Accrual
Accounting entry

For Shop Floor destinations, the Deliver transaction has no

accounting in PO/Receiving
(WIP has the OSP resource accounting)

Slide 50
Where Can You See This OSP Receipt?
Menu path: Cost Management – SLA => View Transactions => Receiving Transactions => Tools => View Accounting

PO Receive transaction
has the PO Accrual
Accounting entry

Slide 51
Where Can You See This OSP Receipt?
Menu path: Cost Management – SLA => View Transactions => Resource Transactions

Slide 52
Where Can You See This OSP Receipt?
Menu path: Cost Management – SLA => View Transactions => Resource Transactions => Resource Distributions

Receiving Inspection accounting entry

Says Resource absorption but it is really

“Receiving Inspection”

Slide 53
Where Can You See This OSP Receipt?
Menu path: Cost Management – SLA => View Transactions => Resource Distributions

Why Not $170 into and out of Receiving?

WIP Value is correct, 100 units completed at $1.50
standard cost

Slide 54
Why Not $170? Vision Environment . . .
Menu path: Purchasing Super User => Purchase Orders => Purchase Orders => Actions => Manage Tax

Nonrecoverable Tax Settings

Slide 55
Where Do These WIP Accounts Come From
Menu path: Cost Management – SLA => Setup => Sub-Elements => Resources

This account is not used for

… the Resource Cost
Worker hit the Receiving
Inspection Account, not the
Absorption Account

This account is used

for OSP PPV

Slide 56
Where Do These WIP Accounts Come From
Menu path: Cost Management – SLA => Setup => Account Assignments => Organization Parameters

These accounts are being shared

with Receiving and Inventory –
DON’T DO THIS

Slide 57
 OSP Destinations
Purchase Order Accounting Accrual Summary by T Account

Transaction Receiving Value Inventory A/P Accrual

Receipt 181.73 181.73
Delivery to WIP 181.73
Invoice Match 181.73

WIP OSP Value Purchase Price Variance

Delivery to WIP 150.00 31.73

Trade Payables
Invoice Match 181.73
If self-assessing state taxes,
would have a second line for
accruing self-assessed taxes

Slide 58
Process PO Receipt for OSP

Slide 59
Process OSP PO Receipt into WIP (Oracle WIP)

Start Process PO OSP Receipt into WIP – Delivery into WIP

Supply is relieved since the

goods are going into WIP
Enter
PO Delivery
Transaction RCV_SHIPMENT_
MTL_SUPPLY
LINES

The
TheCost
WIPResource
Cost Processor
Worker
creates the resource/overhead
Receiving entries, & the accounting for
Transaction RCV_SHIPMENT
resources and resource
Processor HEADERS
overheads

RCV WIP Cost XLA_

RCV_ WIP_ WIP_TRANSACTION Create
Transactions TRANSACTIONS
Transaction TRANSACTIONS _ACCOUNTS
AE_HEADERS
Accounting XLA_AE_LINES
Interface Processor

Purchasing creates shadow delivery

transaction (only the receipt is accounted for WIP_PERIOD_
GL_INTERFACE
in Purchasing) and WIP creates the accounted BALANCES
for OSP “delivery” transaction

Accounting
Entries
Created

Slide 60
So Where Are We Now?
ƒ We have setup and received Outside Processing

ƒ How do we see Outside Processing Transactions on Reports?

• Receiving Account Distribution Detail Report
• WIP Account Detail Report
• WIP Account Summary Report

ƒ How do we see Receiving Value?

• Receiving Value Report
• All Inventories Value Report

Slide 61
Receiving Value Report
Menu path: Cost Management – SLA => Reports => Valuation Reports => Receiving Value

Slide 62
Receiving Value Report
Menu path: Cost Management – SLA Vision Operations => Reports => Valuation Reports => Receiving Value

Slide 63
Receiving Errors
Menu path: Cost Management – SLA Vision Operations => Requests => Submit a New Request =>
Receiving Interface Errors Report

Slide 64
Receiving Errors
Menu path: Cost Management – SLA Vision Operations => Requests => Submit a New Request =>
Receiving Interface Errors Report

Slide 65
Receiving Errors
– Period Close Pending Transactions Report
Menu path: Cost Management – SLA Vision Operations => Reports => Transactions =>
Period Close Pending Transactions Report

Slide 66
Receiving Errors
– Period Close Pending Transactions Report
Menu path: Cost Management – SLA Vision Operations => Reports => Transactions =>
Period Close Pending Transactions Report

Slide 67
Outside Processing Solutions

1. Use Standard Functionality – Requires OSP Item and OSP Resource

2. Use Standard Functionality But Avoid Having new OSP resources for
each OSP Item

3. Use Expense POs for Outside Processing

4. Use Inventory POs for OSP

Slide 68
2) Alternate OSP Solutions
Use Standard Functionality But Avoid Having new OSP resources for each OSP Item

ƒ Standard functionality requires too many OSP resources. How to avoid

having a new OSP resource for each OSP Item:
• Use OSP in normal way but link OSP resource to an OSP dummy item
• Write a database trigger or concurrent program to correctly populate the
assembly_item_id into the purchase requisition open interface table

ƒ Advantages:
• Only need the number of resources required to correctly set the cost of the vendor
service. And you could name the resource by vendor name and operation
sequence. The OSP resource is still set to “PO MOVE” autocharge type.
• OSP purchase order is linked to work order, with the appropriate leadtime
scheduling.
• Standard Oracle process plus the Cost Rollup includes OSP costs
• Personnel at receiving dock able to see the work order the receipt goes to.

ƒ Disadvantages:
• As needed, to avoid directly tying the assembly being built with the OSP process,
may need to automate the creation of OSP items
• May still experience OSP receiving errors
Slide 69
3) Alternate OSP Solutions
Use Expense POs for Outside Processing

ƒ Charge Expense POs and Relieve the Expense by:

• Charge a non-osp resource as the units are built on the routing
• Charge the vendor service on EXPENSE purchase orders, hitting the same or
similar account number that the “dummy” OSP resource credits (resource
absorption account)
ƒ Advantages:
• Cost rollup includes OSP cost for the assembly
• Limited setup needed, don’t need “dummy” OSP item or OSP receipt or link
between OSP resource and OSP item, smaller number of OSP resources to setup
• Assembly includes the lead time on the dummy OSP resource on the routing
• Don’t have the interface/transaction issues common with the OSP PO receipt,
avoid using the shop floor move interface which creates a WIP costing entry
ƒ Disadvantages:
• OSP purchase order is NOT linked to work order
• Personnel at receiving dock not able to see the work order the receipt goes to
• Have to manually set up Expense PO for the vendor service
• “Muddy up” the OSP Absorption Account and create another reconciliation
needed for the account

Slide 70
4) Alternate OSP Solutions
Use Inventory POs for Outside Processing

ƒ Earn the OSP cost on the routing by:

• Better variation for avoiding Oracle OSP setup. The cost of the OSP service and
the leadtime for the OSP service is setup using the same item on the BOM
• Receiving personnel receive the OSP item into a OSP subinventory and the OSP
item quantities are backflushed into WIP or manually “pushed” to the WIP jobs
ƒ Advantages:
• Bypasses the OSP interface/transaction issues common with the OSP PO receipt
• Cost rollup includes OSP cost for the assembly
• Limited setup needed, don’t need “dummy” OSP item or OSP receipt or link
between OSP resource and OSP item, smaller number of OSP resources to setup
• Assembly includes the lead time on the dummy OSP resource on the routing
• Planning can automatically give purchase order recommendations for the OSP
service, per the leadtime for the OSP items
• No special receiving instructions needed for OSP, works just like a normal
Inventory receipt into a subinventory, much easier for CLIENT to understand
ƒ Disadvantages:
• OSP purchase order is NOT linked to work order
• Need to set up dummy OSP items on the bills of material

Slide 71
Common Cost Mgmt Customizations for OSP & Receiving

ƒ Multi-Org Reporting for:

• Receiving Account Summary Report
• WIP Account Summary Report
• Receiving Value Report (listing OSP information)
• Receiving Interface Errors (and the other interface tables as well)
• WIP Resource Efficiency Reports
(see which WIP jobs have not earned OSP, so you don’t close them early)

ƒ Replace Missing R11i Functionality

• Receiving Value by Destination Account Report
(needed when you accrue expenses at time of receipt)

Slide 72
Conclusions

‡ Outside Processing can be very useful but it involves lots of setup steps
and can be difficult to use without proper training

‡ Careful OSP training for Purchasing, Production Control and Receiving

staff is essential

‡ Careful monitoring of interface tables is also required, OSP can get stuck
in 2 tables: RCV_TRANSACTIONS_INTERFACE, and
WIP_COST_TXN_INTERFACE

‡ Many companies use custom reports, especially for to report additional

OSP information on Receiving Value, Receiving Interface and distribution
accounting reports

Slide 73
Where to get more information

‡ Oracle Cost Management SIG Minutes

http://www.volzconsulting.com/oaugcostsig.html
ƒ July 2010: WIIFM Release 12 New Cost Features
ƒ March 2011: R12 A/P Accruals
ƒ June 2011: Receiving as it Relates to Cost Management
ƒ April 2012: R11i & R12 Open Interfaces for Month-End Close

‡ Oracle Corporation
ƒ Metalink/My Oracle Support:
Outside Processing Frequently Asked Questions (Doc ID 1282909.1)
ƒ Oracle Cost Management User Guide
ƒ Oracle Purchasing User Guide
ƒ Oracle Work in Process Guide on Outside Processing, Chapter 11

Slide 74
Acknowledgements

ƒ You, the OAUG Cost Mgmt SIG, thanks for attending this session

Slide 75
Any Questions?

Sue Doughty Doug Volz

Sue.Doughty@emerson.com doug@volzconsulting.com
http://www.emersonnetworkpower.com www.volzconsulting.com
+1 614.841.6610 +1 510.755.7050

Slide 76
Douglas Volz (doug@volzconsulting.com)
Professional Background
Doug Volz is a Senior Architect and Business Advisor for Oracle EBS projects, specializing in Cost Management
and Intercompany processes. He has over 35 years accumulated experience, including 5 years in Oracle
Development (co-designing Oracle Cost Management), 19 years implementing Oracle EBS in multiple countries
and 12 years in industry for Cost and Accounting Management positions. His Manufacturing and Cost systems
experience covers project management, software design/development, delivery and consulting services, for both
Oracle Corporation and multiple international consulting firms. Prior to his systems career, Mr. Volz also held
management accounting positions for telecommunications, defense and electronics companies.

In his consulting roles, Doug has served over 100 clients. Many of these were multi-org, multi-currency with
global footprints and intercompany accounting requirements. Countries include US, Mexico, UK, Netherlands,
Belgium, Taiwan, PRC, Norway, Japan, Italy, Switzerland and Germany.

Doug has been recognized as the 2014 OAUG Member of the Year. He leads the OAUG Cost Management
Special Interest Group and freely gives out valued business advice to his SIG members and to the Oracle
community at large. Doug also presents at OAUG Collaborate, UKOUG and Oracle OpenWorld conferences. In
addition he advises and participates on Oracle Customer Advisory Boards and frequently meets with the Oracle
Cost Development team.

Core Expertise Experience

‡ Multi-organization, Multi-currency Global ‡ Sample of clients served:
Implementations ¾ Beckman Coulter (US)
‡ Cost Accounting Business Solutions ¾ Celgene (US, Switzerland)
‡ Project Management and Senior Project Advisor
¾ Garlock Sealing Tech. (US, Germany)
‡ Core manufacturing and distribution processes
 Cost Management ¾ Logitech (US, Taiwan, P.R.C.)
 Inventory ¾ Matsushita (UK, Mexico)
 Bills of Material ¾ NTL (UK, now Virgin Media)
 WIP ¾ Onninen AS (Norway)

Helping people use Oracle Applications since 1990 www.volzconsulting.com

End of Presentation

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