1.0 Oracle Inventory overview

Oracle Inventory is core module of entire Oracle e-business suite, this module shares the information with almost every other module. Oracle Inventory let you define the Items and it is backbone of all inventory transactions.

Functionality provided by Oracle Inventory:

Item Master:
Item setup is critical part of Oracle ERP implementation. Item setup is required to place purchase orders, receive & transact inventory, to enter sales orders, ship goods/services to customer. Items are first setup in master inventory organization and same can enabled in every other inventory organization where it needs to transact. Item attributes are different flags that determine the characteristics of items. Item attributes determine whether item is procured item, saleable item, service item etc.

Inventory transactions:
Inventory holds the onhand quantities and transactions that can cause onhand changes. Transactions originated from other modules (Shipping – customer shipments, Purchasing – Receiving goods into stock etc) are finally transferred to Inventory. Every transaction is associated with a transaction type, source, Item, quantity, unit of measure and additional attributes. Oracle provides many seeded transaction types and you can add custom transaction types as needed for accurate reporting.

Examples of Inventory transactions:
Subinventory transfers
Miscellaneous issue/receive
Account Alias issue/receive
Move order issue
Sales order shipment

Serial & Lot control: Its provides detail tracking of onhand and related inventory transactions. Lot number and serial number are critical requirements in a regulated environment like pharmacuetical, food processing industries. In case of any recalls lot/serial control provides tracing the current location of goods.

Inventory Planning:
Oracle Inventory planning provides good planning methodoligies for indirect item purchases, MRO kinds of items while MRP (Material Requirements Planning) as planning method is still preferred for direct material. MRP functionality is delivered through Oracle MRP/SCP module.
Widely known inventory planning methods are Reorder planning & Min-max planning, lets understand little bit more about these methods.

Reorder Point Planning (ROP): ROP uses Supply (onhand + expected receipts) and safety stock information to plan the re-order quantity. When supply falls below safety stock a replenishment order is created considering the lead time and economic order quantity.

Min-Max Planning: This planning method is bit different from ROP, The replenishment order is created when onhands falls below the minimum level set at the item.

Periodic Inventory verification methods:
It is very important to have systematic onhand match with actual physical onhands for data accuracy and efficient planning purpose. Oracle Inventory provides two onhand verification and reconciliation methods called Physcial Inventory and Cycle counting.

Physical Inventory: It is an activity where 100% of onhand is physicaly verified and reconciled with system onhand. Typically this is done once a year or twice based on business needs. When physical inventory in progress typically all other operations will be on hold. Any differences in physical and systematic onhands are adjusted and approved in system and matched with physical onhand quantity.

Cycle counting: It is a periodic counting process instead of onetime process like physical inventory. In cycle counting items are classified into ABC classes (high, medium, low value items). High value items are verified more frequent than low low value items. System generates the schedule of items that need to be counted and verified.

2 responses to 1.0 Oracle Inventory overview

  1. I appreciate your post and it was superb .Thanks for sharing.I would like to hear more about this in future.

  2. Excellent article oracleguru!

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