Using Outside Processing in Oracle Supply Chain Management Cloud

Transcription

1 Using Outside Processing in Oracle Supply Chain Management Cloud Manage and Execute Your Outsourced Manufacturing Operations Efficiently O R A C L E W H I T E P A P E R J U N E

2 Disclaimer The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle s products remains at the sole discretion of Oracle. USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

3 Table of Contents Disclaimer 1 Introduction 5 Outsourcing a Single Operation on a Work Order 6 Use Case Description 6 Key Setups 6 Set up Plant Parameters to Create Purchase Requisition for Plating Operation 6 Set up Items for Outsourcing the Plating Operation 7 Set up Mapping Set for Automatic Purchase Order Creation 8 Set up Supplier for Processing Plating Operation 9 Set up Blanket Purchase Agreement for Plating Operation 10 Set up Standard Supplier Operations 10 Set up Work Definition with Plating Operation 11 Set up Outside Processing (Plating) Cost and Include in Rolled up Costs 13 Execution Steps 13 Create Work Order with Plating Operation Processed by Supplier 13 Create Purchasing Documents Automatically for Plating Operation 15 Complete Quantities at Machining Operation 16 Review Quantities at Plating Operation 16 Create Shipment Lines Automatically and Confirm Shipment of Machined Parts to Supplier (Precision Industrial Plating) 17 Print Shipping Documents for Shipment of Machined Parts to Supplier 18 Receive Plated Parts from Supplier and Deliver to Manufacturing 20 1 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

4 Review Accounting Distributions on Receipt of Plated Parts and Delivery to Manufacturing 20 Review Progress at Plating Operation 21 Review Purchasing, Shipping, and Receiving Details of Plating Operation 22 Complete Quantities at Assembly Operation 22 Review Plating Operation Costs on Work Order 23 Outsourcing Consecutive Operations on a Work Order 24 Use Case Description 24 Key Setups 24 Set up Plant Parameters to Create Purchase Requisitions for Heat Treatment and Plating Operations 25 Set up Items for Outsourcing the Heat Treatment and Plating Operations 25 Set up Mapping Set for Automatic Purchase Order Creation 27 Set up Suppliers for Processing Plating and Heat Treatment Operations 28 Set up Blanket Purchase Agreements for Heat Treatment and Plating Operations 29 Set up Standard Supplier Operations 31 Set up Work Definition with Heat Treatment and Plating Operations 32 Execution Steps 34 Create Work Order with Heat Treatment and Plating Operations Processed by Suppliers 35 Complete Quantities at Machining Operation 36 Create Purchasing Documents Automatically for Heat Treatment Operation 37 2 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

5 Review Quantities at the Heat Treatment Operation 38 Create Shipment Lines Automatically and Confirm Shipment of Machined Parts to Supplier (Industrial Heat Treaters) 39 Print Shipping Documents for Shipment of Machined Parts to Supplier (Industrial Heat Treaters) 40 Create Advance Shipment Notice to Confirm Shipment of Heat Treated Parts for Plating 42 Review Accounting Distributions on Logical Receipt and Delivery of Heat Treated Parts 42 Report Progress at the Heat Treatment Operation 43 Create Purchasing Documents automatically for Plating Operation 44 Review Quantities at Plating Operation 45 Receive Plated Parts from Supplier (Precision Industrial Plating) and Deliver to Manufacturing 46 Review Accounting Distributions on Receipt of Plated Parts and Delivery to Manufacturing 46 Review Purchasing, Shipping, and Receiving Details of Heat Treatment and Plating Operations 47 Complete Quantities at Assembly Operation 49 Review Heat Treatment and Plating Operation Costs on Work Order 49 Managing Demand and Supply Side Changes in Outside Processing 50 Managing Demand Side Changes in Outside Processing 50 Example of Demand Side Change Management in Outside Processing 54 3 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

6 Managing Supply Side Changes in Outside Processing 54 Example of Supply Side Change Management in Outside Processing 56 Example of Receipt Correction in Outside Processing 57 Example of Return to Supplier in Outside Processing 58 Troubleshooting 59 FAQs 61 Conclusion 64 Additional Resources 65 Release Trainings 65 Documentation 65 4 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

7 Partnerships with third-party contract manufacturers are deepening, as is the breadth of the contract manufacturing services utilized by savvy brand owners. - Survey Analysis: The Proviso for Contract Manufacturing, March 2017 VIRGINIA HOWARD RESEARCH DIRECTOR GARTNER Introduction Contract or outsourced manufacturing is today s supply chain reality and a strategic staple for several manufacturers and brand owners. Companies have adopted this collaborative business model as an alternative to in-house manufacturing for the following reasons:» Lower manufacturing costs due to economies of production» Leverage state of the art manufacturing technologies» Augment capacity to overcome production bottlenecks» Focus on core competencies Depending on the nature of business, an enterprise may choose to completely outsource its manufacturing activities or a portion of it to an external supplier, often referred to as a manufacturing partner who provides specialized manufacturing services. However, regardless of the extent of manufacturing outsourcing, companies need visibility and means to efficiently control and manage processes that are executed beyond the four walls of their factories. To support outsourced manufacturing, Oracle Supply Chain Management Cloud offers the following solutions:» Contract manufacturing solution: Supports complete outsourced manufacturing scenarios, where the entire process to manufacture a product is outsourced to a supplier. To know more about the contract manufacturing solution, refer to the white paper titled Contract Manufacturing: A Guide to Key Application Setups.» Outside processing solution: Supports partial outsourced manufacturing situations where one or more operations to manufacture a product are outsourced to suppliers and the rest are processed in-house. This white paper discusses how to set up and execute outside processing in scenarios where either single or consecutive operations on a work order are outsourced to suppliers. 5 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

8 Outsourcing a Single Operation on a Work Order This section describes the detailed steps to set up and execute scenarios where one of the operations on a work order is outsourced to a supplier while the rest are processed in-house. Use Case Description The following diagram represents a single operation outsourcing scenario. To manufacture a product (Casing Assembly), an original equipment manufacturer (OEM) performs the first operation, machining, in-house and then ships the machined parts to a supplier (Precision Industrial Plating) for plating. The supplier performs the plating operation and ships the plated parts to the OEM. The OEM receives the plated parts and pays the supplier for performing the plating operation. In the entire process, the OEM retains the ownership of the goods that are sent to and received back from the supplier. Figure 1. Single Operation Outsourcing Key Setups The following are the key setups required to model the above use case:» Set up Plant Parameters to create Purchase Requisition for Plating Operation» Set up Items for outsourcing the Plating Operation» Set up Mapping Set for automatic Purchase Order creation» Set up Supplier for processing the Plating Operation» Set up Blanket Purchase Agreement for the Plating Operation» Set up Standard Supplier Operations» Set up Work Definition with Plating Operation» Set up Outside Processing (Plating) cost and include in rolled up costs Set up Plant Parameters to Create Purchase Requisition for Plating Operation It is important to decide when purchase requisitions need to be automatically created for outsourcing the Plating Operation to a supplier and set up the Purchase Requisition Trigger plant parameter accordingly as shown in following screenshot. 6 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

9 Navigation: Setup and Maintenance > Manage Plant Parameters Figure 2. Purchase Requisition Trigger Plant Parameter If set to Work order release, a purchase requisition is created for the Plating operation when the work order is released. This is the default setting. If set to Prior operation completion, purchase requisitions are created for the Plating operation when quantities are completed at the prior count point Machining operation. For this scenario, let s assume that purchase requisitions are created when a work order with the Plating operation is released. This also applies to all other manufacturing operations in the plant that outsourced to suppliers. Set up Items for Outsourcing the Plating Operation In addition to the product (Casing Assembly in this example), you must define an outside processing service item (Industrial Plating in this example) in Product Information Management work area and associate to the organization to represent the value added service. Navigation: Product Management > Product Information Management > Create Item Figure 3 (a). Outside Processing Item (Industrial Plating) The Outside Processing Service Item attribute of this item must be set to Yes as shown below. In addition, the Purchased and Purchaseable attributes should be set to Yes, a list price must be defined and a buyer must be 7 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

10 associated. More importantly, the unit of measure of the Outside Processing Item (Industrial Plating) must be the same as that of the end product (Casing Assembly) Figure 3 (b). Outside processing item attribute The outside processing service item Industrial Plating is used to account for the supplier contribution in the build process. It is referenced in the purchasing and shipping documents, and is used to receive goods against an outside processing purchase order. It also represents the outgoing partially finished assemblies (Machined parts) that are shipped to the manufacturing partner. The outside processing service item Industrial Plating also represents the incoming partially finished assemblies (Plated parts) that are received from the supplier. Receiving the Industrial Plating item implicitly means receipt of the incoming partially finished assemblies (Plated parts). Set up Mapping Set for Automatic Purchase Order Creation You must define rules for the predefined Outside Processing mapping set if you require Outside Processing Purchase Orders to be automatically created for outsourcing the Plating operation. This enables you to get the purchase order charge account required for automatic creation of Outside Processing Purchase Orders. You can define rules by using the Define Transaction Account Rules and Manage Mapping Sets tasks in the Setup and Maintenance work area. Navigation: Setup and Maintenance > Define Transaction Account Rules > Manage Mapping Sets (Scope: Cost Management) > Outside Processing 8 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

11 Figure 4. Outside Processing Mapping Set The outside processing mapping set is defined using the following attributes:» Inventory Organization» Work Order Subtype» Purchasing Category Code» Item Number Set up Supplier for Processing Plating Operation It is required to define a supplier (Precision Industrial Plating in this example) for outsourcing the Plating operation. In addition, you must define a supplier site and assign it to the required procurement business unit. Navigation: Procurement > Suppliers > Create Supplier Figure 5. Supplier for Outsourcing Plating Operation 9 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

12 In the context of outside processing, a supplier refers to an external party that provides specialized manufacturing services, such as Plating to manufacture a product. Set up Blanket Purchase Agreement for Plating Operation To enable automatic creation and approval of Outside Processing Purchase Orders in outside processing, you must define a Blanket Agreement with a document style that supports outside processing and include the outside processing service item (Industrial Plating in this example). You must also set the Automatically generate order and Automatically submit for approval attributes to Yes in the Controls tab of the Blanket Agreement. Navigation: Procurement > Purchase Agreements > Create Agreement Figure 6. Blanket Agreement for Outsourcing Plating Operation In the absence of a blanket agreement, the purchase orders must be manually created from the requisition. Set up Standard Supplier Operations In Oracle Manufacturing Cloud, you can optionally define and identify a standard operation of the type Supplier (Plating in this example) that is processed by an external supplier (Precision Industrial Plating). An operation of the 10 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

13 type Supplier is always a count point operation. You can also maintain additional details for a standard Plating operation and re-use it across work definitions and work orders. Navigation: Work Definition > Manage Standard Operations Figure 7. Standard Supplier Operation You can optionally create similar standard operations for Machining and Assembly operations that are processed inhouse. It is assumed that the work area, work centers, and resources have been already defined. Set up Work Definition with Plating Operation In Oracle Manufacturing Cloud, you must define a work definition for the end assembly (Casing Assembly) with the Machining, Plating and Assembly operations to create standard work orders. You can reference the standard Plating operation while creating the work definition as shown below. In addition, you need to check the Generate shipment attribute to trigger automatic creation of shipment line to ship the Machined parts to the supplier. Navigation: Work Definition > Manage Work Definitions 11 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

14 Navigation: Work Definition > Manage Work Definitions Figure 8 (a). Work Definition indicating that the Plating Operation is processed by a supplier Figure 8 (b). Plating Operation details in the Work Definition 12 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

15 Set up Outside Processing (Plating) Cost and Include in Rolled up Costs As part of cost planning, Oracle Fusion Cost Management allows you to define outside processing service item cost, and include it in the rolled up cost of standard costed items. You need to create a cost scenario, set up standard costs, perform cost roll up, and publish the rolled up costs. Navigation: Cost Accounting > Cost Planning > View Rolled Up Costs Figure 9. Outside Processing (Plating) cost as part of the rolled up cost of the finished good Execution Steps The following are the key steps to execute this scenario where one of the operations on a work order is outsourced to a supplier:» Create a Work Order with Plating Operation processed by the supplier (Precision Industrial Plating)» Create Purchasing Documents automatically for the Plating Operation» Complete Quantities at the Machining Operation» Review Quantities at the Plating Operation» Create Shipment Lines automatically and confirm shipment of machined parts to supplier (Precision Industrial Plating)» Print Shipping Documents for shipment of machined parts to supplier (Precision Industrial Plating)» Receive plated parts from supplier (Precision Industrial Plating) and deliver to manufacturing» Review Accounting Distributions on receipt of plated parts and delivery to manufacturing» Review progress at the Plating Operation» Review Purchasing, Shipping and Receiving Details of the Plating Operation» Complete Quantities at the Assembly Operation» Review Plating Operation Costs on the Work Order Create Work Order with Plating Operation Processed by Supplier The first step is to create and release a work order for the end assembly (Casing Assembly) in Oracle Manufacturing Cloud by referencing the work definition with the Plating operation. 13 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

16 Navigation: Work Execution > Manage Work Orders Figure 10 (a). Work Order with Plating Operation Figure 10 (b). Plating Operation Details The supplier operation (Plating) is scheduled based on the lead times that are specified here. 14 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

17 Create Purchasing Documents Automatically for Plating Operation Once the work order is released, since the Purchase Requisition Trigger plant parameter is set to Work order release, a request is sent to Supply Chain Orchestration to automatically create a Purchase Requisition. Supply Chain Orchestration in turn creates a Supply Order and triggers the creation of a Purchase Requisition in Oracle Fusion Self Service Procurement for the Plating operation. An Outside Processing Purchase Order is created and approved in Oracle Fusion Purchasing from the Purchase Requisition for the outside processing service item (Industrial Plating) using the details maintained in the Outside Processing Blanket Agreement. Navigation: Procurement > Purchase Orders > Manage Orders Figure 11 (a). Outside Processing Purchase Order It displays manufacturing details such as Product (Casing Assembly) at purchase order line and schedule levels as shown below. 15 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

18 Figure 11 (b). Work Order and Operation Details in Outside Processing Purchase Order Complete Quantities at Machining Operation The next step is to execute the work order by reporting quantities as completed at the Machining operation. This is done by searching for the work order operation in the Dispatch List, selecting it and performing a Quick Complete action. Navigation: Work Execution > Review Dispatch List Figure 12. Reporting Completion at Machining Operation Review Quantities at Plating Operation Upon completion, the machined parts are ready to be shipped to the supplier for Plating and are represented as In Process at the Plating operation in the Manage Supplier Operations page. The In Process dispatch status represents quantities that have been completed at the prior count point operation (Machining) but have not yet been received from the supplier after processing. Navigation: Work Execution > Manage Supplier Operations Figure 13. Representation of Quantities in In Process Status 16 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

19 Create Shipment Lines Automatically and Confirm Shipment of Machined Parts to Supplier (Precision Industrial Plating) Once the goods are reported as completed at the Machining operation, Oracle Manufacturing Cloud sends a request to Supply Chain Orchestration to create a shipment line to ship the Machined parts to the supplier (Precision Industrial Plating). Supply Chain Orchestration orchestrates the automatic creation of a shipment line in Oracle Fusion Shipping. The Shipment Line is created for the outside processing item Industrial Plating, as it represents the Machined parts that are shipped to the supplier for performing the Plating operation. The shipment line carries the manufacturing details such as work order, operation, and the end assembly. Navigation: Warehouse Operations> Shipments > Manage Shipment Lines Figure 14. Automatic Creation of a Shipping Line to Ship the Machined Parts 17 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

20 The shipment line then needs to be manually associated to a shipment. It could either be associated to an existing shipment or a new shipment following which the shipment needs to be confirmed and closed. Figure 15. Confirmation of Shipment to Supplier Print Shipping Documents for Shipment of Machined Parts to Supplier Upon confirming the shipment, based on the options set for the Ship Confirm Rule, the processes to print Packing Slip and Bill of Lading are automatically launched. These processes can be launched manually as well. The Packing Slip Report and the Bill of Lading Report display the details of the outside processing service item, Industrial Plating that represents the Machined parts shipped to the supplier (Precision Industrial Plating) for plating. 18 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

21 Navigation: Warehouse Operations> Scheduled Processes> Print Packing Slip Report Figure 16. Packing Slip Navigation: Warehouse Operations> Scheduled Processes> Print Bill of Lading Report Figure 17. Bill of Lading 19 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

22 Receive Plated Parts from Supplier and Deliver to Manufacturing The next step is to receive the Plated parts (represented by the Plating item) processed by the supplier and deliver them to manufacturing using the Manufacturing destination type. Navigation: Warehouse Operations > Receipts > Receive Expected Shipments Figure 18. Receipt of Plated Parts Navigation: Warehouse Operations > Receipts > Put Away Receipts Figure 19. Delivery of Plated Parts Review Accounting Distributions on Receipt of Plated Parts and Delivery to Manufacturing Accounting distributions are created in Oracle Fusion Cost Management after the Plated parts are received and delivered to manufacturing. The following processes need to be scheduled or run manually to process the receipt and put away transactions:» Transfer Transactions from Manufacturing to Costing» Transfer Transactions from Inventory to Costing» Transfer Transactions from Receiving to Costing» Create Receipt Accounting Distributions» Create Cost Accounting Distributions The following are the accounting distributions in Receipt Accounting after the plated parts are received from the supplier. Account Debit Credit Accruals - XX Receiving Inspection XX - The same can be reviewed as shown below. 20 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

23 Navigation: Costing > Receipt Accounting > Review Receipt Accounting Distributions Figure 20. Accounting Distributions after Plated Parts are Received The following are the accounting distributions in Cost Accounting after the plated parts are delivered to Manufacturing. Account Debit Credit Receiving Inspection - XX WIP Valuation XX - The same can be reviewed as shown below. Navigation: Cost Management > Costing > Review Cost Accounting Distributions Figure 21. Accounting Distributions after Plated Parts are Delivered Review Progress at Plating Operation Upon delivery of the Industrial Plating items to manufacturing, Oracle Fusion Receiving invokes Oracle Manufacturing Cloud to automatically progress quantities from In Process to Complete status at the supplier operation, Plating. The quantities are further managed through the Manage Supplier Operations page in Oracle Manufacturing Cloud. 21 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

24 Navigation: Work Execution > Manage Supplier Operations Figure 22. Automatic Completion upon Delivery of Plated parts to Manufacturing Review Purchasing, Shipping, and Receiving Details of Plating Operation At any given point of time, you can monitor and review the Plating operation details through the Review Supplier Operation Details page that displays the purchasing, shipping, and receiving details related to a supplier operation and provides hyperlinks to review additional details of POs, shipments, and receipts. And as a Production Supervisor, you can perform several actions to manage supply exceptions. Navigation: Work Execution > Manage Work Orders > Review Supplier Operation Details Work Execution > Manage Supplier Operations > Review Supplier Operation Details Figure 23. Purchasing, Shipping, and Receipt Details Complete Quantities at Assembly Operation The next step is to report quantities as completed into inventory at the Assembly operation. This is done by fetching the work order operation in the Dispatch List, specifying the quantity and performing a Quick Complete action. Navigation: Work Execution > Review Dispatch List 22 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

25 Figure 24. Reporting Completion at Assembly Operation Review Plating Operation Costs on Work Order You can review the work order costs and identify costs related to the Plating operation as shown below. Navigation: Cost Management > Costing > Review Work Order Costs Figure 25. Plating Operation Costs 23 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

26 Outsourcing Consecutive Operations on a Work Order This section describes the detailed steps to set up and execute scenarios where consecutive operations on a work order are outsourced to suppliers while the rest are processed in-house. Use Case Description The following diagram represents a consecutive operation outsourcing scenario. To manufacture a product (Casing Assembly), an original equipment manufacturer (OEM) performs the first operation, machining, in-house and ships the machined parts to a supplier (Industrial Heat Treaters) for heat treatment. After completing the heat treatment operation, the supplier (Industrial Heat Treaters) drop ships the heat treated parts to yet another supplier (Precision Industrial Plating) for plating. The OEM pays the supplier (Industrial Heat Treaters) for performing the heat treatment operation. The second supplier (Precision Industrial Plating) performs the plating operation and ships the plated parts to the OEM. The OEM receives the plated parts and pays the supplier (Precision Industrial Plating) for performing the plating operation. In the entire process, the OEM retains the ownership of the goods that are sent to and received back from the suppliers. Figure 26. Consecutive Operations Outsourcing Key Setups The following are the key setups required to model the above use case:» Set up Plant Parameters to create Purchase Requisitions for Heat Treatment and Plating Operations» Set up Items for outsourcing the Heat Treatment and Plating Operations» Set up Mapping Set for automatic Purchase Order creation» Set up Suppliers for processing the Plating and Heat Treatment Operations» Set up Blanket Purchase Agreements for the Heat Treatment and Plating Operations» Set up Standard Supplier Operations» Set up Work Definition with Plating Operation» Set up Outside Processing (Heat Treatment and Plating) costs and include in rolled up costs 24 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

27 Set up Plant Parameters to Create Purchase Requisitions for Heat Treatment and Plating Operations It is important to decide when purchase requisitions need to be created for outsourcing the Heat Treatment and Plating operations to suppliers and set up the Purchase Requisition Trigger plant parameter accordingly as shown in following screenshot. Navigation: Setup and Maintenance > Manage Plant Parameters Figure 27. Purchase Requisition Trigger Plant Parameter If set to Work order release, purchase requisitions are created for the Heat Treatment and Plating operations when the work order is released. This is the default setting. If set to Prior operation completion, purchase requisitions are created for the Heat Treatment and Plating operations when quantities are completed at the prior count point operations (Machining and Heat Treatment) respectively. For this use case, let s assume that purchase requisitions are created for the Heat Treatment and Plating operations when quantities are completed at the prior count point (Machining and Heat Treatment) operations respectively. This also applies to all other manufacturing operations in the plant that outsourced to suppliers. Set up Items for Outsourcing the Heat Treatment and Plating Operations In addition to the product (Casing Assembly in this example), you must define outside processing service items (Industrial Heat Treatment and Industrial Plating in this example) in Product Information Management work area to represent the value added services. Navigation: Navigation: Product Management > Product Information Management > Create Item The Outside Processing Service Item attribute of these items must be set to Yes as shown below. In addition, the Purchased and Purchaseable attributes should be set to Yes, a list price must be defined, and a buyer must be associated. More importantly, the unit of measure of the Outside Processing Item (Industrial Plating) must be the same as that of the end product (Casing Assembly). 25 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

28 Figure 28 (a). Outside Processing Item (Industrial Heat Treatment) Figure 28 (b). Outside Processing Item Attributes (Industrial Heat Treatment) Figure 28 (c). Outside Processing Item (Industrial Plating) 26 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

29 Figure 28 (d). Outside Processing Item Attributes (Industrial Plating) The outside processing service items Industrial Heat Treatment and Industrial Plating are used to account for the supplier contributions in the build process. They are referenced in the purchasing and shipping documents, and are used to receive goods against the outside processing purchase orders. The Industrial Heat Treatment item represents the outgoing partially completed assemblies (Machined parts) that are shipped to the supplier who processes the Heat Treatment operation. The outside processing service item Industrial Heat Treatment also represents the partially finished assemblies (Heat Treated parts) that are drop shipped by the supplier after completing the Heat Treatment operation to next supplier in sequence for Plating. Creating and sending an Advance Shipment Notice for the Industrial Heat Treatment item implicitly means the shipment of partially finished assemblies (Heat Treated parts) to next supplier in sequence who processes the Plating operation. Similarly, the outside processing service item Industrial Plating represents the incoming partially finished assemblies (Plated parts) that are received from the supplier. Receiving the Industrial Plating item implicitly means receipt of the incoming partially finished assemblies (Plated parts). Set up Mapping Set for Automatic Purchase Order Creation You must define rules for the predefined Outside Processing mapping set if you require Outside Processing Purchase Orders to be automatically created for outsourcing the Heat Treatment and Plating operations. You can define rules by using the Define Transaction Account Rules and Manage Mapping Sets tasks in the Setup and Maintenance work area. 27 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

30 Navigation: Setup and Maintenance > Define Transaction Account Rules > Manage Mapping Sets (Scope: Cost Management) > Outside Processing Figure 29. Outside Processing Mapping Set The predefined outside processing mapping set is based on the following attributes:» Inventory Organization» Work Order Subtype» Purchasing Category Code» Item Number If you choose to use different charge accounts for Heat Treatment and Plating operations, you could define two different rules with items Industrial Heat Treatment and Industrial Plating mapping to the corresponding accounts. Set up Suppliers for Processing Plating and Heat Treatment Operations It is required to define suppliers (Industrial Heat Treaters and Precision Industrial Plating in this example) for outsourcing the operations which are Heat Treatment and Plating respectively. In addition, you must define the corresponding supplier sites and associate them to the desired procurement business unit. Also, for creating Advance Shipment Notices in Oracle Fusion Supplier Portal, you must define a supplier contact for each supplier. 28 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

31 Navigation: Procurement > Suppliers > Create Supplier Figure 30 (a). Supplier for Outsourcing Heat Treatment Operation Figure 30 (b). Supplier for Outsourcing Plating Operation In the context of outside processing, a supplier refers to an external party that provides specialized manufacturing services, such as Heat Treatment and Plating to manufacture a product. Set up Blanket Purchase Agreements for Heat Treatment and Plating Operations To enable automatic creation and approval of Outside Processing Purchase Orders in outside processing, you must define Blanket Agreements with a document style that supports outside processing and include the outside processing service items (Industrial Heat Treatment and Industrial Plating in this example). You must also set the Automatically generate order and Automatically submit for approval attributes to Yes in the Controls tab of the Blanket Agreement. 29 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

32 Navigation: Procurement > Purchase Agreements > Create Agreement Figure 31 (a). Blanket Agreement for Outsourcing Heat Treatment Operation Figure 31 (b). Blanket Agreement for Outsourcing Plating Operation In the absence of blanket agreements, the purchase orders must be manually created from the requisition. 30 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

33 Set up Standard Supplier Operations In Oracle Manufacturing Cloud, you can optionally define and identify standard operations of the type Supplier (Heat Treatment and Plating in this scenario) that are processed by external suppliers (Industrial Heat Treaters and Precision Industrial Plating). An operation of the type Supplier is always a count point operation. You can also specify additional details for the standard Heat Treatment and Plating operation and re-use it across work definitions and work orders. Navigation: Work Definition > Manage Standard Operations Figure 32 (a). Standard Heat Treatment Operation Figure 32 (b). Standard Plating Operation You can create similar standard operations for Machining and Assembly operations that are processed in-house. It is assumed that the work area, work centers, and resources have been already defined. 31 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

34 Set up Work Definition with Heat Treatment and Plating Operations In Oracle Manufacturing Cloud, you must define a work definition with the Machining, Heat Treatment, Plating and Assembly operations to create standard work orders. You can reference the standard Heat Treatment and Plating operations while creating the work definition as shown below. In addition, you need to check the Generate shipment attribute of the Heat Treatment operation to trigger automatic creation of shipment line to ship the Machined parts to the supplier. Navigation: Work Definition > Manage Work Definitions Figure 33 (a). Work Definition with Supplier Operations 32 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

35 While it is optional to associate a supplier and supplier site to the Heat Treatment operation, you must associate a supplier and supplier site to the Plating operation. This is required to derive the Ship to Party, Ship to Location and Deliver to Location while creating the Outside Processing Purchase Order for outsourcing the Heat Treatment operation to the supplier (Industrial Heat Treaters). The Ship to Party, Ship to Location and Deliver to Location on the PO correspond to the supplier (Precision Industrial Plating) that services the next operation (Plating) in sequence. Figure 33 (b). Heat Treatment Operation Details Figure 33 (c). Plating Operation Details 33 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

36 Set up Outside Processing (Heat Treatment and Plating) Costs and include in Rolled up Costs As part of cost planning, Oracle Fusion Cost Management allows you to define outside processing service item (Industrial Heat Treatment and Industrial Plating) costs, and include it in the rolled up cost of standard costed items. You need to create a cost scenario, set up standard costs, perform cost roll up costs, and publish the rolled up costs. Navigation: Cost Accounting > Cost Planning > View Rolled Up Costs Figure 34. Outside Processing (Heat Treatment and Plating) cost as part of the rolled up cost of the finished good Execution Steps The following are the key steps to execute this scenario where consecutive operations on a work order are outsourced to suppliers while the rest are processed in-house.» Create Work Order with Heat Treatment and Plating Operations processed by suppliers» Complete Quantities at the Machining Operation» Create Purchasing Documents automatically for Heat Treatment Operation» Review Quantities at the Heat Treatment Operation» Create Shipment Lines Automatically and confirm shipment of machined parts to supplier (Industrial Heat Treaters)» Print Shipping Documents for shipment of machined parts to supplier (Industrial Heat Treaters)» Create Advance Shipment Notice to confirm shipment of heat treated parts for plating» Review Accounting Distributions on logical receipt and delivery of heat treated parts» Report Progress at the Heat Treatment Operation» Create Purchasing Documents automatically for the Plating Operation» Review Quantities at the Plating Operation» Receive plated parts from supplier (Precision Industrial Plating) and deliver to manufacturing» Review Accounting Distributions on receipt of plated parts and delivery to manufacturing» Review Purchasing, Shipping and Receiving Details of the Heat Treatment and Plating Operations» Complete quantities at the Assembly Operation» Review Heat Treatment and Plating Operation Costs on the Work Order In this example, we will assume that the end product is serial controlled and serial tracking is enabled at all operations. 34 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

37 Create Work Order with Heat Treatment and Plating Operations Processed by Suppliers The first step is to create and release a work order in Oracle Manufacturing Cloud by referencing the work definition with the Heat Treatment and Plating operations. Navigation: Work Execution > Manage Work Orders Figure 35 (a). Heat Treatment and Plating Operations on Work Order Figure 35 (b). Heat Treatment Operation Details 35 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

38 Figure 35 (c). Plating Operation Details It is important to note that supplier operations (Heat Treatment and Plating) are scheduled based on the lead times that are specified here. Complete Quantities at Machining Operation The next step is to execute the work order by reporting quantities as completed at the Machining operation. This is done by fetching the work order operation in the Dispatch List and performing a Quick Complete action. Navigation: Work Execution > Review Dispatch List Figure 36. Completion at Machining Operation 36 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

39 Create Purchasing Documents Automatically for Heat Treatment Operation Once the quantities are reported as completed at the Machining operation, since the Purchase Requisition Trigger plant parameter is set to at Prior operation completion, a request is sent to Oracle Fusion Supply Chain Orchestration to create a Purchase Requisition for the Heat Treatment operation. Supply Chain Orchestration in turn creates a Supply Order and triggers the creation of a Purchase Requisition in Oracle Fusion Self Service Procurement. An Outside Processing Purchase Order is created in Oracle Fusion Purchasing from the Purchase Requisition for the outside processing service item (Industrial Heat Treatment) using the details maintained in the Outside Processing Blanket Agreement. Navigation: Procurement > Purchase Orders > Manage Orders Figure 37 (a). Outside Processing Purchase Order for Heat Treatment The Ship-to Location and Deliver-to Location is Precision Industrial Plating, where the heat treated parts are sent for plating. 37 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

40 The manufacturing details at the purchase order line and the schedule levels are displayed as shown below. Figure 37 (b). Work Order and Operation Details in Outside Processing Purchase Order The Ship-to Location Precision Industrial Plating is indicated as a third party location as shown below. Figure 37 (c). Work Order and Operation Details in Outside Processing Purchase Order Review Quantities at the Heat Treatment Operation The machined parts are now ready to be shipped to the supplier (Industrial Heat Treaters) for Heat Treatment and are represented as In Process at the Heat Treatment operation in the Manage Supplier Operations page. The In Process dispatch status represents quantities that have been completed at the prior count point operation (Machining) but have not yet been received from the supplier (Industrial Heat Treaters) after heat treatment. Navigation: Work Execution > Manage Supplier Operations Figure 38. Representation of Quantities in In Process Status 38 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

41 Create Shipment Lines Automatically and Confirm Shipment of Machined Parts to Supplier (Industrial Heat Treaters) Once the goods are reported as completed at the Machining operation, Oracle Manufacturing Cloud sends a request to Supply Chain Orchestration to create a shipment line to ship the Machined parts to the supplier. Supply Chain Orchestration orchestrates the automatic creation of a shipment line in Fusion Shipping. The Shipment Line is created for the outside processing item Industrial Heat Treatment, as it represents the Machined parts that are shipped to the supplier for performing the Heat Treatment operation. The shipment line carries the manufacturing details such as work order, operation, and the end assembly. Navigation: Warehouse Operations> Shipments > Manage Shipment Lines Figure 39. Automatic Creation of a Shipping Line to Ship the Machined Parts 39 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

42 The shipment line then needs to be manually associated to a shipment. It could either be associated to an existing shipment or a new shipment following which the shipment needs to be confirmed and closed. Figure 40. Confirmation of Shipment to Supplier Print Shipping Documents for Shipment of Machined Parts to Supplier (Industrial Heat Treaters) Upon confirming the shipment, based on the options set for the Ship Confirm Rule, the processes to print Packing Slip and Bill of lading are automatically launched. These processes can be launched manually as well. The Packing Slip Report and the Bill of Lading Report display the details of the outside processing service item, Industrial Heat Treatment that represents the Machined parts that are shipped to the supplier Precision Industrial Plating for heat treatment. 40 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

43 Navigation: Warehouse Operations> Scheduled Processes> Print Packing Slip Report Figure 41. Packing Slip Navigation: Warehouse Operations> Scheduled Processes> Print Bill of Lading Report Figure 42. Bill of Lading 41 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

44 Create Advance Shipment Notice to Confirm Shipment of Heat Treated Parts for Plating The next step is for the supplier (Industrial Heat Treaters) user to confirm the completion of the heat treatment operation and shipment of heat treated parts to the next supplier (Precision Industrial Plating) in sequence by creating an Advance Shipment Notice using Oracle Fusion Supplier Portal or Oracle Fusion Receiving. The Advance Shipment Notice is created for the outside processing service item (Industrial Heat Treatment) as it represents the heat treated parts that are sent for plating to Precision Industrial Plating. Navigation: Supplier Portal > Create ASN Receiving > Create ASN Figure 43. Advance Shipment Notice Creation The Advance Shipment Notice is processed and a logical receipt and put away transaction are created in Oracle Fusion Receiving. Review Accounting Distributions on Logical Receipt and Delivery of Heat Treated Parts Accounting distributions are created in Fusion Cost Management after the logical receipt and delivery is created, as shown here. The following are the accounting distributions in Receipt Accounting after the logical receipt is created. Account Debit Credit Receiving Inspection XX - Accruals - XX 42 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

45 The same can be reviewed as shown below. Navigation: Cost Management > Receipt Accounting > Review Receipt Accounting Distributions Figure 44. Accounting Distributions after the logical receipt is created The following are the accounting distributions in Cost Accounting after the logical delivery is created. Account Debit Credit WIP Valuation XX - Receiving Inspection - XX The same can be reviewed as shown below. Navigation: Cost Management > Costing > Review Cost Accounting Distributions Figure 45. Accounting Distributions after the logical delivery is crated Report Progress at the Heat Treatment Operation Upon creation of logical receipt and put away transactions for the Industrial Heat Treatment item, Receiving invokes Manufacturing to automatically progress the serials from In Process to Ready status at the supplier operation (Heat Treatment). The specific serial numbers are then reported as completed through the Manage Supplier Operations page in Fusion Manufacturing using the Quick Complete as shown below. Navigation: Work Execution > Manage Supplier Operations 43 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

46 Figure 46. Completion Reporting at the Heat Treatment Operation Create Purchasing Documents automatically for Plating Operation Once the serial numbers are reported as completed at the Heat Treatment operation, since the Purchase Requisition Trigger plant parameter is set to at Prior operation completion, a request is sent to Supply Chain Orchestration to create a Purchase Requisition for the Plating operation. Supply Chain Orchestration in turn creates a Supply Order and triggers the creation of a Purchase Requisition in Oracle Fusion Self Service Procurement. An Outside Processing Purchase Order is created in Oracle Fusion Purchasing from the Purchase Requisition for the outside processing service item (Industrial Plating) using the details maintained in the Outside Processing Blanket Agreement. 44 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

47 Navigation: Procurement > Purchase Orders > Manage Orders Figure 47 (a). Outside Processing Purchase Order for Plating The manufacturing details at the purchase order line and the schedule levels are displayed as shown below. Figure 47 (b). Work Order and Operation Details in Outside Processing Purchase Order Review Quantities at Plating Operation The heat treated parts are shipped to the supplier (Precision Industrial Plating) for Plating and are represented as In Process at the Plating operation in the Manage Supplier Operations page. The In Process dispatch status represents quantities that have been completed at the prior count point operation (Heat Treatment) but have not yet been received from the supplier (Precision Industrial Plating) after plating. Navigation: Work Execution > Manage Supplier Operations 45 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

48 Figure 48. Representation of Quantities in In Process Status Receive Plated Parts from Supplier (Precision Industrial Plating) and Deliver to Manufacturing The next step is to receive the Plated parts (represented by the Industrial Plating item) processed by the supplier and deliver them to manufacturing using the Manufacturing destination type. Navigation: Warehouse Operations > Receipts > Receive Expected Shipments Figure 49. Receipt of Plated parts Warehouse Operations > Receipts > Put Away Receipts Figure 50. Delivery of Plated parts Review Accounting Distributions on Receipt of Plated Parts and Delivery to Manufacturing Accounting distributions are created in Fusion Cost Management after the Plated parts are received and delivered to manufacturing, as shown below. The following are the accounting distributions in Receipt Accounting after the Plated parts are received from the supplier. Account Debit Credit Receiving Inspection XX - Accruals - XX The same can be reviewed as shown below. 46 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

49 Navigation: Cost Management > Receipt Accounting > Review Receipt Accounting Distributions Figure 51. Accounting Distributions after Plated Parts are Received The following are the accounting distributions in Cost Accounting after the Plated parts are delivered to Manufacturing. Account Debit Credit WIP Valuation XX - Receiving Inspection - XX The same can be reviewed as shown below. Navigation: Cost Management > Costing > Review Cost Accounting Distributions Figure 52. Accounting Distributions after Plated Parts are Delivered Review Purchasing, Shipping, and Receiving Details of Heat Treatment and Plating Operations At any given point of time, you can monitor and review the details of the Heat Treatment and Plating operations details through the Review Supplier Operation Details page that displays the purchasing, shipping, and receiving details related to a supplier operation and provides hyperlinks to review additional details of POs, shipments, and receipts. And as a Production Supervisor, you can perform several actions to manage supply exceptions. 47 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

50 Navigation: Work Execution > Manage Work Orders > Review Supplier Operation Details Work Execution > Manage Supplier Operations > Review Supplier Operation Details Figure 53. Purchasing and Receipt Details of Heat Treatment Operation Figure 54. Purchasing and Receipt Details of Plating Operation 48 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

51 Complete Quantities at Assembly Operation The next step is to report serials as completed into inventory at the Assembly operation. This is done by fetching the work order operation in the Dispatch List, selecting the serial numbers, and performing a Quick Complete action. Navigation: Work Execution > Review Dispatch List Figure 55. Reporting Completion at Assembly Operation Review Heat Treatment and Plating Operation Costs on Work Order You can review the work order costs and identify costs related to the Heat Treatment and Plating operations as shown below. Navigation: Cost Management > Costing > Review Work Order Costs Figure 56. Heat Treatment and Plating Operation Costs 49 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

52 Managing Demand and Supply Side Changes in Outside Processing Managing Demand Side Changes in Outside Processing Demand side changes in outside processing refer to changes to a work order with supplier operations such as Heat Treatment and Plating, or as a result of reporting operation transactions at a count point operation prior to the supplier operation which impacts the associated purchasing and shipping documents. The following table details the demand side change events and the corresponding actions that are automatically initiated or performed by users to handle such changes. Event Work order quantity change Actions The Work Order quantity changes are propagated to Fusion Purchasing by automatically requesting Supply Chain Orchestration to create purchase requisitions or update purchase orders for the differential quantity. Work order quantity increase: The Purchase Requisition Trigger plant parameter determines how work order quantity increase is propagated for supplier operations:» If the Purchase Requisition Trigger plant parameter is set to Work order release, then a purchase requisition is created for the differential work order quantity for all the supplier operations of the work order.» If the Purchase Requisition Trigger plant parameter is set to Prior operation completion and if the first count point operation of the work order is a supplier operation, then a purchase requisition is created only for the first supplier operation for the differential work order quantity. In the above cases, if a requisition creation fails, the failed record can be viewed and resubmitted from Supply Chain Orchestration. Work order quantity decrease: The Purchase Requisition Trigger plant parameter determines how work order quantity decrease is propagated for supplier operations:» If the Purchase Requisition Trigger plant parameter is set to Work order release, then the purchase orders belonging to all the supplier operations of the work order are updated to reflect the reduced work order quantity.» If the Purchase Requisition Trigger plant parameter is set to Prior operation completion and if the first count point operation of the work order is a supplier operation, then the purchase order belonging to it is updated to reflect the reduced work order quantity. 50 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

53 In the above cases, if change propagation fails, a supplier operation exception is logged. Work order status change Work order release: When a work order is updated to Released status for the first time or if the work order is directly created in Released status, purchase requisitions are automatically created for the work order quantity based on the Purchase Requisition Trigger plant parameter setting. This is done by automatically requesting Supply Chain Orchestration.» If the Purchase Requisition Trigger plant parameter is set to Work order release, then purchase requisitions are created for the work order quantity for all the supplier operations of the work order.» If the Purchase Requisition Trigger plant parameter is set to Prior operation completion, and if the first count point operation of the work order is a supplier operation, then a purchase requisition is created for the work order quantity only for the first supplier operation. When a work order in Canceled or Closed status is subsequently updated to Released status, purchase requisitions are automatically triggered only for the eligible unexecuted quantity. In all the above cases, if a requisition creation fails, the failed record can be viewed and resubmitted from Supply Chain Orchestration. Work order unrelease: A work order is allowed to be updated to Unreleased status from Released status, or On Hold status, or Closed status, or Canceled status only if there is no pending Purchase Requisition creation requests, Purchase Requisitions, or Purchase Orders for any of the supplier operations on the work order. Work order cancellation: When work order is updated to Canceled status for reasons such as upstream demand cancellation, a warning message is displayed if any open Purchase Requisition, Purchase Order, or any pending Purchase Requisition creation requests exist for any of the supplier operations on the work order. 51 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

54 If the user decides to proceed with the status change, then a request is automatically sent to Supply Chain Orchestration to cancel the Purchase Requisitions, Purchase Orders, or any open shipments created for the supplier operations on the work order. If the change propagation fails, a supplier operation exception is logged. Work order closure: When work order is updated to Closed status for reasons such as upstream demand cancellation or decrease in demand, a warning message is displayed if any open Purchase Requisition, Purchase Order, or any pending Purchase Requisition creation requests exist for any of the supplier operations on the work order. If the user decides to proceed with the status change, then a request is automatically sent to Supply Chain Orchestration to cancel the Purchase Requisitions, Purchase Orders, or any open shipments created for the supplier operations on the work order. If the change propagation fails, a supplier operation exception is logged. Work order supplier operation date changes When the supplier operation completion date is either moved in or moved out due to changes in upstream demand, then a request is automatically sent to Supply Chain Orchestration to propagate the changes in the associated purchasing documents. This will only happen when the requested quantity has not yet been fully received, that is, receipt quantity is less than purchase order requested quantity. If the change propagation fails, a supplier operation exception is logged. Overcompletion When the quantity is over-completed at the first count point operation, the following is applicable:» If the Purchase Requisition Trigger plant parameter is set to Work order release, then a request is automatically sent to Supply Chain Orchestration to create purchase requisitions for all the supplier operations of the work order by an amount equivalent to the over-completed quantity.» If the Purchase Requisition Trigger plant parameter is set to Prior operation completion, then a request is automatically sent to Supply Chain Orchestration to 52 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

55 create a purchase requisition only for the first supplier operation in sequence by an amount equivalent to the overcompleted quantity. In the above cases, if requisition creation fails, the failed records can be viewed and resubmitted from Supply Chain Orchestration. Scrap at prior count point operation When a quantity at a count operation prior to a supplier operation is scrapped, the following is applicable: If the Purchase Requisition Trigger plant parameter is set to Work order release, then a request is automatically sent to Supply Chain Orchestration to decrease the quantity on existing purchase orders for the supplier operation and all the subsequent supplier operations by an amount equivalent to the scrapped quantity. If the change propagation fails, a supplier operation exception is logged. Reversal of scrap at prior count point operation When a scrapped quantity is reversed to ready at a count operation prior to a supplier operation, the following is applicable: If the Purchase Requisition Trigger plant parameter is set to Work order release, then a request is automatically sent to Supply Chain Orchestration to create purchase requisitions for the supplier operation and all the subsequent supplier operations for an amount equivalent to the scrapped quantity that is reversed to ready. In the above cases, if requisition creation fails, the failed records can be viewed and resubmitted from Supply Chain Orchestration. Reversal of completion at prior count point operation When a completed quantity is reversed to ready at a count operation prior to a supplier operation, the following is applicable: If the Purchase Requisition Trigger plant parameter is set to Prior operation completion, then a request is automatically sent to Supply Chain Orchestration to decrease the quantity on existing purchase order for the supplier operation by an amount equivalent to the completed quantity that is reversed to ready. 53 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

56 If the change propagation fails, a supplier operation exception is logged. Example of Demand Side Change Management in Outside Processing Let s assume that in a scenario where single or multiple operations on a work order are outsourced to supplier, the upstream demand is reduced, and hence the corresponding work order that serves as a supply needs to be canceled. When work order is updated to Canceled status, a warning message is displayed if any open Purchase Requisition or Purchase Order or any pending Purchase Requisition creation requests exist for any of the supplier operations on the work order. Navigation: Work Execution > Manage Work Orders Figure 57. Cancellation of a Work Order with Supplier Operations If the user decides to proceed with the status change, then a request is automatically sent to Supply Chain Orchestration to cancel the Purchase Requisitions or Purchase Orders or any open shipments created for the supplier operations on the work order. Managing Supply Side Changes in Outside Processing Supply side changes in outside processing refer to the changes to an outside processing purchase order in Fusion Purchasing. These also include supply issues related to quality and quantity of goods in outside processing that are received from or returned to the supplier. The following table details the supply side change events and the corresponding actions that are automatically initiated or performed by users to handle such changes. 54 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

57 Event Purchase order quantity change Actions When the quantity on an outside processing purchase order is reduced due to supplier s inability to supply the requested quantity, Supply Chain Orchestration subscribes to the change event and communicates the details to Manufacturing. An exception of Supplier Operation type is automatically logged. A production supervisor reviews the supplier operation exception, navigates to the Review Supplier Operation Details page and triggers creation of a purchase requisition for the deficit quantity by clicking on the Create Purchase Requisition action and specifying the required quantity, suggested supplier, and supplier site. Purchase order status change When an outside processing purchase order is cancelled due to supplier s inability to supply the requested quantity, Supply Chain Orchestration subscribes to the change event and communicates the details to Manufacturing. A supplier operation exception is automatically logged. A production supervisor reviews the supplier operation exception, navigates to the Review Supplier Operation Details page and triggers creation of a purchase requisition for the deficit quantity by clicking on the Create Purchase Requisition action and specifying the required quantity, suggested supplier, and supplier site. Purchase order requested delivery change When the requested delivery date of an outside processing purchase order is moved out due to supplier s inability to supply on the requested date, Supply Chain Orchestration subscribes to the change event and communicates the details to Manufacturing. A supplier operation exception is automatically logged. However no exception is logged when the requested delivery date of an outside processing purchase order is moved in. A production supervisor reviews the supplier operation exception, and takes appropriate action such as rescheduling the supplier operation to complete at a later date, or cancel the existing purchase order and create a new purchase requisition and a purchase order for a different supplier. Receipt and return corrections In cases where quantities that were received or returned need to be corrected for reasons such as wrong data entry, a production supervisor can use the Correct action in the Review Supplier Operation Details page to return the quantities to the supplier. 55 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

58 Return to supplier Return to receiving Overreceipt In cases where quantities need to be returned directly to the supplier for reasons such as bad quality, a production supervisor can use the Return to Supplier action in the Review Supplier Operation Details page to return the quantities to the supplier. In cases where quantities need to be returned to receiving for reasons such as bad quality, a production supervisor can use the Return to Receiving action in the Review Supplier Operation Details page to return the quantities to the supplier. In cases where the quantity received is more than the quantity requested on an outside processing purchase order, a production operator can use the Correct Overreceipt action in the Review Supplier Operation Details page to correct the overreceipt quantity. Example of Supply Side Change Management in Outside Processing Let s assume that in a scenario where a single or multiple operations on a work order are outsourced to supplier, the quantity on one of the associated purchase order for the Plating operation is reduced as the supplier (Precision Industrial Plating) is unable to process the entire requested quantity. In such a situation, Supply Chain Orchestration subscribes to the PO change event raised by Fusion Purchasing and notifies Fusion Manufacturing. This results in the automatic logging of a production exception of the type Supplier Operation as shown below. Navigation: Work Execution > Manage Exceptions Figure 58 (a). Supplier Operation Exception Figure 58 (b). Supplier Operation Exception Details 56 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

59 The concerned Production Supervisor can review the exception details and directly navigate to the Review Supplier Operation Details page by clicking on the Supplier Operation hyperlink to reinitiate creation of a purchase requisition to fulfil the deficit supply. Figure 59. Purchase Requisition Creation to fulfil the deficit supply In other cases, the Production Supervisor may also choose to reconcile with the reduced supply by updating the work order quantity based on the feasibility. Example of Receipt Correction in Outside Processing Let s assume that in an outside processing scenario, the quantity of Plated parts received from the supplier (Precision Industrial Plating) and delivered to manufacturing was erroneously entered and needs to be corrected. In such a situation, the delivered quantity can be corrected by selecting the record in the Receiving tab in the Review Supplier Operations Details page and using the Correct action as shown in the below screenshot: Navigation: Work Execution > Manage Supplier Operations > Review Supplier Operation Details Figure 60. Receipt correction in Outside Processing 57 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD

60 Example of Return to Supplier in Outside Processing Let s assume that in an outside processing scenario, the quantity of Plated parts received from the supplier (Precision Industrial Plating) and delivered to manufacturing was found to be defective and needs to be returned directly to the supplier. In such a situation, the delivered quantity can be corrected by selecting the record in the Receiving tab in the Review Supplier Operations Details page and using the Return to Supplier as shown in the below screenshot: Navigation: Work Execution > Manage Supplier Operations > Review Supplier Operation Details Figure 61. Return to Supplier in Outside Processing 58 USING OUTSIDE PROCESSING IN ORACLE SUPPLY CHAIN MANAGEMENT CLOUD