1. Douglas Volz Consulting
Receiving as it Relates to Cost Management OAUG Cost Mgmt SIG Meeting June 21, 2011
Douglas Volz
Douglas Volz Consulting

2. Introduction Learn about the basic receiving and A/P accrual processes
See the available reporting and inquiries at each step
Note some of the common difficulties
Discuss current problems you may have 2

3. Agenda Welcome to Our Session! Cost Management SIG Business
Receiving as it Relates to Inventory
Scenario
Sources of Receipts
PO Receipt into Stock
PO Receipt into Expense
PO Receipt/OSP into WIP
Receiving Transaction Inquiries
Material Transaction Inquiries
Receiving Value Reports
Open Receiving Interface Challenges
Custom Reporting Solutions
Conclusions 3

4. OAUG Cost Management SIG Business - Oracle Conferences
OAUG Connection Point® — Release 12.1
July 12-13, 2011
Westin Chicago Northwest, Chicago, Illinois
OAUG Connection Point® — EPM/BI
July 20-21, 2011
Hyatt Regency Bellevue, Seattle, Washington
OAUG Virtual Sessions — The Best of Collaborate11
Webinars during August 2011
Details forthcoming, see
OpenWorld 2011
October 2-6, 2011
Moscone Center, San Francisco 4

5. OAUG Cost Management SIG Business - Other SIG Business
Open vacancy for OAUG Cost SIG Membership Chairperson
Summer Break July and August
Keep this webinar date free: September 20, 2011 – Oracle Fusion Cost Management
Questions, concerns, ideas for the OAUG Cost Mgmt SIG:
Doug Volz
Jerry Devore
Sharon Widmer 5

6. Scenario and Overall Process

7. What happens when?
You receive goods into receiving, inspect and deliver?
Process PO Receipt into Stock
Process PO Receipt into Expense
Process PO Receipt/OSP into WIP
How can you see its progress?
How can you see the results?
What is the financial accounting? 7

8. General Material Receiving Process Flow8

9. Sources of Receipts: Purchase Orders and RMAs
Many Different Types of POs
Employees with expense requisitions, operational expenses
MRP / Material planning requirements
Capital requirements (CapEx)
Project requirements
Internal Purchase Requisitions (and Inter-Org Transfers):
Sourced from another inventory organization
Creates a matching internal sales order (internal purchase reqs. only)
Received on the same forms/screens as external purchases
External Purchase Orders:
Sourced from external organizations
Received on the same forms/screens as internal purchases
Returned Material Authorizations:
Approved customer or external returns (returns functionality does not exist for internal orders)
Received on the same forms/screens as other purchases 9

10. Background Information for Purchase Orders
PO HEADERS
(PO_HEADERS_ALL)
May have multiple lines per PO
May have multiple scheduled receipts and PO releases per line
May have multiple PO distributions per line or scheduled receipt
Four stored accounts per PO distribution
PO LINES (PO_LINES_ALL)
PO SHIPMENTS (PO_LINE_LOCATIONS_ALL)
PO RELEASES (PO_RELEASES_ALL)
PO DISTRIBUTIONS
(PO_DISTRIBUTIONS_ALL)
Slide 10

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 11

12. Inventory PO Receipt

13. Sample Purchase Order – Inventory Destination Menu path: Purchasing, Vision Operations (USA) => Purchase Orders => Purchase Order Summary
Slide 13

14. Don’t change this control!
Sample Purchase Order – Inventory Destination PO Shipments (scheduled receipt)
Don’t change this control!
Slide 14

15. Sample Purchase Order – Inventory Destination Receiving Controls
From your Item receiving controls, then,
Default from your Supplier receiving controls, then,
Failing this, from your inventory organization receiving parameters
Receipt Routing Choices:
None
Direct Delivery
Standard Receipt
Inspection Required
Receipt Routing Settings:
By item number
Default by organization
Slide 15

16. Sample Purchase Order – More on Receipt Routing
Receipt Routing Choices:
Direct Delivery
PO Receipt into Receiving and Delivery into Inventory (Inventory PO Receipt) happen at the same time
Standard Receipt
PO Receipt into Receiving first, then a separate Delivery into Inventory (Inventory PO Receipt)
Inspection Required
PO Receipt into Receiving first, then a separate Inspection (or Rejection) then Delivery into Inventory (Inventory PO Receipt)
The Inspection transaction does not create any accounting
Slide 16

17. Sample Purchase Order – Inventory Destination PO Distribution Accounts
Slide 17

18. PO Account Sources (Standard Workflow / Account Generator Rules)
Expense Destination
Inventory / WIP Destination
Cost Center or Expense Account
Default Subinv. or Org Mat’l Acct
Expense A/P Accrual Account
Inventory A/P Accrual Account
Inventory IPV Account
Expense Budget Account
Default Subinv/Org Encumbrance Account
Type of Account
Charge Account
Accrual Account
Variance (IPV) Account
Budget Account
Slide 18

19. PO Workflow - (View Workflow History) Menu path: Purchasing, Vision Operations (USA) => Purchase Orders => Purchase Order Summary => Inquire => View Approval through Workflow
Slide 19

20. Sample Purchase Order – R12 PO Web Screens Menu path: Purchasing, Vision Operations (USA) => Buyer Work Center => Orders
Slide 20

21. Sample Purchase Order – R12 PO Web Screens Menu path: Purchasing, Vision Operations (USA) => Buyer Work Center => Orders
Once you click on Go the query results appear below
Click on the Order number to get to the next page
Slide 21

22. Sample Purchase Order – R12 PO Web Screens Menu path: Purchasing, Vision Operations (USA) => Buyer Work Center => Orders
The web PO pages in R12 have all of the tabs grouped together
R12 web pages work very different from forms
Slide 22

23. Sample Purchase Order – R12 PO Web Screens Menu path: Purchasing, Vision Operations (USA) => Buyer Work Center => Orders
Slide 23

24. Now use the term “Schedules” instead of “Shipments”
Sample Purchase Order – R12 PO Web Screens Menu path: Purchasing, Vision Operations (USA) => Buyer Work Center => Orders
Now use the term “Schedules” instead of “Shipments”
Slide 24

25. Sample Purchase Order – R12 PO Web Screens Menu path: Purchasing, Vision Operations (USA) => Buyer Work Center => Orders
Slide 25

26. Receiving Transactions – Receive into Receiving
Menu path: Inventory, Vision Operations (USA) => Transactions => Receiving => Receipts
Quantity received 26

27. Receiving Transactions – Receive into Receiving
Menu path: Inventory, Vision Operations (USA) => Transactions => Receiving => Receipts
Specify the Subinventory and Locator as needed
Specify the Subinventory and Locator as needed
You can set up default receiving subinventories by item (Item Transaction Defaults) 27

28. Where Can You See This Inventory Receipt?
Menu path: Cost Management – SLA Vision Operations => View Transactions => Receiving Transactions
PO Receive transaction has the PO Accrual entries
For Inventory destinations, the Deliver transaction has no accounting in PO/Receiving (Inventory has the material transaction accounting)
Slide 28

29. Where Can You See This Inventory Receipt?
Menu path: Cost Management – SLA Vision Operations => View Transactions => Receiving Transactions
Slide 29

30. Where Can You See This Inventory Receipt?
Menu path: Cost Management – SLA Vision Operations => View Transactions => Receiving Transactions
Slide 30

31. Where Can You See This Inventory Receipt?
Menu path: Cost Management – SLA Vision Operations => View Transactions => Receiving Transactions
Slide 31

32. Where Can You See This Inventory Receipt?
Menu path: Cost Management – SLA Vision Operations => View Transactions => Material Transactions
Slide 32

33. Where Can You See This Inventory Receipt?
Menu path: Cost Management – SLA Vision Operations => View Transactions => Material Distributions
Slide 33

34. Where Do These Accounts Come From – Avg Costing
Menu path: Cost Management – SLA Vision Operations => Setup => Account Assignments => Organization Parameters
This account is being shared with Receiving – DON’T DO THIS
Sharing accounts makes it much harder to reconcile at month-end
Slide 34

35. Where Do These Accounts Come From – Std Costing
Menu path: Cost Management – SLA Vision Operations => Setup => Account Assignments => Organization Parameters
This account is being shared with Receiving – DON’T DO THIS
Sharing accounts makes it much harder to reconcile at month-end
Slide 35

36. Where Do These Accounts Come From – Receiving
Menu path: Cost Management – SLA Vision Operations => Setup => Account Assignments => Receiving Options
These accounts are being shared with Inventory – DON’T DO THIS
This account is being shared with Inventory – DON’T DO THIS
Sharing accounts makes it much harder to reconcile at month-end
Slide 36

37. Where Do These Accounts Come From – A/P Accrual
Menu path: Cost Management – SLA Vision Operations => Setup => Account Assignments => Organization Parameters
Here is where the Inventory A/P Accrual Account comes from
Slide 37

38. Receiving Value Inventory A/P Accrual
Inventory Destinations Purchase Order Accounting Accrual Summary by T Account
Transaction
Receipt
Delivery to Stock
Invoice Match
Receiving Value Inventory A/P Accrual
100
Material Value Invoice Price Variance 20
Trade Payables 80
Slide 38

39. Process PO Receipt into Receiving (Oracle Purchasing)39

40. Process PO Receipt Accounting Transactions
Receive one $100 PO unit price Account Debit Credit
Receiving Account
A/P Accrual Account

41. Process PO Receipt into Stock (Oracle Inventory)41

42. Process PO Receipt into Stock Accounting Transaction ─ Standard Costing
Delivery to stock inventory (PO $110 Std Material Cost
Account Debit Credit
Material Subinv Account
Matl O/H Subinv Account
Receiving Account
PPV
Matl O/H Absorp. Account
This example assumes the PO unit price = 100 and the material overhead is a fixed amount per item

43. Process PO Receipt into Stock Accounting Transaction ─ Average Costing
Delivery to stock inventory (PO $100 PO Material Cost
Account Debit Credit
Material Org Account
Matl O/H Org Account
Receiving Account
Matl O/H Absorp. Account
This example assumes the PO unit price = 100 and the material overhead is a fixed amount per item

44. Expense PO Receipt

45. Sample Purchase Order – Expense Destination, PO Header and Lines
Slide 45

46. Don’t change this control!
Sample Purchase Order – Expense Destination, PO Shipments (scheduled receipt)
Don’t change this control!
This example assumes you want to accrue expenses at time of receipt. Normally done by government agencies and firms with lots of project accounting requirements. Not so much for everyone else.
Slide 46

47. Sample Purchase Order – Expense Destination, PO Distribution Accounts
Slide 47

48. PO Account Sources (Standard Workflow Rules)
Expense Destination
Inventory / WIP Destination
Cost Center or Expense Account
Default Subinv. or Org Mat’l Acct
Expense A/P Accrual Account
Inventory A/P Accrual Account
Inventory IPV Account
Expense Budget Account
Default Subinv/Org Encumbrance Account
Type of Account
Charge Account
Accrual Account
Variance (IPV) Account
Budget Account
Slide 48

49. This difference also goes to the Charge Account
Expense Destinations Purchase Order Accounting Accrual Summary by T Account
Transaction
Receipt
Delivery to Expense
Invoice Match
Receiving Value Expense A/P Accrual
100
Charge Account Invoice Price Variance 20
Trade Payables 80
This difference also goes to the Charge Account
Slide 49

50. Where Can You See This Expense Receipt?
Only the Receive
and Deliver transaction have
accounting entries
Slide 50

51. Where Can You See This Expense Receipt?
Can you see both of the account setup mistakes here?
Yep, both the Receiving and Expense A/P Accrual Accounts are shared with other setups!
Slide 51

52. Where Can You See This Expense Receipt?
Slide 52

53. Process PO Receipt for Expense (same process as before)53

54. Process PO Receipt into Expense (Oracle Purchasing)54

55. Accounting Entries for an Expense PO Receipt – Direct Delivery
Receive one $100 PO unit price
A. PO Receipt into Receiving (Purchasing Receipt)
Account Debit Credit
Receiving Account
Expense A/P Accrual Account 100
B. PO Delivery into Expense (Purchasing Delivery)
Charge Account
Receiving Account
The expense accounting works for same for both Average and Standard Costing
Slide 55

56. WIP Outside Processing PO Receipt

57. Sample Purchase Order – Shop Floor Destination Menu path: Purchasing, Vision Operations (USA) => Purchase Orders => Purchase Order Summary
For Purchasing, OSP is an OSP item that you receive. For WIP, OSP is an OSP resource that you earn.
OSP is both an item and a resource at the same time.
Purchasing calls Outside Processing a “Shop Floor” Destination
Slide 57

58. Sample Purchase Order – Shop Floor Destination Menu path: Purchasing, Vision Operations (USA) => Purchase Orders => Releases
Slide 58

59. Sample Purchase Order – Shop Floor Destination PO Distribution Accounts
Slide 59

60. Sample Purchase Order – Shop Floor Destination WIP Job Information
Slide 60

61. PO Account Sources (Standard Workflow / Account Generator Rules)
Expense Destination
Inventory / WIP Destination
Cost Center or Expense Account
WIP Job OSP Account
Expense A/P Accrual Account
Inventory A/P Accrual Account
Inventory IPV Account
Expense Budget Account
Default Subinv/Org Encumbrance Account
Type of Account
Charge Account
Accrual Account
Variance (IPV) Account
Budget Account
Slide 61

62. Where Can You See This OSP Receipt?
Menu path: Cost Management – SLA Vision Operations => View Transactions => Receiving Transactions
PO Receive transaction has the PO Accrual
For Shop Floor destinations, the Deliver transaction has no accounting in PO/Receiving (WIP has the OSP resource accounting)
Slide 62

63. Where Can You See This OSP Receipt?
Menu path: Cost Management – SLA Vision Operations => View Transactions => Receiving Transactions => Tools => View Accounting
Slide 63

64. Where Can You See This OSP Receipt?
Menu path: Cost Management – SLA Vision Operations => View Transactions => Resource Transactions
Slide 64

65. Where Can You See This OSP Receipt?
Menu path: Cost Management – SLA Vision Operations => View Transactions => Material Distributions
Receiving Inspection accounting entry
Resource absorption, not Receiving Inspection
Slide 65

66. Where Do These WIP Accounts Come From
Menu path: Cost Management – SLA Vision Operations => Setup => Account Assignments => Organization Parameters
These accounts are being shared with Receiving and Inventory – DON’T DO THIS
Sharing accounts makes it much harder to reconcile at month-end
Slide 66

67. Where Do These WIP Accounts Come From
Menu path: Cost Management – SLA Vision Operations => Setup => Sub-Elements => Resources
For OSP resources, the
Absorption Account defaults to the Receiving Account. This is normal behavior.
This example assumes OSP resource has the standard rate unchecked. If the resource definition has standard rate unchecked (No), then the WIP job earns OSP at PO Price.
Slide 67

68. Receiving Value Inventory A/P Accrual
OSP Destinations Purchase Order Accounting Accrual Summary by T Account
Transaction
Receipt
Delivery to WIP
Invoice Match
Receiving Value Inventory A/P Accrual
100
WIP OSP Value Invoice Price Variance 20
Trade Payables 80
Slide 68

69. Process PO Receipt for OSP (same process as before)69

70. Process OSP PO Receipt into WIP (Oracle WIP)70

71. Accounting Entries for a PO Receipt – Direct Delivery
Receive one $100 PO unit price
A. PO Receipt into Receiving (Purchasing Receipt)
Account Debit Credit
Receiving Account
A/P Accrual Account 100
B. PO Delivery into WIP (WIP Resource Transaction)
WIP OSP Account
Receiving Account
Slide 71

72. PO Returns to Vendor (RTV)

73. What About RTVs? From a Transaction Viewpoint:
Have to get the goods back into Receiving to do a RTV
Return to Receiving, then Return to Vendor
From an Accounting Viewpoint:
Simply the reverse of the initial accounting, except:
Standard Costing reverses at current standard cost into Receiving
Average Costing reverses at current average cost into Receiving
Slide 73

74. So Where Are We Now? We have received:
Inventory
Expenses
Outside Processing
How do we see Receiving Transactions on Reports?
Receiving Account Distribution Detail Report
Material Account Distribution Detail Report
Material Account Distribution Summary Report
WIP Account Detail Report
WIP Account Summary Report
How do we see Receiving Value?
Receiving Value Report
All Inventories Value Report 74

75. Receiving Value Report
Menu path: Cost Management – SLA Vision Operations => Reports => Valuation Reports => Receiving Value 75

76. Receiving Value Report
Menu path: Cost Management – SLA Vision Operations => Reports => Valuation Reports => Receiving Value 76

77. All Inventories Value Report
Menu path: Cost Management – SLA Vision Operations => Reports => Valuation Reports => All lnventories Value Report 77

78. All Inventories Value Report
Menu path: Cost Management – SLA Vision Operations => Reports => Valuation Reports => All lnventories Value Report
There are two All Inventory Value Reports:
All Inventories Value Report
All Inventories Value Report - by Cost Group 78

79. Receiving Errors
Menu path: Cost Management – SLA Vision Operations => Requests => Submit a New Request => Receiving Interface Errors Report
This purge is for the PO PO_INTERFACE_ERRORS table, not RCV_TRANSACTIONS_INTERFACE

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

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

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

83. Common Cost Mgmt Customizations for Receiving
Multi-Org Reporting for:
Receiving Account Summary Report
Material Account Summary Report
WIP Account Summary Report
Receiving Value Report
All Inventories Value Report
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)
Replace Missing R11i Functionality
Receiving Value by Destination Account Report (needed when you accrue expenses at time of receipt)

84. Conclusions
Receiving value is made up of Debits from Purchasing/Receiving, and Credits from Inventory/WIP
So Receiving value is one big clearing account across three modules: Purchasing, Inventory and WIP
Many companies use custom reports, especially for Multi-Org Reporting
If you accrual expenses at time of receipt you will a replacement for the R11i Receiving Value by Destination Report
The Open Receiving Interface has been a problem child from its inception. Usually lots of errors each month, don’t fall behind.

85. Where to get more information
Oracle Cost Management SIG Minutes (
July 2010: WIIFM Release 12 New Cost Features
March 2011: R12 A/P Accruals
Oracle Corporation
Metalink/My Oracle Support: Cost Management White Papers [ID ]
Oracle Cost Management User Guide
Oracle Purchasing User Guide

86. Acknowledgements
You, the OAUG Cost Mgmt SIG, thanks for attending this session

87. 87

88. Douglas Volz (doug@volzconsulting.com)
Professional Background
Doug Volz is a Senior Architect and Advisor for Oracle Application projects, with a particular interest in Cost and Project Management. He has 30 years accumulated experience, including 5 years in Oracle Development (co-designing Oracle Cost Management) and 12 years in industry in 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 numerous 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. Countries include US, Mexico, UK, Netherlands, Belgium, Taiwan, P.R.O.C., Norway, Japan, Italy, Switzerland and Germany.
Doug leads the OAUG Cost Management Special Interest Group. He also advises and participates on the Oracle Customer Advisory Board for Fusion Costing.
Core Expertise
Experience
Multi-organization, Multi-currency ERP Implementations
Project Management and Senior Project Advisor
Core manufacturing processes
Cost Management
Inventory
Bills of Material
WIP
Systems Integration and Data Conversions
Sample of clients served:
Beckman Coulter (US)
Matsushita (UK, Mexico)
Logitech (US, Taiwan, P.R.O.C.)
Celgene Corporation (US, Switzerland)
NTL (UK, now Virgin Media)
TCI International (US)
Onninen AS (Norway) 88

89. End of Presentation