Oracle Inventory Configuration

Oracle Inventory

Oracle Inventory is a very important part of the Oracle E-Business Suite. Its main functionality is to manage and provide real-time transactions for our Inventory Suite. It allows us to manage our inbound and outbound logistics and to keep track of transactions in real-time. In simple words, Oracle Inventory allows us to manage items, which can be in the form of raw material, semi-finished goods, finished goods, services, and so on.

Configuration Steps

1. Define System Items Flexfield

You must design and configure your System Items Flexfield before you can start defining items in Oracle Inventory. You must indicate how many separate segments you need for an item code and how many characters should be there in each segment. Once you define the structure of your Flexfield and any applicable value sets, you must freeze and compile your Flexfield definition. System Items Flexfield Structure can only be created once in overall application so decision for its segments is very crucial. As this is a Key Flexfield so we will follow these 6 steps:
i. Create Key Flexfield Structure
ii. Assign qualifiers if required
iii. Create Value Set for each segment of Flexfield
iv. Assign Value Set to each segment
v. Add Values in each Value Set
vi. Create combinations for all segments in each structure
Navigation path: Inventory>Setup>Flexfields>Key>Segments

2. Open Values in System Item Flexfield

When we have created the value sets for each segment then the next step is to open values for each segment.
Navigation path: Inventory>Setup>Flexfields>Key>Values

3. Define Categories Flexfield

Categories are the method by which the items in inventory can be separated logically and functionally for planning, purchasing and other activities. You can use categories and category sets to group your items for various reports and programs. A category is a logical classification of items that have similar characteristics. A category set is a distinct grouping scheme and consists of categories. The flexibility of category sets allows you to report and inquire on items in a way that best suits your needs. As this is a Key Flexfield so we will follow these 6 steps:
i. Create Key Flexfield Structure
ii. Assign qualifiers if required
iii. Create Value Set for each segment of Flexfield
iv. Assign Value Set to each segment
v. Add Values in each Value Set
vi. Create combinations for all segments in each structure
Navigation path: Inventory>Setup> Key>Segments

4. Open Values in Categories Flexfield

When we have created the value sets for each segment then the next step is to open values for each segment.
Navigation path: Inventory>Flexfields>Key>Values

5. Define Stock Locators Flexfield

If you keep track of specific locators such as aisle, row and bin indicators for your items, you need to configure your Stock Locators Flexfield and implement locator control in your organization. You must indicate how many separate segments your flexfield has, how many characters each segment has, and -whether you want to validate the values that you assign to the segments. As this is a Key Flexfield so we will follow these 6 steps:
i. Create Key Flexfield Structure
ii. Assign qualifiers if required
iii. Create Value Set for each segment of Flexfield
iv. Assign Value Set to each segment
v. Add Values in each Value Set
vi. Create combinations for all segments in each structure
Navigation path: Inventory>Setup> Key>Segments
Note: Even if you do not implement locator control, you must still compile the Stock Locators Flexfield because all Oracle Inventory transaction and on-hand inquiries and reports require a frozen flexfield definition. However you do not need to configure the flexfield in a specific way.

6. Open Values in Stock Locators Flexfield

When we have created the value sets for each segment then the next step is to open values for each segment.
Navigation path: Inventory>Flexfields>Key>Values

7. Define Account Aliases Flexfield

An account alias is an easily recognized name or label representing a general ledger account number. You can view, report, and reserve against an account alias. During a transaction, you can use the account alias instead of an account number to refer to the account. As this is a Key Flexfield so we will follow these 6 steps:
i. Create Key Flexfield Structure
ii. Assign qualifiers if required
iii. Create Value Set for each segment of Flexfield
iv. Assign Value Set to each segment
v. Add Values in each Value Set
vi. Create combinations for all segments in each structure
Navigation path: Inventory>Setup> Key>Segments

8. Open Values in Account Aliases Flexfield

When we have created the value sets for each segment then the next step is to open values for each segment.
Navigation path: Inventory>Setup>Flexfields>Key>Values

9. Define Locations

Locations have various usages assigned to them such as:
• Bill to (where suppliers send invoices)
• Ship to (where suppliers send product)
• Office (identifies a business address where employees are located)
Locations can be linked to one or many organizations
Navigation path: Inventory>Setup>Organizations>Locations

10. Define Organization Calendar / Workday Calendar

You can define the inventory organization calendar or the workday calendar in both Oracle Inventory and Oracle Bills of Material. When you set out to define an inventory organization Oracle asks you to assign a workday calendar to that Inventory Organization. Organization parameters cannot be saved without a workday calendar.
In a workday calendar you specify which days are worked within your organization and which shifts are available to be worked. The workday calendar is also referred to as the manufacturing calendar or simply the inventory calendar. However, the workday calendar is separate from the Oracle General Ledger calendar.
When you define the inventory organization calendar Oracle Inventory assumes a workday pattern that includes all days, between the start and end dates of the calendar. The usual practice is to define a workday pattern of 5 days on and 2 days off for a 5 day working week or 6 days on and 1 day off for a 6 day working week. You can define one or more workday calendars and assign them to any number of organizations, and any number of organizations can share a calendar.
Navigation path: Inventory>Setup>Organizations>Calendars

11. Define Inventory Organization(s)

Two types of Inventory Organizations are found in Oracle Applications. They are defined in the same way. Both are assigned a set of books, a legal entity organization, an operating unit organization and a location.
An item master organization is used for item number maintenance and validation. This master organization serves as a data repository storing items and item attributes, master level categories and category sets, master level cross references, and numerous data defaults. On-hand balances, inventory movements and other on-going inventory activities are not performed in an item master organization. Generally, the master organization is used as the validation organization for Purchasing and Order Entry. It is recommended that a single item master organization be defined, even in multiple organizations and
Set of books environments.
In addition to the item master organization there is one or more non-master or you may say transactional Inventory Organizations. Like the item master inventory organization, the non-master organizations are assigned a set of books, a legal entity organization and an operating unit organization. The non-master inventory organization points to a master organization and looks to the master organization for master level item attributes, master level categories and other master level controlled data.
NOTE: Each organization has its own set of books/legal entity/operating unit relationship, so inventory organizations with differing Set of books or operating units may share the same master organization.
These non-master inventory organizations are the execution level organizations. They hold on-hand balances and transaction history. Here is where inventory users execute their daily activities, such as receiving and issuing material, performing cycle counts and viewing material availability and transaction history. A single organization therefore generally represents a single manufacturing site or distribution center.
Navigation path: Inventory>Setup>Organizations>Organizations

12. Define Cost Types

A cost type is a set of costs uniquely identified by name. Two cost types are predefined for you, “Frozen” (for standard costs) and “Average.” You can define and update an unlimited number of additional simulation or unimplemented cost types. Each cost type has its own set of cost controls. These cost types are defined at Inventory Organization level so first we have to select the Inventory Organization by following this navigation path.
Navigation path: Inventory>Change Organization

13. Define Financial Options

Use the Financials Options window to define the options and defaults that you use for your Oracle Financial Application(s). Values you enter in this window are shared by Oracle Payables, Oracle Purchasing and Oracle Assets. You can define defaults in this window to simplify supplier entry, requisition entry, purchase order entry, invoice entry, and automatic payments.
NOTE: Financial Options are shown in Oracle Inventory Document because Financial Options should be set before setting up Receiving Options and Purchasing Options which are the part of Oracle Inventory and Oracle Purchasing respectively.
Navigation path: Payables>Setup>Options>Financials Options

14. Define Receiving Options

Use the Receiving Options window to define options that govern receipts in your system. Most of the options that you set here can be overridden for specific suppliers, items, and purchase orders. These Receiving Options are set at Inventory Organization level so first we have to select the relevant Inventory Organization Level for which we are going to set our Receiving Options.
Navigation path: Inventory>Change Organization

15. Define Organization Access

You can specify which organizations a responsibility can access by mapping responsibilities to organizations. Once this mapping is set up, a user logging into an Oracle Inventory product is restricted to the organizations mapped to the responsibility chosen. The Change Organization window is restricted as well.
Navigation path: Inventory>Organizations>Organizations Access

16. Define Unit of Measure Classes

Unit of measure classes represent groups of units of measure with similar characteristics. Creating unit of measure classes is the first step in unit of measure management. Each unit of measure you define must belong to a unit of measure class.
Each class has a base unit of measure. The base unit of measure is used to perform conversions between units of measure in the class. For this reason, the base unit of measure should be representative of the other units of measure in the class, and generally one of the smaller units. For example, you could use CU (cubic feet) as the base unit of a class called Volume.
Navigation path: Inventory>Setup>Unit of Measure>Classes

17. Define Unit of Measure

Units of measure are used by a variety of functions and transactions to express the quantity of items. Defining units of measure is the second step in unit of measure management. The values defined in the Units of Measure window provide the list of values available in unit of measure fields in other windows.
Units of measure are not organization-specific.
Navigation path: Inventory>Setup>Unit of Measure

18. Define Unit of Measure Conversions

Unit of measure conversions are numerical factors that enable you to perform transactions in units other than the primary unit of the item being transacted. You can define:
• a conversion common to any item (Standard)
• a conversion for a specific item within a unit of measure class (Intra-class)
• a conversion for a specific item between unit of measure classes (Inter-class)
Navigation path: Inventory>Setup>Unit of Measure>Conversions

19. Define Subinventory(s)

A Subinventory is used as a holding point for on-hand inventory and generally represents a stock room, stocking area or cage used for storing material. Subinventory(s) are defined within Inventory
Organizations. An Inventory Organization may have any number of Subinventories, and an asset account is assigned to each Subinventory. Since the Subinventory entity is logical, as there is not an address or
physical location description associated with it. Clients may define Subinventories for any physical or logical grouping of inventory.
As Subinventory is defined under a specific Inventory Organization so first we have to enter into an Inventory Organization.
Navigation path: Inventory>Change Organization

20. Define Stock Locators

Stock Locators are an optional entity that may be used to represent physical locations within a Subinventory. You may choose to use Stock Locators for selected Subinventory(s) or selected items within selected Subinventory(s). If Locators are used, Subinventory and Locator track on-hand balances. Therefore, if Locators are defined to represent a shelf within a stockroom, on-hand balances on the system would show the item and quantity down to the physical location within the facility.
Oracle Inventory uses a key flexfield for Stock Locators. This presents a few limitations for its use. Only one Locator flexfield definition is allowed per installation. Therefore, if the stockroom (Subinventory) wants to track material by row, bin and shelf, it will likely define a three-segment flexfield with segments for row, bin, and shelf. If Locators are desired for another Subinventory, even in another Inventory Organization, the structure will again be 3 segments for row, bin and shelf. In addition to this limitation, Locators must be unique within an Inventory Organization. You cannot use the same Locator in different Subinventory(s) within an Inventory Organization, but you can use the same locator in Subinventory(s) in a different Inventory Organization.
Navigation path: Inventory>Setup>Organizations>Stock Locators

21. Define Category Codes

You can define an unlimited number of categories and group subsets of your categories into category sets. A category can belong to multiple category sets. You can assign a category to a category set either at the time you define a category set or at the time you assign an item to the category.
Navigation path: Inventory>Setup>Items>Categories>Category Codes

22. Define Category Codes

You can use categories and category sets to group items for various reports and programs. Category sets may be used as a means to develop custom lists of items on which to report and sort.
Navigation path: Inventory>Setup>Items>Categories>Category Set

23. Define Default Category Set

When you install Oracle Inventory, you must assign a default category set to each of the following functional areas: Inventory, Purchasing, Planning, Service, Product Line Accounting and Order Entry. Product Line Accounting is seeded with the Inventory category set. Inventory makes the default category set mandatory for all items defined for use by a functional area. If your item is enabled for a particular functional area you cannot delete the item’s corresponding default category set assignment. Default category sets are required so that each functional area has at least one category set that contains all items in that functional area. You can enable an item for each functional area by using that functional area’s item defining attribute. An item defining attribute identifies the nature of an item.
Navigation path: Inventory>Setup>Items>Categories>Default Category Sets

24. Define Item Template(s)

A template is a defined set of attribute values. When you apply a template to an item, you overlay or default in the set of attribute values to the item definition.
You can apply the same or different templates to an item multiple times. The more recent attribute values (from the last template applied) override previous values unless the previous value is not updatable (for example, the Primary Unit of Measure, which is never updatable).
Navigation path: Inventory>Setup>Items>Templates

25. Assign Organization, Subinventory(s) and Stock Locator(s) to Items

As we have discussed preciously that there are two types on Inventory Organizations. One is the Master Organization in which all the required items are opened and the other is Non-master or Transactional Organization to which items are assigned which are opened in Master Organization.
After assigning the Non-Master or Transactional Organization to an item you can assign items to a given Subinventory. Assigning items to a Subinventory does not restrict the Subinventory to that list of items rather the items are restricted to that Subinventory. Thus, you can always issue and receive unrestricted items to any Subinventory, but you can only issue and receive restricted items to their list of Subinventory(s). You activate the list of Subinventory(s) for a restricted item by setting the Restrict Subinventory(s) attribute when defining or updating items.
Similar to Subinventory, a Locator can also be assigned to an Item(s).
Navigation path: Inventory>Items>Master Items

26. Define Material Overheads (Non-Mandatory)

You can use material overhead and overhead cost sub-elements to add indirect costs to item costs on either a percentage basis or as a fixed amount in both standard and average costing organizations.
Each overhead sub-element has a default basis, a default activity, and an absorption account. The overhead absorption account offsets the corresponding overhead cost pool in the general ledger.
You can base the overhead charge on the number of resource units or percentage of resource value earned in the routing operation. Or, you can set up move-based overheads where the rate or amount is charged for each item moved in an operation. To do this, use the Item or Lot basis types.
You can base the material overhead charge on a percentage of the total value, which is earned when you receive purchase orders or perform WIP completion transactions. Or, you can use the Item or Lot basis types.
You can apply each of these sub-elements using different basis types for increased flexibility. Material overhead is earned when an item is received into inventory or completed from work in process. Overhead, based upon resources, is earned as the assembly moves through operations in work in process.
Navigation path: Inventory>Setup>Sub-elements>Overheads

27. Define Default Material Overheads Rates  (Non-Mandatory)

You can define and update default material overhead sub-elements and rates. These defaults speed data entry when defining items.
When you define items, these material overheads are defaulted into the Frozen cost type under standard costing, and into the cost type you defined to hold average rates under average costing.
Navigation path: Inventory>Setup>Costs>Sub-elements>Defaults

28. Define Item Costs (Non-Mandatory)

The Material Overheads defined are assigned to a specific Item.
Navigation path: Cost Management – SLA>Item Costs>Item Costs

29. Define Material Overhead Absorption Rules (Non-Mandatory)

For specific transaction types the defined Material Overheads can be used.
Navigation path: Cost Management –SLA>Setup>Sub-Elements>Material Overhead Absorptions Rules

30. Define Organization Shipping Network (Non-Mandatory)

Inter-organization shipping network information describes the relationships and accounting information that exists between a shipping (from) Inventory Organization that ships inventory to a destination (to) Inventory Organization.
Depending on the function security assigned to your responsibility, you can define a shipping network between the current organization and another organization or between any two organizations. The function security assigned to your responsibility determines whether you have the ability to define shipping networks for all organizations or just the current organization.
Navigation path: Inventory>Setup>Organizations>Shipping Networks

31. Define Account Aliases (Non-Mandatory)

An account alias is an easily recognized name or label representing a general ledger account number. You can view, report, and reserve against an account alias. During a transaction, you can use the account alias instead of an account number to refer to the account.
Account Aliases are defined in each Inventory Organization. For this purpose first we have to enter into an Inventory Organization.
Navigation path: Inventory>Change Organization

32. Define Transaction Source Type (Non-Mandatory)

A transaction source type is the type of entity against which Oracle Inventory charges a transaction. Along with a transaction action, it uniquely identifies the type of transaction you perform. Oracle Inventory provides the following predefined transaction source types:
• Purchase Order
• Sales Order
• Account
• Job or Schedule
• Account Alias
• Internal Requisition
• Internal Order
• Cycle Count
• Physical Inventory
• Standard Cost Update
• RMA (Return Material Authorization)
• Inventory
You can define additional transaction source types in the Transaction Source Types window. You can then use these user-defined transaction source types and predefined transaction actions to define a new transaction type. This user-defined transaction type is now a customized form of tracking transactions with which you can group and sort reports and inquiries. When you perform a transaction, you specify a transaction type and a source. For example, for a PO receipt transaction, the transaction source type is Purchase Order and the actual PO number is the source.
Navigation path: Inventory>Setup>Source Types

33. Define Transaction Type (Non-Mandatory)

A transaction type is the combination of a transaction source type and a transaction action. It is used to classify a particular transaction for reporting and querying purposes.
Navigation path: Inventory>Setup>Transactions>Types

34. Cost Period (Non-Mandatory)

Oracle Inventory provides the features you need to summarize costs related to inventory and manufacturing activities for a given accounting period and distribute those costs to the general ledger.
Cost Periods are set at Inventory Organization level so first we have to select the relevant Inventory Organization for which we are going to set our Cost Periods.
Navigation path: Inventory>Change Organization

After the configuration of these steps  we are able to make entries in Oracle Inventory.

Please contact me for any kind of detail and screeshots related to the understanding of Oracle Inventory Configuration at:
Email: raheelirshadkhan@gmail; Facebook: Raheel Irshad Khan or raheel.i.khan.14@facebook.com
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