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Internal Order Process in Oracle Order Management

0 comments In multi-site companies, One of common business practices is internal fulfillment. There is two common scenarios that need Internal-Fulfillment from another operating unit:

Manufacturing facility is centrali e but has multiple distribution sites. Manufacturing operations are spread out from many locations.

The demand can come from mar!eting plan of distribution sites or by min-ma" planning at source organi ation. In Figure below, #ision $ingapore %&edger $ingapore' is a distribution operation unit. $ingapore (istribution )enter%$*' follows the sales plan, it need to replenish the good from $eattle Manufacturing %M+'

The Internal Orders process content following step: +. ,ccording to $ale plan, #ision $ingapore%#$' creates an internal re-uisition. This internal re-uisition is transferred as internal sales order for #ision Operation %#+' *. #ision Operation pic! releases the internal sales order to $eattle Manufacturing %M+' .. M+ ships the goods to $*. $* recei/es the goods. 0. #+ issues an ,1 inter-company in/oice to #$ at transfer price. 2. #$ issues an inter-company payable to #+.

Setup Internal Order Process (Oracle Order Managment)

0 comments This post will guide thought how to setup an Internal Order Process in Oracle Order Management and Oracle Inventory. 1-Create Item -Navigate to Inventory -> Items -> Master Items -Select organization V1 (Vision Operations) -Enter Item Name and Description (starting it! OV" as initials) Item # OVT_Internal_Order1 Description # OVT Internal Order Flow 1 -$o to "ools -> %opy &rom# 'pply t!e (Purchased Item( template

-$o to t!e Order Management ta) and select t!e c!ec*)o+ ,or Internal Ordered Internal Orders Enabled -Save t!e record -$o to "ools -> Organization 'ssignment -> %!ec* M1 and D1 -Save t!e record 2-Internal Customer Setup

- Navigate to %-stomers -> Standard Enter t!e ,ollo ing searc! criteria and clic* on &ind Name # Vision %-stomer N-m)er # 1021 - %lic* on %-stomer ro - .lace c-rsor on t!e c-stomer address starting it! /011 123t! 've45 Seattle - %lic* on t!at ro - Select t!e 6-siness .-rposes ta)

- .lace c-rsor on t!e 7sage ,ield Ship To and clic* Open - Veri,y t!e Salesperson as No Sales %redit - Notice t!e ,ollo ing in,ormation on t!e internal )loc* (see screens!oot )elo )

8ocation # M1- Seattle Organization # Seattle Manu acturin! "!is set-p is to map t!e c-stomer address to an internal receiving organization4 'n internal sales order ill appear li*e a reg-lar order5 !o ever act-al s!ipping to an internal organization (in t!is case M1) is done )y creating t!is association4 3-Setup Shipping Networ !etween In"entor# Organi$ations - Navigate to Inventory -> Set-p -> Organizations -> S!ipping Net or*s - %lic* on &ind - .lace t!e c-rsor in t!e D1 to M1 ro (t!is ro ill already e+ist in a Vision environment) and veri,y t!e ,ollo ing or ma*e c!anges !ere needed4

"rans,er "ype # Intransit &O6 # "ecei#t 9eceipt 9o-ting # Standard Internal Order 9e:-ired # chec$ed - Save t!e record i, any c!anges ere made %-&e'ine Inter-(ocation )ransit )ime - $o to Inventory -> Set-p -> Organizations -> Inter-8ocation "ransit "imes - $o to Vie -> &ind and enter

Origin "ype # %ocation Origin # &1- Sin!a#ore Destination "ype # %ocation Destination # M1- Seattle - Enter t!e S!ip Met!od and Intransit "ime s-c! as # S!ip Met!od # &'% Intransit "ime # ( De,a-lt Met!od # chec$ *-Open In"entor# +ccounting Periods - $o to Change Organization and select M1 or D1 as necessary - Navigate to Inventory -> 'cco-nting %lose %ycle -> Inventory 'cco-nting .eriods

- Veri,y i, t!e Sysdate is in an Open acco-nting period5 else open t!e same )y clic*ing on t!e )-tton %!ange Stat-s5 and clic*ing o* to t!e :-estion ;Open t!is .eriod<; ,-Create On-hand 'or Item in Source In"entor# Organi$ation - $o to %!ange Organization and select D1 - Navigate to Inventory -> "ransactions -> Miscellaneo-s "ransaction - %reate a miscellaneo-s receipt transaction it! t!e ,ollo ing in,ormation Item # OVT_Internal_Order1 S-)inventory # F)I 7OM # Ea =-antity # 1*00 'cco-nt # Select the account alias Miscellaneous +01-*,0-((-0-0000-000. - Save record - Navigate to Inventory -> On-!and5 'vaila)ility -> On-!and =-antity and veri,y t!e on-!and :-antity ,or t!e item --&e'ine )ransaction )#pe and Order Source in Purchasing setup - Navigate to .-rc!asing -> Set-p -> Organizations -> .-rc!asing Options - %lic* on t!e Internal 9e:-isitions ta) - Notice t!e Order "ype and Order So-rce set-p

Internal 9e:-isition Order "ype # Mi/ed ("!e internal sales order in OM ill )e created it! t!is order type) Internal 9e:-isition Order So-rce # Internal ("!e internal sales order ill )e imported into OM it! t!is order so-rce) .-&e'ine Inter-(ocation )ransit )ime - $o to Inventory -> Set-p -> Organizations -> Intercompany "ransaction &lo s

- %lic* on Intercompany 9elation

Intercompan# In"oicing Setups

1/ For a single process flow %one procure-to-pay cycle or order-to-cash cycle', you can model Oracle to generate intercompany in/oices between two or more operating units. The building bloc! of intercompany in/oicing is the setup of intercompany transaction flow.

The intercompany transaction flow establishes the physical flow of goods and financial flow relationship between two operating units. The intercompany transaction flow establishes the relationship between one operating unit %!nown as $tart Operating 3nit' and another operating unit %!nown as 4nd Operating 3nit' about the actual mo/ement of goods. $imilarly, it also establishes the in/oicing relationship between $tart Operating 3nit and 4nd Operating 3nit. 2/ Intercompany transaction flow is of two types 5 shipping flow and procuring flow. 6ou need to setup intercompany transaction flow of type shipping when selling operating unit is different from shipping operating unit. 6ou need to setup intercompany transaction flow of type procuring when buying operating unit is different from recei/ing operating unit.

3/1 7y enabling ad/anced accounting for an intercompany transaction flow, you would be able to generate multiple intercompany in/oices between different operating units for the same physical mo/ement of goods.

Oracle supports intercompany in/oicing for both shipping and procuring flows. 8owe/er, you need to use the 9,d/anced ,ccounting: option for enabling intercompany in/oicing for procuring flow e/en if it in/ol/es only two operating units. If you do not enable 9,d/anced ,ccounting: option at the intercompany transaction header, then no logical transactions will be generated and no intermediate nodes can be defined 3/2 6ou need to define intercompany relations between each pair of operating units in the intercompany transaction flow. ;hen ad/anced accounting is enabled for an intercompany transaction flow, you will be able to define multiple intercompany relationships between different operating units. If ad/anced accounting is set to <o, then an intercompany transaction flow can ha/e only one intercompany relation %it is between start operating unit and end operating unit'.

,t each pair of intercompany relationship, you will define the intercompany accounts, and currency code to be used on ,1 and ,= in/oices. <ote that in Figure ..+ - Intercompany Transaction Flow, physical goods ne/er flow through intermediate operating unit. Oracle creates 9&ogical Material Transactions: between the operating units, based on which intercompany in/oices between multiple operating units are raised. 3/3 <o logical transactions will be created when you do not choose 9,d/anced ,ccounting:. For e"ample, the transactions in Figure 0 can be bro!en down as depicted in Figure >.

&ogical transactions are useful to record financial transactions between two operating units without physical mo/ement of goods. For e"ample, in Figure ..* - &ogical Material Flow, #ision ?apan is an intermediate operating unit through which no physical goods flow. 8owe/er, it is a financial intermediate node, which is in/ol/ed in intercompany in/oice flow. To facilitate accounting in the intermediate O3s, logical intercompany

receipt and issue transactions are created. $imilarly, logical receipt and logical sales order issue transactions are created for those receipts and issues that are not accompanied with physical receipt and issue of goods. 3/% ,d/anced ,ccounting: option is not a/ailable for internal re-uisitions 5 internal sales order business flow. Though you can set the 9,d/anced ,ccounting: flag at Intercompany Transaction Flow header to 96es:, system ignores the flag and does not generate any logical transactions. This means you cannot ha/e an intermediate financial node in the intercompany transaction flow. ,lso, you cannot ha/e intercompany in/oicing for internal sales order with direct transfer %in shipping networ! between the in/entory organi ations' as an option. 6ou ha/e an fle"ibility to switch off intercompany in/oicing for internal sales orders by setting the profile 9I<#: Intercompany In/oice for Internal Orders: to <o. Intercompany invoicing is possible for inter-org transfers of type In-transit only through Internal sales Orders. No intercompany invoicing is possible if you perform org transfers between two inventory orgs belonging two different operating units without internal sales Orders. Also note that intercompany invoice cannot be raised for interorg transfers of type Direct ransfer through Internal sales Orders. Customer and Supplier relationship Intercompany in/oicing is widely used in multinational organi ations. $ometimes you will find that these companies engage in a customer 5 supplier relationship.

For e"ample, in abo/e Figure you need to define #ision ?apan as a customer in #ision )hina operating unit. $imilarly, #ision )hina should be defined as a supplier in #ision ?apan. ;hen you define an intercompany relationship between #ision ?apan and #ision )hina, actually you are establishing an internal customer and supplier relationship. $imilar is the case for e/ery intercompany relationship in an intercompany transaction flow. 8owe/er, at present intercompany in/oicing does not support any sales credit chec!.