AIM

MD.050 APPLICATION EXTENSIONS

FUNCTIONAL DESIGN
School Specialty
Revenue & COGS Flow to GL

Author: Bev Matheys

Creation Date: August 29, 2007
Last Updated: August 29, 2007
Document Ref: <Document Reference Number>
Version: DRAFT 1A

Approvals:

<Approver 1>

<Approver 2>

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 Table of Contents
Document Control......................................................................................................................................................iii
Topical Essay.................................................................................................................................................................1
Major Features........................................................................................................................................................1
Proposed High Level Process Flow / Invoice Creation in Accounts Receivable – shown below..............1
Definitions...............................................................................................................................................................3
Current High Level Process Flow / Invoice Creation in Accounts Receivable............................................4
Proposed High Level Process Flow / Invoice Creation in Accounts Receivable – Direct Shipments
Revenue....................................................................................................................................................................5
Proposed High Level Process Flow / Invoice Creation in Accounts Receivable – EE Revenue Flow......7
Current High Level Process Flow / Cost of Goods Sold account Generator Customization.....................8
Proposed High Level Process Flow / Cost of Goods Sold account Generator Customization -
Intercompany..........................................................................................................................................................9
Proposed High Level Process Flow / Cost of Goods Sold account Generator Customization – Sample
Orders.....................................................................................................................................................................10
Proposed High Level Process Flow / Cost of Goods Sold account Generator Customization - EE
COGS......................................................................................................................................................................12
Proposed High Level Process Flow / Cost of Goods Sold account Generator Customization – Projects
COGS......................................................................................................................................................................13

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Document Control

Change Record
1

Author Version Change Reference

29-Aug-07 Bev Matheys Draft 1a No Previous Document

17-Jul-07 Bev Matheys Draft 1b Draft 1a

Reviewers

Name Position

Pradeep Nagaraja Hitachi Consulting

Distribution

Copy No. Name Location

1
Library Master Project Library
2 Project Manager
3
4

Note to Holders:
If you receive an electronic copy of this document and print it out, please write your name on the
equivalent of the cover page, for document control purposes.
If you receive a hard copy of this document, please write your name on the front cover, for document
control purposes.

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Topical Essay
The process flow for revenue and COGS that was implemented in phase 1 needs to be modified.

Major Features

Direct shipment revenue GL accounts

AR and Inventory transactions for direct shipment sales orders should be distinguished from stock transactions when posting to
Revenue and COGS accounts in the GL. In the current Oracle environment Revenue and COGS transactions are recorded in the
general ledger in different natural account segments for US, Canadian, International and intercompany. There is no distinction
between Directs and Stock in the GL. There are no reports that provide gross margin by Directs and Stock. It is necessary to
have this distinction in the Oracle general ledger for forecasting and so variances can be analyzed.
Proposed High Level Process Flow / Invoice Creation in Accounts Receivable – shown below

Intercompany (I/C) COGS GL account.

Inventory transactions for intercompany sales orders should be charged to an intercompany COGS account. Whenever the
Revenue natural account (account segment 5) is 41065, the COGS natural account segment should be 51050. When the customer
sales order line is an intercompany customer, then COGS natural account segment should be 51050.
Proposed High Level Process Flow / Cost of Goods Sold account Generator Customization – shown below.

Sample Expense GL account.

Sample expenses are not correctly recorded in the General Ledger in the current Oracle Production (PSCHLI) environment.
Current process is as follows: Samples are used throughout the business for distribution to customers, for trade shows and for
workshops. In current environment there are two customer accounts set up for samples:
Account # Account Name Account Description
448083 SSI TRADE SHOW TRADE SHOW SAMPLES
448159 SSI SAMPLE SAMPLE ACCOUNT
Customer 448159 is for general samples. If the ship-to is an internal location, the address is set-up under this account. If the
ship-to is a sales rep, the ship-to from the sales rep personal account is linked to the sample customer.
Customer # 448083 SSI Trade Show is for samples sent directly to a convention center/hotel for a trade show. The bill-to is the
corporate address. If the ship-to is a hotel/conference center, that ship-to address is linked to the Trade Show customer account.

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 If the ship-to is a sales
rep, the ship-to from the sales reps personal account is linked to the Trade Show customer account.
Order Types are set up for samples (e.g. 019 SAMPLE, 025 SAMPLE, 049 SAMPLE, 065 SAMPLE). When orders are entered, the
price is overridden to zero and the Promotion “SAMPLES” is entered and the user chooses a single List Line
(SALES_WORKSHOP, PURCHASING, CONS_BID_DEPT, SALES_MGMT_TRADE_SHOWS, SALES_REPS or MARKETING).
Since SS Science charges samples at the regional level, they also enter the sales rep using DFF on the Order Header. They select
the Sales Representative receiving the sample(s) in the Consignment Sales Rep Field.
In the COGS account generator workflow, samples are charged to the company and business segment based upon the
XX_MARKETING UNIT code from the price list. The location code defaults to 000. If, the user enters a “SAMPLE” promotion
code, the department will default to 4100 (Sales Representatives) and the natural account will default to 77035 (Samples). Note
that even though a promotion code is entered in OM with the correct department, the account generator still defaults to a single
department.
If the user fails to enter a promotion code, the natural account segment for COGS will default to the standard natural account for
the account generator (51001, 51002 or 51003 – Cost of Goods Sold – Domestic, Canadian and International respectively).
Proposed solution:
The COGS Account Generator Workflow should obtain the department segment of the account code from the Promotion list line
rather than defaulting to a single account. This would eliminate the need to reclassify samples to the correct department.
The COGS Account Generator Workflow should obtain the location segment from the DFF on the order header rather than
defaulting to zero. If DFF is null then 000. This would eliminate the need to reclassify samples to the correct location (SS
Science & EE).
Whenever, a sample order type is used, the Promotion code is mandatory. This would prevent samples from being charged to the
COGS accounts (51001-51003). When the Promotion code “SAMPLES” is entered the user would have to choose a single List
Line which would be linked to a department (segment 4) as follows:
SALES_WORKSHOP = 4000, SALES_MGMT_TRADE_SHOWS = 4050, SALES_REPS = 4100, CONS_BID_DEPT = 4500,
PURCHASING = 5000, MARKETING = 5100

Education Essentials Revenue & COGS GL account.

The current process for revenue & COGS workflow to GL for the Business Segment is from the Marketing Unit on the Price List
DFF which is found on the sales order line. This will need to be modified to accommodate Education Essentials. There will be
an additional DFF on Marketing Unit. GL_CATEGORY_ FLAG value would be ‘Yes’ or ‘No’. If DFF equals ‘Yes’ then go to
item master category. If the first segment of the CORPORATE MARKETING category equals ‘FURNITURE’ then business
segment equals 812, else continue with existing logic.

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 Project Order Types
COGS GL account.
Order type Projects will be used for all Project sales orders. When the Order Type is set up for Projects (e.g. 019 PROJECTS, 027
PROJECTS, 041 PROJECTS, 049 PROJECT, 081 PROJECT) the COGS workflow would pull all segments from the Cost of Goods
Sold Account on the transaction type (Order Type).

Definitions

Cost of goods sold account

The Cost of Goods Sold account is the Code combination that will be provided in Inventory for the system to calculate the cost of
goods and post it over to this account. There is a seeded workflow by Oracle. This workflow can be tweaked according to the
necessity. Oracle supports this customization.

Chart of Accounts
For SSI the Chart of Accounts structure is defined as follows:
Company
Business Segment
Location
Department
Natural Account
Future 1
Future 2

In the references made to the diagrams in later sections they are shown as S1, S2, S3, S4, S5, S6, and S7 respectively. For the
various customizations that are handled, the segments will be picked for making the code combinations.

Note: The 4th, 6th, and 7th segments would generally be having the value “00”. So these segments can be picked form the easiest
possible scenario.

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Current High Level Process Flow / Invoice Creation in Accounts Receivable

SO Line-Price List DFF SO Line-Price List DFF

Auto-Accounting Rules
Marketing Unit Marketing Unit

S2
S S S S S S S S
1 2 3 4 5 6 7 1

RA_DISTRIBUTIONS TABLE
Segment value columns updated and data populated

RA_INTERFACE_LINES TABLE

Run Auto Invoice Import

Invoices in RA Transactions table with the

required Code Combinations

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Proposed High Level Process Flow / Invoice Creation in Accounts Receivable – Direct Shipments Revenue

SO Line-Price List DFF SO Line-Price List DFF Sales order line

Auto-Accounting Rules Receiving Org &

Marketing Unit Marketing Unit Source Type

S2 S
S S S S S S S S 3
1 2 3 4 5 6 7 1

Custom Program

Source Type = external

Receiving org = 111
Segment 3 = 003
RA_DISTRIBUTIONS TABLE All others = 000
Segment value columns updated and data populated

RA_INTERFACE_LINES TABLE

Run Auto Invoice Import

Invoices in RA Transactions table with the

required Code Combinations

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 The above Figure shows a
High Level Process flow of this customization. The only change from the Phase 1 implementation is to Segment 3, to add location for
direct ship orders. Customization would look at the Sale Order Line for the Source type and the Receiving Org. If Source Type =
External and Receiving Org = 111 then Segment 3 = 003, all others = 000

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Proposed High Level Process Flow / Invoice Creation in Accounts Receivable – EE Revenue Flow

SO Line-Price List DFF SO Line-Price List DFF

Auto-Accounting Rules
Marketing Unit DFF - GL_CATEGORY_FLAG if Marketing Unit
= Yes, then go to Item Master Category. If first
segment of Corporate Marketing category =
FURNITURE, then S2 = 812, else continue w/
S S S S S S S S
1 2 3 4 5 6 7 existing logic.
1
Marketing Unit DFF - GL_CATEGORY_FLAG if
S2

RA_DISTRIBUTIONS TABLE
Segment value columns updated and data populated

RA_INTERFACE_LINES TABLE

Run Auto Invoice Import

Invoices in RA Transactions table with the

required Code Combinations

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Current High Level Process Flow / Cost of Goods Sold account Generator Customization
The standard Accounts Generator process will be defaulted to “Generate Default Account” in the Account Generator processes form.
A new customized process has to be defined and then attached to the “OM: Generate Cost of Goods Sold Account” in addition to the
default one. This new process will have to pick up the code combinations as shown form the flow diagram below:

SO Line-Price List DFF Customer Site - Address

Marketing unit Generated by the Standard COGS Domestic = 51001

Canadian = 51002
International = 51003

S S S S S S
1 2 3 4 6 7 S
5

Cost of Goods Sold Accounts Generator-

Picks up the segments from the said areas as
defined in the newly generated default account

As can be seen from the above shown flow of data, the COGS account generator would have created a code combination
(standard) Except for the segment 1 & 2 & 5 all other segments will be untouched.
Note: For Freight lines the header level Price list will be looked into to get the Business segment. For the revenue lines the line
level Price list will be looked into to get the business segment.

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 Proposed High Level
Process Flow / Cost of Goods Sold account Generator Customization - Intercompany
This new process will have to pick up the code combinations as shown form the flow diagram below: Changes in blue.

SO Line-Price List DFF

Sales order line

Marketing unit Generated by the Standard COGS I/C Customer

S S S S S S S
1 2 3 4 6 7 5

Cost of Goods Sold Accounts Generator-

Picks up the segments from the said areas as
defined in the newly generated default account

Intercompany COGS would use the same logic as revenue. When customer on the sales order is an intercompany customer the
COGS would be equal to 51050.

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Proposed High Level Process Flow / Cost of Goods Sold account Generator Customization – Sample Orders
The standard Accounts Generator process will be defaulted to “Generate Default Account” in the Account Generator processes form.
A new customized process has to be defined and then attached to the “OM: Generate Cost of Goods Sold Account” in addition to the
default one. This new process will have to pick up the code combinations as shown form the flow diagram below:

SO Line-Price List DFF Order Type Sales Order Sales Order

Hard coded Trans Type = Trans Type =

Marketing unit Generated by the to expense Sample Order Sample Order
Standard COGS acct = 77035
SO Line – DFF SO Line – Promotion
List Code
S S S S S
1 2 6 7 5
S S
3 4

Cost of Goods Sold Accounts Generator-

Picks up the segments from the said areas as
defined in the newly generated default account

The above Figure shows a High Level Process flow of this customization. The change from the Phase 1 implementation is to Segment 3
& 4 for Sample Orders Only. Customization would look at the Transaction Type, if Sample Order then Segment 3 is derived from the
Sales Rep on the order line DFF. If the DFF is null then 000 else Sales Rep location code. Segment 4 is derived from the Promotion

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 code on the line which will
need to have a look up for the Department as follows.
SALES_WORKSHOP = 4000, SALES_MGMT_TRADE_SHOWS = 4050, SALES_REPS = 4100, CONS_BID_DEPT = 4500,
PURCHASING = 5000, MARKETING = 5100

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 Proposed High Level
Process Flow / Cost of Goods Sold account Generator Customization - EE COGS
The standard Accounts Generator process will be defaulted to “Generate Default Account” in the Account Generator processes form.
A new customized process has to be defined and then attached to the “OM: Generate Cost of Goods Sold Account” in addition to the
default one. This new process will have to pick up the code combinations as shown form the flow diagram below:

SO Line-Price List DFF SO Line-Price List DFF Customer Site - Address

Marketing Unit DFF - GL_CATEGORY_FLAG if

Marketing unit = Yes, then go to Item Master Category. If first Generated by the Standard COGS Domestic = 51001
segment of Corporate Marketing category = Canadian = 51002
FURNITURE, then S2 = 812, else continue w/ International = 51003
existing logic.
S S S S S
1 S 3 4 6 7 S
S
2 5
2

Cost of Goods Sold Accounts Generator-

Picks up the segments from the said areas as
defined in the newly generated default account

As can be seen from the above shown flow of data, the COGS account generator would have created a code combination
(standard) Except for the segment 1 & 2 & 5 all other segments will be untouched.
Note: For Freight lines the header level Price list will be looked into to get the Business segment. For the revenue lines the line
level Price list will be looked into to get the business segment.

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 Proposed High Level
Process Flow / Cost of Goods Sold account Generator Customization – Projects COGS
Order type Projects will be used for all Project sales orders. When the Order Type is set up for Projects (e.g. 019 PROJECTS, 027
PROJECTS, 041 PROJECTS, 049 PROJECT, 081 PROJECT) the COGS workflow would pull all segments from the Cost of Goods Sold
Account on the transaction type (Order Type).
.

Order Type

When Order Type equals ‘XXX PROJECT ‘ the

COGS workflow pulls all segments from the
Cost of Goods Sold Account on the transaction
type.

S S S S S S S
1 2 3 4 5 6 7

Cost of Goods Sold Accounts Generator-

Picks up the segments from the said areas as
defined in the newly generated default account

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