• Order Management
1. What is 2-way, 3-way, 4-way matching? Can you give me an example of 2 way matching? [Complexity **]
2-way matching verifies that Purchase order and invoice quantities must match within your tolerances as follows:
Quantity billed <= Quantity Ordered
Invoice price <= Purchase order price
(<= sign is used because of tolerances)
Often used for services where no receiver is generated.
3-way matching verifies that the receipt and invoice information match with the quantity tolerances defined:
Quantity billed <= Quantity received
4-way matching verifies that acceptance documents and invoice information match within the quantity tolerances defined:
Quantity billed <= Quantity accepted.
(Acceptance is done at the time of Inspecting goods).
2. Tell me difference between Job hierarchy and position hierarchy? What are the steps involved in setting up Position Hierarchy? [Complexity ***]
Job hierarchy is used when there is a single approval hierarchy system in the organization compared to Position hierarchy which is used if for the same job, multiple positional approvals are required i.e. Junior buyer’s requisition needs to be approved by senior buyer and senior buyer’s requisition is sent to Supply Chain manager and then to Finance manager for final approval. In Position hierarchy, approval might happen between different positions for the same Job.
• Use Approval hierarchy must be checked in Finance Options
• Jobs must be defined
• Position must be defined and mapped to jobs
• Position hierarchy must be setup
• Position hierarchy must be mapped to Document type
• Define and assign Approval groups
• Assign employees
• Run Fill Employee hierarchy concurrent program
3. What is the difference between bill of distribution and sourcing rule? [Complexity *]
Sourcing rule is used to determine the source of particular item i.e. Suppliers or source organization in an organization. Bill of distribution is used to determine how the item is distributed in an organization i.e. warehouses to which item are to be distributed.
4. A buyer is authorized to approve PO worth 5000 but though the PO is below 5000, he’s not able to approve it? Which setup are we missing? [Complexity *]
• There might be restriction on the item, category or account combination that would prevent a particular user not approve a PO.
• Check if approval workflow is running
• If any changes have been done to position or Job, has the Fill employee hierarchy program been run to update these positions
• If Employee supervisor hierarchy is set, is the supervisor a valid and active employee.
• Are multiple users mapped to same employee?
5. We provide ranks and allocations in Sourcing Rules to Suppliers or Inventory organizations, what is the use of these ranks and allocations and where is it used? [Complexity **]
Ranks and allocations are used by MRP or ASCP modules to create supply based on the ranks provided. If a requisition needs to be created for a demand of an item, then system checks the sourcing rule and creates a requisition to the Rank 1 supplier and based on the allocation percentage specified.
For example, if demand for an item X, is to be satisfied by creating a requisition, then system looks at the sourcing rule, if two suppliers are given Rank 1 and allocation as 70% and 30% then system creates two requisition lines, one for 70% of supply quantity from supplier 1 and other for 30% of supply quantity from supplier 2.
Total of allocation for each rank must sum up to 100 for the sourcing rule to be planning active.
6. Client requires every Purchase order to have paper based Requisition number entered mandatory in Create Purchase order screen by users [Client doesn’t want to create Requisition in APPS and use Auto-create functionality in this scenario]. How to handle this requirement? [Complexity **]
Enable a DFF at PO line level and make the DFF mandatory to be entered by user for each line.
7. What is the difference between Blanket Purchase Agreement and Contract Purchase Agreement? [Complexity **]
Blanket purchase agreements carry detail of the goods or services you plan to buy from a specific supplier in a period, but you do not yet know the detail of your delivery schedules. You can use blanket purchase agreements to specify negotiated prices for your items before actually purchasing them.
Contract purchase agreements are created with your suppliers to agree on specific terms and conditions without indicating the goods and services that you will be purchasing. You can later issue standard purchase orders referencing your contracts
8. Client requires control over procurement for each department. Is it possible in EBS to handle such a requirement? [Complexity **]
Yes, Using Encumbrance functionality, Each department can be allocated a specific amount and purchasing would honor this and ensure system doesn’t approve PO more than the budgetary amount.
9. What are the types of receipts and their functions in Purchasing? [Complexity **]
There are no distinct types of receipts as we find in PO documents (Requisition, Quotation, Purchase order etc). Receipts differ mainly by the method of recording the receiving transactions.
1) Unordered receiving
2) Blind receiving
3) Express receiving
4) Substitute receiving
10. For an OSP Sub-assembly, when you move transaction to the 'Queue' of an OSP Operation, Requisition Import is fired which creates an Approved Requisition and an Unapproved PO. What are the setups that govern creation of PO? [Complexity **]
Sourcing Rule needs to be defined for the item. The sourcing rule needs to be mapped to item and organization under an assignment set.
11. When does a Purchase order or requisition goes into ‘Pre-Approved’ status? [Complexity *]
• A person with the final authority to approve the document approves it, but then forwards it to someone else for additional approval, thus changing its status to Pre–Approved.
• Your organization uses encumbrance (reserves funds for documents), and the document is authorized for approval but funds have not yet been reserved for it. Even if someone with sufficient approval authority approves the document, its status may still be Pre–Approved if funds were not able to be reserved at the time of approval. Once funds are reserved for the approved document, the document changes its status to Approved.
12. If the preparer of purchase requisition is not authorized to Approve that requisition then what setup should be performed in the system to achieve this? [Complexity *]
In document type, set Owner can approve flag to No
13. How do I ensure if Purchase order is cancelled then corresponding requisition is also cancelled? [Complexity *]
In Purchasing Option, Set Cancel requisition to ‘Optionally’ or ‘Always’
14. What is the functionality I am achieving by setting Receipt close % as 100 %? [Complexity *]
Receipt close % ensures that PO line ordered quantity is closed up to that specified percentage. If Receipt close point is set as 60% and if Order quantity is 100 then if PO receipt is made for 40 quantities then PO line would be moved to closed status automatically,
15. Client wants each requisition auto created in the system to be grouped by Buyer, how to achieve this in EBS? [Complexity *]
In Purchasing option, Set requisition group by parameter to ‘Buyer’
1. Operating Unit 1 (OU1) has 3 Inventory orgs say M1, M2 and M3 and Operating Unit2 (OU2) has 3 Inventory orgs say S1,S2 and S3. OU1 & OU2 has different Set Of Books (SOB) and Legal Entity (LE). Now is it Possible to change the Operating Unit (OU) for Inventory Org S3 from OU2 to OU1
If Possible, what are the Inventory Setup requirement needed? Also, what are all the financial impacts? [Complexity **]
No, it’s not possible to change an inventory org from one OU to another.
2. Please explain the concept of 'Genealogy' in Inventory Management? [Complexity **]
Genealogy is the maintained for all Lot controlled and Serial controlled items. Lot Genealogy tracks the relationship between lots and provides lot traceability that result from inventory transactions.
Serial genealogy tracks the transaction and multilevel composition history of any serial-controlled item from receipt through work in process and inventory to your customer sale. The composition genealogy is captured through material transactions in Oracle Work in Process.
3. During closure of inventory period, system throws an error stating pending transaction exist for this period? How to resolve this and close the Inventory period? [Complexity **]
Navigate to inventory accounting period, click on the pending task and identify the nature of the task which is pending and resolve as per issue.
4. What is concept of Multi-org? Whats the purpose of running concurrent request ‘Replicate Seed Data’? [Complexity **]
Multi-org means single installation of Oracle Applications will support multiple organizations with the use of different Set of Books. Multi-org supports any number of Legal Entities.
Replicate seed data is a concurrent program used to replicate the generic data attributes such as Supplier, customer header information across OUs. This program is typically run after creation of new OUs.
5. What’s the difference between Cycle counting and Physical inventory? [Complexity **]
Cycle counting is recurring and more often phenomena compared to Physical inventory. Cycle counting typically happens for A class items on periodic interval say every quarter.
Physical inventory is done on an annual basis for all items in the inventory.
6. What transactions would be available in Item Supply/Demand form? [Complexity *]
Demand such as Sales order booking
Supply such as Purchase orders, requisitions etc.
7. Which report should I run for viewing item on hand quantity across organization? [Complexity *]
Multi-organization Quantity Report
8. What are types of managers in Oracle? [Complexity *]
• Cost Manager
• Lot Move transaction Manager
• Move Manager
• Material manager
9. Whats the difference between nettable and non-nettable sub inventories? [Complexity *]
Nettable sub inventories are the only sub inventories which are used by MRP/ASCP engines for identification of any supply for an item
Non Nettable sub inventories are not considered by planning engines as sources of supply.
10. What transactions would be available in Transaction Open interface? [Complexity **]
Transaction Open interface is a key interface through which user can submit transactions. Transaction open interface can process different transactions to do on hand conversions from legacy systems and do other transactions like sub inventory transfer, account alias issue / receipts etc.
The transactions could involve Lot and /or serial controlled items.
11. Whats the difference between Intra-class and Inter-class UOM conversions? [Complexity **]
UOM conversions that happen within the same UOM class (Quantity, Weight) are known as Intra-class UOM conversions. (Kg to Pounds)
UOM conversions that happen across UOM class are known as inter-class UOM conversions.
12. In Shipping Networks, whats the role of field FOB? [Complexity **]
Receipt: The shipping organization owns the shipment until the destination Organization receives it.
Shipment: The destination organization owns the shipment when the from Organization ships it (and while the shipment is in transit).
In EBS, Free on Board is specified in shipping network for the system to recognize the costing impact of inter-organization transaction. If FOB is set as Shipment then costing of transaction would happen during sale order shipment. If FOB is set as Receiving then costing of transaction would happen during Receipt of item in the requesting organization.
13. What is the purpose of Organization Access? [Complexity *]
Organization Access is used to restrict responsibilities to organization. Once this mapping is set up, a user logging into an Oracle Manufacturing product is restricted to the organizations mapped to the responsibility chosen.
14. Client doesn’t have business practice of issuing transactions that would drive inventory to have negative balances, how would you setup this requirement in EBS? [Complexity *]
In organization parameters form, ensure the Allow negative balance checkbox is not checked.
15. Can I perform Sub-inventory transfer to transfer items across organizations? [Complexity *]
Sub inventory transfer can be used to transfer items from one sub inventory to another within a single inventory organization.
1. Can you explain the process involved in updating of ‘Frozen’ costs in Standard costing organization?
Items are typically assigned to updatable cost type other than Frozen cost type and at the month end when previous inventory period is closed and new period is not opened, the item costs defined in user defined cost types are updated to Frozen cost and hence becomes the base cost for any transaction in the next month.
2. What is concept of Cost group?
Cost group is a unique identifier that is used to identify set of accounts such as Material, Outside Processing, Material Overhead, Overhead and Resource accounts for an inventory organization.
3. What is FIFO costing? When would variances be recognized in FIFO costing organization?
FIFO (First In, First Out). is a separate perpetual costing method based on actual cost. This method is also referred to as layer costing. FIFO costing is based on the assumption that the first inventory units acquired are the first units used.
Variances would be recognized in FIFO organization when transactions occur that drive inventory negative.
4. What is the concept of Layer costing?
In layer costing, a layer is the quantity of an asset item received or grouped together in inventory and sharing the same costs. Available inventories are made of identifiable cost layers.
• Inventory Layer
On–hand inventory contains layers that are receipt–based (purchased items) or completion–based (manufactured items).
• Work in Process (WIP) Layer
Components issued to a work in process job are maintained in layers within the job itself. Each issue to WIP represents a separate layer within the job. In addition, each WIP layer consists of only one inventory layer initially consumed by the issue transaction. The costs of those inventory layers are held separately within the WIP layer.
5. What is Purchase Price Variance? When would PPV be recognized in the system in a standard costing organization?
Purchase price variance is the variance that is caused by the difference in PO price and standard cost of that item in an organization. PPV is recognized at the time delivery transaction of PO receipt into inventory. In general, it’s the difference between PO price and Std cost of that item.
6. How to setup Overheads for a department?
Overheads for a department are defined as a sub-element of type overhead. Cost element, Absorption account and basis is specified for the overhead. Resources which are to account for this overhead are specified against a cost type in Resources window. The rates applicable for the resources are specified in Rates window.
7. What are the types of costing supported in Oracle EBS?
8. Where can I see the cost updates for an item under standard costing?
Standard cost updates for an item is available under View cost history screen.
9. What is the concept of Standard costing?
Under standard costing, predetermined costs are used for valuing inventory and for charging material, resource, overhead, period close and job close and schedule complete transactions. Differences between standard costs and actual costs are recorded as variances.
10. If a client is using LIFO costing and client is operating in a country where inflation is going down drastically then would client stand to benefit in this environment?
No, FIFO costing would be beneficial in this type of environment.
11. What would happen if item is costed X in Average costing organization and this item is transferred to another organization which is Standard costing enabled?
Average or transfer cost would be compared to item’s standard cost and the difference would be accounted under the variance account.
12. What is the importance of Inventory period closure and its impact in Costing?
Inventory period closure brings a procedural control in the system and thereby ensures that transactions that occur in a particular period are accounted in that period itself. System would prevent any transactions in a period which is in closed status.
13. What is the use of Sub-elements in costing?
Sub elements bring a greater item cost visibility and flexibility, EBS allows users to define multiple material sub-elements. Sub-elements are a smaller classification of the cost elements. For every sub-element you define, you must enter the method of allocating the cost to the sub-element (basis type).
14. What is the use of Multi-org flag in Cost types?
Multi-org flag ensures that cost type defined in one inventory organization is available for other organizations as well. Multi-org flag ensures that cost type is available for sharing across organization.
15. What is Transfer Price costing?
Transfer price costing occurs when a sales order is created for an intransit transfer, between two internal organizations, in two different operating units.
1. Client operates in a retail shop environment where most of the goods sold are to the walk-in customers and wants to use Oracle Order Management. What are the configurations to be done to support such businesses where quick order entry, entering existing or new customers with ease, no elaborate picking and shipping process is required?
Workflow of type ‘Bill and Ship only’ depending on client’s requirement. Quick Sales order form can be used to facilitate order details entry. Generic customer can be defined to account for walk-in customers.
2. Whats the use of specifying alternate items in Order Management?
System facilitates order entry user to choose between items which are set as Alternates based on attributes such as ATP etc. Hence alternate items can be booked if original item is not available as per customer timelines.
3. Client requires a single delivery for all orders of a customer, what setups needs to be done for such a requirement?
In Shipping Parameter, set delivery grouping parameter to Customer and Auto create Delivery criteria as ‘Across Orders’.
4. What are Back-to-Back orders and what are the setups involved?
Back to Back orders are orders for which items booked in Sale order is not available in Inventory and system creates a purchase requisition and tracks the item through creation of Purchase order from the requisition and finally when PO receipt is made for the item, the receipt quantity is reserved against the sale order.
Setups include definition of item with attributes such as ‘Built in WIP’ and ‘Assemble to order’ set to Yes. Sourcing rule needs to be defined for the item and sourcing rule should be mapped to MRP: Assignment set.
5. What are ATO and PTO items?
ATO and PTO are types of Item which are used in OM and Configurator mainly.
ATO or Assemble to Order items are typically items that are built as per the customer’s requirement. Hence ATO model is entered in Sales order and end items are chosen from the configurator window. The workflow of the item creates a Discrete job and chosen item is built in WIP. Once the Discrete job is complete, the item is available in OM for picking and shipping.
PTO or Pick to order items are items which are picked from inventory based on customer requirements and then picked and shipped.
6. What are the typical reasons for a line to get backordered during Pick Release?
Primary reasons for line to be backordered are
1. Item is not available in inventory
2. Inventory period is closed
3. Holds are placed against the order or order line.
7. What is the purpose of Trips and Stops?
A trip is an instance of a specific freight carrier departing from a particular location containing deliveries. A trip is carrier specific and contains at least two stops such as a stop to pick up goods and another stop to drop off goods, and may include intermediate stops.
8. Client wants to ensure that a particular item when placed in a Sale order is not processed until Inspection happens and approval is given, how to setup such a requirement?
Create a Hold Source and specify Hold criteria as Item and criteria value as the item name.
9. How to setup Drop shipment cycle in OM?
Oracle Order Management and Oracle Purchasing integrate to provide Drop Shipments. Drop Shipments are orders for items that your supplier ships directly to the customer either because you don't stock or currently don't have the items in inventory, or because it's more cost effective for the supplier to ship the item to the customer directly.
In the sale order, specify the Source type as External. Purchase Release program should be run and post this program, requisition import program should be run.
10. What is the purpose of Interface Trip Stop?
Interface Trip Stop creates the sales order issue transaction and thereby depletes the inventory to the sale order shipped quantity. As part of ITS, COGS account gets generated.
11. What is RMA and what are the scenarios when RMA cycle would be used?
If I have shipped an order via Order Management to a wrong customer or the wrong item/quantity has been shipped, then I will do an RMA transaction in Inventory to bring the item back. This will generate a credit memo in AR.
If the customer finds that item is faulty or defective, then he returns the shipment to us. In this case too, we will create an RMA in Inventory and receive the item back. This again creates a credit memo.
12. How to setup credit hold in Order Management?
Credit hold setups include setting up
Customer site level – Credit check must be enabled, Amount and currency must be specified
Payment term – Credit check must be enabled
Credit check rule – Credit check rule must be defined.
Order type – Credit check Rule must be mapped as required
13. How to setup quantity discounts in Price lists?
Quantity discounts are handled by specifying Price breaks by giving quantity and corresponding price applicable.
14. What is the purpose of scheduling a sale order?
Scheduling a sales order ensures that line is available for Picking and further transactions applicable. Also, Scheduling looks at sourcing rules to determine the source of the item specified in order line. Scheduling honors Promise date and Latest Acceptable date whichever is applicable as per setups.
15. What are processing constraints in OM?
Processing constraints ensure that user doesn’t violate any business process or system defined process by putting checks on various actions performed by user.
Typically actions such as cancelling orders are governed by processing constraints.
1. What are demand classes?
Demand classes allow you to segregate scheduled demand and production into groups, allowing you to track and consume those groups independently. A demand class may represent a particular grouping of customers, such as governmental and commercial customers, or it may represent sales channels or regions. Demand classes may also represent different sources of demand, such as retail, mail order, and wholesale.
2. What is expected delivery date?
Excepted delivery date is number of days that system allows orders to arrive before they are needed.
The Acceptable Early Days item attribute is defined in Oracle Inventory. Oracle Master Scheduling/MRP and Supply Chain Planning does not generate a reschedule out recommendation if the number of days the order is going to arrive early is less than the acceptable early days delivery. This allows you to reduce the amount of rescheduling activity within a material plan.
3. On what criteria are requisitions released via the planner workbench?
System looks at orders and ensures there exist no compression days for those orders i.e. recommendation of those orders doesn’t involve reduction of procurement lead times.
4. What is Forecast consumption?
Forecast consumption replaces forecasted demand with actual sales order demand. Each time you create a sales order line, you create actual demand. If the actual demand is already forecasted, the forecast demand must be decremented by the sales order quantity to avoid counting the same demand twice.
5. What are the uses of Master scheduling?
Master scheduling is used for:
• demand management
• scheduling production
• validating the production schedule
• managing the production schedule
You use the schedules generated by master scheduling as input to other manufacturing functions, such as material requirements planning and rough-cut capacity planning.
6. What are the demand types used in MDS?
Demand types of Master Demand Schedule include
• Item forecast
• Sales order
• Internal Requisition
• Spares demand
7. What is meant by schedule reliefs?
Schedule reliefs are MDS entries to be decremented when you create purchase orders, purchase requisitions or discrete jobs. System would show the unfulfilled demand by performing relief operations.
8. What is Demand time fence and Planning time fence?
Demand time fence is the period of time where system only considers Sales order demand and ignores forecast demand in that period.
Planning time fence is the period of time where plan doesn’t suggest any orders and considers the existing demand/supply to be frozen.
9. What is the purpose of Planning Manager?
The Planning Manager is a background concurrent process that performs automatic forecast consumption as you create sales orders.
10. What is the difference between Shrinkage Rate and Component yield?
For a particular inventory item, you can define a shrinkage rate to describe expected scrap or other loss. Using this factor, the planning process creates additional demand for shrinkage requirements for the item to compensate for the loss and maintain supply.
For example, if you have a demand of 100 and a discrete job for 60, the planning process would suggest a planned order for 40 to meet the net requirements, assuming no shrinkage rate exists.
With a shrinkage rate of .2 (20%), Oracle Master Scheduling/MRP and Supply Chain Planning assumes you lose 20% of any current discrete jobs and 20% of any suggested planned orders. In this example, since you have a discrete job for 60, assume you lose 20% of that discrete job, or 60 times 20%, or 12 units. The net supply from the discrete job is 48. Since you have a total demand of 100 and supply of 48, you have a net requirement of 52 units. Instead of suggesting a planned order for 52, the planning process has to consider that 20% of that planned order is also lost to shrinkage.
Component yield is the percentage of a component on a bill of material that survives the manufacturing process. A yield factor of 0.90 indicates that only 90% of the usage quantity of the component on the bill actually survives to be incorporated into the finished assembly.
The difference between a shrink rate and component yield is that Oracle Master Scheduling/MRP and Supply Chain Planning applies the same shrink rate to every use of an item on a bill, whereas you can vary the component yield factor you assign to each occurrence of an item on a bill. Another difference is that shrinkage demand is calculated at the parent assembly level and passed down to components. Component yield is calculated at the component level.