Oracle EBS ERP user group presentation. Originally presented in April 2008 at the COLLABORATE 08 conference in Denver. Addresses EBS 11i but relevant to R12!

1. Surviving Assemble-To-Order With Outside Processing InOracle E-Business Suite Eric Guether eguether@gmail.com

2. Objectives Explain the business case that led us to replace a Finished Goods Buy turnkey solution with an Assemble-To-Order (ATO) Make process Walk through the process that combines discrete WIP jobs – created by ATO – with outside processing (OSP) in the E-Business Suite (EBS) Share lessons learned, including forms personalizations and workflow notifications

3. Scope Release Scope: EBS 11i functionality via 11.5.10.2 examples Should be completely applicable to EBS Release 12 Not Covered in this Presentation: Step-by-step configuration ATO Buy scenarios Also called Procure-To-Order or back-to-back orders Configure-To-Order (CTO) using Oracle Configurator Usage of Internal Requisitions / Internal Orders Impact on planning [MRP / Master Scheduling / ASCP]

4. Opnext Lasers: From Chip to Consumer Datacom Telecom Industrial Applications

5. Business Case Redesign the outsourced manufacturing process for families of lasers [finished good] using common subassembly (SA) components Designed SA could be used as the key component for all lasers within a product family Configuration lead time to convert the SA into a finished good (FG) = 2 weeks Common subassembly represented 90% of the total manufacturing time and cost of the finished good Based on assumption that we could forecast product family demand better than specific products

6. 1st PO: Order Subassemblies on Forecast Issue a Standard PO to the CM for the common subassembly 12 weeks in advance based on product family forecasts Has nothing to do with ATO functionality PO creation driven by MRP planning The 3rd party contract manufacturer (CM) would build the subassembly (SA) and bill us, then hold the SA on consignment until it is needed to configure the FG The SA would be added to our Oracle Inventory when built even though it was physically at the 3rd party CM location

7. Clarification In this specific business case, the subassembly and the finished good are made by the same 3rd party contract manufacturer. The solution presented, however, is equally applicable to scenarios where: You ship the part / subassembly from your own warehouse (whether you made that part or not), or You have the part / subassembly made by one 3rd party firm and then shipped directly to another 3rd party contract manufacturer to perform the final assembly

8. 2nd PO: Assembly of Ordered FG Items Issue a PO to the CM to assemble the FG item once a firm customer SO is booked Should be triggered, directly or indirectly, by the booking of a customer SO Like Assemble-to-Order (ATO) functionality! Completion of assembly services needs to consume the SA (previously ordered & built) from our Oracle Inventory Like Outside Processing (OSP) functionality!

9. System Solution for FG Assembly ATO Make Functionality Set up the FG item as an ATO Make item OM Assemble to Order flag = ‘Yes’ [checked ON] General Planning Make or Buy flag = ‘Make’ Build in WIP flag = ‘Yes’ [checked ON] Booking of a SO triggers creation of a discrete WIP job Outside Processing Routing on the WIP job will have an OSP step Creates a PO (“the 2nd PO”) for the FG assembly via an OSP purchase requisition Causes the WIP job to consume the SA

10. SO – WIP Job – OSP PO Relationship

11. SO Workflow Controls ATO Functionality Seeded Order Mgmt. sales order (SO) workflow (WF) initiates the creation of the discrete WIP job WF links the SO line to the discrete WIP job Completion of the WIP job creates a reservation against the FG inventory for the SO line that spawned the WIP job

12. SO Line Workflow Assignment

13. ATO Sub-Process Added to SO WF

14. More on OSP Functionality WIP module functionality to ship out parts (example: SA999) for assembly services typically to a 3rd party Expect to receive back an assembled item (LASER123) and incur an OSP resource charge Ultimately consumes the parts (SA999) shipped out Creates PO reqs that generate OSP POs OSP POs typically sent to supplier providing services Item on PO is a 'fake' (non-physical) OSP services item in your item master, not the assembled item received back PO unit price is the price for OSP services, not the full value of the assembled item

15. Standard Costing Standard Cost of ATO Make FG item = Material Cost of Subassembly + Outside Processing Resource Charge Example: Standard Cost of LASER123 = $900 Material Cost of Subassembly (SA999) + $100 OSP Resource Charge $1,000 Rolled-up Std. Cost of LASER123

16. Transaction Walkthrough Manual Process or Automated Interface Automated Process Optional: Manual or Automated

17. Step 1: OM Sales Order Booked OM WF changes the SO line status from ‘BOOKED’ to ‘SUPPLY_ELIGIBLE’

18. Step 2: Discrete WIP Job Created Changes the SO line status to ‘PRODUCTION_OPEN’

19. Sales Order Reservation via WIP Job

20. Sales Order Reservation via SO Line Actions

21. Step 3: OSP Step Generates Requisition

22. Step 4: AutoCreated OSP PO

23. Step 4: Distribution on AutoCreated OSP PO

24. Step 5: OSP PO Receipt Transaction

25. Step 6: WIP Job Automatically Completed

26. Step 7: ATO Item Added to Inventory as Reserved / Subassembly Consumed Changes the SO line status to ‘AWAITING_SHIPPING’

27. Step 8: WIP Job Closed by Request

28. Issue # 1: OSP Functionality PO Confusion The OSP PO under the typical EBS OSP set-up showed a 'fake' OSP services item as the ordered item, not the item number of the ATO Make FG item Example: The PO showed an ordered item number of ‘OSP_SERVICES’ for services to build item LASER123 How would the CM know which FG item to assemble based on ordered item ‘OSP_SERVICES’? Receiving Confusion Receipts against an OSP PO were recorded against the 'fake' OSP item despite physically receiving the FG item

29. Issue # 1 Solution: ATO Item = OSP Item Set up the ATO Make FG item also as the outside processing item in lieu of using a 'fake' OSP services item Allowed the OSP PO to show the assembled item (LASER123) as the ordered item Receipts for the OSP PO were made against the physically-received item (LASER123) Suggested by our consultant from Colibri No Oracle documentation addressed this alternative

30. Setting the ATO Make Item as an OSP Item

31. Linking the OSP Item to the Resource

32. Linking the Resource to the Routing

33. Issue # 2: Insufficient Component QOH OSP PO receipt recorded even when insufficient SA component qty existed in the supply subinv. An issue for Opnext only because we did not push the SA component to the WIP job SA supply type = ‘Assembly Pull’ for 2 reasons: Typically, we wanted the WIP job to pull the SA component automatically without user interaction WIP user occasionally needed to substitute the SA

34. Issue # 2 (continued) Impact: WIP job never completed (remained ‘Released’) ATO Make FG item never added to Inventory No notification of error on the WIP_MOVE_TXN_INTERFACE table OSP PO was closed for receiving if fully received

35. Issue # 2 Solution: Personalization Control Created a Forms Personalization to check for sufficient SA component quantity Error condition prevented the recording of the PO Receipt

36. Issue # 3: Synching Up SO Changes If the quantity or date on an ATO Make SO line changed, or the line was cancelled, the change was not automatically made to the WIP job nor the OSP PO Relied on a user to manually synch up the WIP job and OSP PO to the modified ATO SO line How an a user detect the need to synch up?

37. Issue # 3 Solution: SO Change WF E-Mail Enable a seeded EBS OM WF notification that is triggered whenever an ATO Make SO line changes or had been cancelled Designed to alert the planner The ATO Make FG item had to be assigned a Planner code in the ship-from org (warehouse) Assigned Planner code needed to be linked to an employee

38. Issue # 3 Solution: Planners Setup

39. Issue # 3 Solution: Seeded WF Notification

40. Conclusion ATO Make with Outside Processing is a cost-effective, cross-module solution that addressed our business issues The solution can be implemented in an existing EBS 11i or R12 instance using mostly, if not exclusively, in-house resources Forms Personalizations, workflow notifications, and custom Discoverer queries were needed to assist users in monitoring this solution