Oracle Outside Processing Release 12.1.1 Workshop

Oracle Outside Processing
Release 12.1.1 Workshop
An Oracle White Paper
APR 2012

Oracle Outside Processing
Objective
The objective of this paper is to provide a detailed analysis of the Oracle’s outside processing functionality in R12.1.1. This analysis will be presented in the form of test cycle with example. In addition, this paper will present a list of setups, process flow, 57F (4) process, accounting entries and frequently asked questions for OSP process. This paper is intended for an audience familiar with oracle outside processing functionality.
OSP Introduction
Normally the manufacturing company they are not doing all defined process in In-house except few critical operations for their products reason is they want to eliminate the resource buying cost, manpower cost and other parameters. More and more industries are moving towards Outsourcing or contract manufacturing, ERP system should have functionality to send goods out and receive back after performing certain operations. Oracle Work in Process has outside processing functionality (OSP) to support this.
Non-availability of machine or large production time we going to use the outsourcing functionality. In this paper we are going to see the setup and complete test cycle for outside processing functionality. We are going to take the example PEN Manufacturing Industry.
OSP Overview
In this pen manufacturing industry, company will purchase the raw materials like ink, plastic and chemicals from their supplier. Once the raw material received from the supplier to the inventory company will send the raw material from inventory to outsourcing supplier place for the operation of making pen. Outsourcing supplier will make the pen and then outsourced supplier will send back the product to the industry. Once the material received from the outsourced supplier company will check the quality and then they will print their name after that packing and selling the finished goods (PEN).
1. Ink 2.Plastics 3.Chemicals etc.,
Standard oracle applications supports outside processing operations in Oracle Work in Process Module (WIP). You will able to monitor the movement of goods to the sub-contractor.

OSP Process Flow


Send the Material from inventory to Outsourced supplier place for doing the operation.
Supplier making the product
From the received assemblies
Receive the assemblies from supplier after complete the
OSP Supplier Send Assemblies to supplier (Ink, plastics etc.) Receive Assemblies (PEN)

Setup
1. Additional Information
(N) India Localization  Setup  Additional Information
Based on this India localization additional organization preference excise duty will be debited at the time of removal of goods and the same duty can be credited on receipt of goods. So there is no need to pay duty on removal of goods for sub-contracting. Also you should take care to setup zero in the OSP Excise Pct (%) field.
This setup has to do for with site as well as null site also.
Tax calendar has to define with site and null site. Based on this tax calendar only system will generate the 57F (4) form sequence number starts with 1. So every year based on this tax calendar system will reset the sequence number 1.

2. Inventory Setup
1. Create Finished Good Item
(N) Oracle Inventory Items  Item Master
Item = PEN
Description = PEN
Tools  copy fromTemplate click LOV (list of values) select @Finished Good  click Done  Save
Assign Item to Organization
Tools  copy fromOrg Assignmentcheck organizationsave
2. Create Purchased Item
(N) Oracle Inventory Items  Item Master
Item = Raw Material
Description = Raw Materials for Pen
Tools  copy fromTemplate click LOV (list of values) select @Purchased Item  click Done  Save
Assign Item to Organization
Tools  copy fromOrg Assignmentcheck organizationsave
3. Create OSP ITEM
(N) Oracle Inventory Items  Item Master
Item = OSP ASSY
Description = Outside Processing Item
Tools  copy fromTemplate click LOV (list of values) select @Outside processing Item  click Done  Save
Purchasing Tab List price should not be blank enter 1 otherwise requisition import completed with normal but system will raise exceptional error.
Outside Processing Unit Type Select Resource (if you want to requisition the usage rate or amount of the outside resources for each assembly you move to an outside operation, you should set the outside processing unit type to Resource).
If you want to requisition one outside processing item for each assembly you ship to a supplier, then you should set the outside processing unit type to Assembly.
Assign Item to Organization
Tools  copy fromOrg Assignmentcheck organizationsave.

4. Sub inventory Creation.
You should create sub inventory in the name of ‘OSP’.
(N) Oracle Inventory Setup  Organizations  Sub inventories.
If you are defined sub inventory in the name of OSP while creating the 57F (4) form you will get the note ‘APP-JA-460480-OSP Sub inventory not defined for this Organization. Whenever you are creating the new 57F (4) form you will receive this note message.
3. Resource Creation
(N) Bill of materials  Routings  Resources.
Name OSP_RESO, Description outside Processing Resource.
Type  Miscellaneous, UOM  MIN, Charge Type  PO Move
Costed tab Absorption Account and Variance Account will get defaulted from the organization parameters accounting setups.
In the Outside Processing tab, item field you should attach the ‘OSP ASSY’ item.

4. Department Creation
(N) Bill of Materials  Routings  Departments.
Create Department name as OSP, Outside Processing Department as description.
Click the Resources button and then attach the ‘OSP_RESO’ you have created in the previous step.
Attach your resource under the OSP Department.

5. Define Routing
(N) Bill of Material  Routings  Routings
In the Item field enter your finished good ‘PEN’
Go to the operations section enter the below details.
Operation Seq 10 department = OSP
Operation Seq 20 department = OSP
Operation Seq 30 department = OSP
Operation Seq 40 department = OSP
Select the Operation Seq 20 and select the Operation Resources push button and then attach your osp resource ‘OSP_RESO’




6. Define Bill Of Material
(N) Bill of Material  Bills  Bills
Item field enter the item ‘PEN’
Line level
Item Seq = 10,
Operation Seq = 10,
Component = Raw Material and tab,
Quantity for making the one ‘PEN’ how much quantity required ‘RAW MATERIAL’ enter that much kg. E.g. 0.5 kg.
Material Control tab Supply Type = Operation Pull, Sub inventory = RM_STORE.
7. Miscellaneous Receipt for ‘Raw Material’.
Perform miscellaneous receipt for ‘Raw Material’ to make the On-Hand Quantity to proceed the next operation in work in process module.
OSP Process Flow
1. Create Discrete Job
(N) WIP  Discrete  Discrete Jobs  New (A)
Enter tab job number system will generate, type standard and enter the assembly ‘PEN’, class is standard, status released.
Quantities enter the start field 10 and save.
Click the operations button and components button and check the routings and available quantity.

2. Move Transactions
(N) WIP  Move Transactions  Move Transactions
Enter the job number and tab, select operations from Seq List of values field select the 10 sequence and to sequence 20 in step field select to move.

Select the transaction quantity field 10 qty and then save your work.
After this work system will raise a purchase requisition based on that purchase requisition through auto create you can create standard PO or Blanket Release. Otherwise you can define sourcing rule. In this document we are going to do Blanket Release based on Blanket Agreement.
Auto Create
(N) Oracle Purchasing  Auto Create
In line level enter your osp item like ‘OSP ASSY’ and then click find button.

Select your line and then select the document type blanket release and click Automatic.
In that screen document field enter your Blanket Purchase Agreement number and give tab and then conform the details supplier and supplier site click the create button.

Blanket release is created based on the work in process module requisition import through auto create and approve the blanket release.
Create 57F (4) Document
(N) India Localization  Outside Processing Approve 57F (4) Dispatch
Enter the purchase order number and select the release number in the list of values in the field PO Number and click the Create 57F (4) push button. The below form will open, form number will be generate after the approve dispatch done only. Line level details serial number, Job name, Assembly, description, item dispatch quantity all the line level fields are empty.

If you are not done item classification for the osp item ‘OSP ASSY’ the line level details will not pop out in this form. So for osp item you have to define item classification then only line level details will come.
(N) India Localization  setup  Item Setup  VAT/EXCISE – Item Classification.
Again you try the same line level details will come serial number, job name, assembly, description, Item description, UOM, original quantity, dispatched quantity, item rate mentioned in the Purchase order it will come, dispatch value, return quantity, return value etc. check the details form number is empty before the approve dispatch
After check the details click the approve dispatch button the 57F (4) form number will be generated automatically based on your setup also sequence will start with 1 only.
Once the material received from the sub contract supplier you have to make the receipt once the receipt made in this 57F (4) form returned quantity will update automatically.
If the sub contract supplier material is rejected you can make Return to vendor and can able to generate new 57F (4) form also for that.

How you are making the receipt the same way have to receive the OSP item also. For making the OSP receipt destination type is shopfloor for direct delivery material.
Move Transaction
(N) WIP  Move Transactions  Move Transaction
After receive the material open the move transaction form enter the job number in the operations field click the LOV field in the from sequence and now the material will lying in the 30 sequence select and select Transaction Type Complete. Complete the job.

57F (4) Printing
For our Indian standard whenever you are sending are your excisable goods out of the factory for job work to your vendor factory in that case you have send the material with 57F(4) challan with our Indian standard format. You have to maintain separate register for outgoing challan. Through RDF with pre-printed stationary you can take the 57F (4) challan print.
In this 57F (4) print control option is available. This feature enables you to control printing of 57F (4) challan. It would restrict repeated prints of challan. Control over the printing of duplicates would be controlled and duplicate challan would be marked as such. In cases where the print could not be generated due to printer errors, authorized users can generate an original print.
Records in ‘Approve 57F (4) Dispatch’ window would be populated on Approval of a Purchase Order (PO) with Line ‘Type’ as Outside Processing. The user would check the accuracy of the Records and Approve the Dispatch and not the Form Number. On approval a record would be populated in ‘Print Control 57F (4)’ window, the ‘Original’ in this form would be set to ‘Yes’ and the value in the ‘Duplicate’ field would be set to ‘No’.
After approval, you would navigate to India Local Purchasing > Oracle Purchasing > Reports > Run, submit ‘India– Outside Processing Challan’ report. The ‘Form Numbers From’ and ‘Form Numbers To’ fields would display only the unprinted Challans i.e., Challans with either the ‘Original’ or ‘Duplicate’ status set to ‘Yes’ (in the ‘View 57F (4) Challan’ window). On Printing the Challan, the value in the ‘Original’ field would be set to ‘No’. At this stage, both ‘Original’ and ‘Duplicate’ fields can be updated.
The Access to ‘View 57F (4) Challans’ window would be restricted to authorized users. You can query the Forms, and change either ‘Original’ or ‘Duplicate’. The value in either one of these fields can be set to ‘Yes’. On changing value in one of these fields the other field would be disabled. This change would list the Form for printing once more. The Challan Report that has ‘Duplicate’ as ‘Yes’ would be marked as ‘Duplicate’. On printing the Challan the values in both ‘Original’ and ‘Duplicate’ fields would be set to ‘No’.

Organization Name:
You can select from the Organizations. The List of values (LOV) for all other fields would be based on value selected in this field. This would be a mandatory filed.
Location:
You can select from the Locations defined for the Organization. The LOV’s for all other fields
Would be based on value selected in this field. This would be a mandatory filed.
Fin Year:
The LOV for this field would list the Fin Year (Localization) defined for the select Organization and Location. This would be a mandatory filed.
Vendor Name:
The LOV for this parameter would display the Suppliers with OSP transactions.
PO Number:
The LOV for this field would display the Purchase Orders with OSP Items created for the selected
Organization, Location and Fin Year. This would be restricted based on the value selected in the
Vendor Name field.
Form Number:
The LOV for this field would display the Form Numbers created for the selected Organization,
Location, Fin Year. This would be restricted to Unapproved 57F4 Receipts. This would be restricted based on the value selected in the Vendor Name field. After clicking find button Print control 57F4 lines form will be opened and the you can enter the data as per the notes given below.

PO Number:
This field would display the Purchase Order number based on which the Form Number has been
Generated.
Form Number:
This field would display the 57F4 Form number.
Vendor Name:
This field would display the Supplier Name for which the Form has been generated.
Original:
The Check box would be enabled when the 57F4 is dispatched. Once the Challan is printed the
check would be removed. However, you can check this to print an ‘Original’ Challan. This field
cannot be checked if the ‘Duplicate’ field is checked.
Duplicate:
You can check Duplicate check box to print duplicate Challans, once the Challan is printed the check would be removed. However, you can check this to Print a ‘Duplicate’ Challan. This field
cannot be checked if the ‘Original’ field is checked.
Reports
The following mentioned reports are available with respect to Oracle Outside Processing functionality in financials for India.

1. India – OSP Pending Despatch Report.
2. India – OSP Pending Receipt Report.
3. India – OSP Stock Register.
4. India – Outside Processing Challan.
7.1.India-OSP Pending Despatch Report Sample
7.2.India-OSP Pending Receipt Report Sample
7.1.India-OSP Stock Register Report Sample

7.1.India-Outside Processing Challan Report Sample
OSP Accounting’s
While sending the material through 57F (4) Challan
Account
Debit
Credit
OSP Excise A/c
With percentage of duty
set up in the additional
organization information
screen
CENVAT / PLA A/c
With percentage of duty set
up in the additional
organization information
screen
On receipt of goods cleared under 57F (4) challan
Account
Debit
Credit
OSP Excise A/c
Duty paid at the time of clearance
CENVAT / PLA A/c
Duty Paid at the time of clearance

While making the receipt in localized form below the accounting entries will done
Account
Debit
Credit
Material Receiving
Debit
Inventory AP Accrual Account
Credit
After receipt while making the invoice for the osp receipt the following accounts will hit
Account
Debit
Credit
Inventory AP Accrual Account
Credit
Liability Account
Debit
While making the payment for that osp supplier the following entries will done
Account
Debit
Credit
Liability Account
Credit
Cash Account
Debit
When the osp receipt delivered to shop floor
Account
Debit
Credit
Material Receiving
Credit
WIP Inventory Outside Processing
Debit
When the job is completed
Account
Debit
Credit
WIP Inventory Outside Processing
Credit
Inventory Outside Processing
Debit

FAQ’s
1. Why PR or PO or release of BPA is not created?
a.) The Line Type Outside Processing is end dated.
b.) The system will not create requisitions unless the Job/work order is Released.
c.) OSP Item should have a List Price Defined in the Item Master form.
d.) Profile option WIP: Enabled Outside Processing Workflows.
e.) OSP item is not linked to the OSP resource.
f.) OSP resource is not linked to the osp operation.
2. What happens if user is adding OSP operations to a WIP Job AFTER the PR was created?
If WIP Parameter is set to OSP Requisition at Job Release then when adding a OSP resource after job was released, the PR will not be create d anymore. Workaround: Manually create the purchase creation and link it to the job.
3. Error Message states that the Quantity must not be greater than
The Quantity available on the works order.
There are two scenarios here. First, the works order is awaiting a receipt, but a receipt is made for a Quantity greater than the WO Quantity. In this case reduce the Transaction Quantity so that it equals the WO Quantity, and resubmit the Transaction.
In the second case, the work order has been completed or cancelled and in these circumstances it will be impossible to post the WIP Transaction. The Move Transaction would normally have caused WIP to be debited with the value of the Receipt, and the OP resource account (which is the same as the Receiving Inspection/Accrual account) gets the credit.
This Transaction will NOT take place and the Job will close with a favourable Variance. Want to find out the Value of the Receipt using the Receiving Transactions Distribution Report or the Receipts Summary (Special Menu).
Delete the Transaction a manual Journal Entry will need to be put through in GL to debit WIP variances and credit the receiving accrual account.
This Type of error normally arises because the person that does the Receipt immediately goes on to complete the works order, Before the Receiving Transaction has been processed by the Receiving Transactions Processor. This can happen even where the Receiving Transactions Processor is running" online", because this may in fact have to queue behind other processes in order to run.
4. How WIP and PO are integrated?
a.) PO Created will have Destination as SHOP FLOOR, Line Type as OSP Line Type.

5. What are all the Tables involved in (OSP) Outside Processing.
PO_REQUISITIONS_INTERFACE - It contains requisition information from other applications. Each row includes the information needed to create approved or unapproved requisitions in Oracle Purchasing. Oracle Work in Process populates this interface when a User performs a Move into the Queue of an Outside Processing Operation.
CST_COST_ELEMENTS - It stores the cost element information. It is seeded with five cost elements: Material, Material Overhead, Resource, Outside Processing, and Overhead.
CST_RESOURCE_COSTS - It stores Resource and Outside Processing Resource unit costs (RESOURCE_RATE) by cost type.
6. Which reports to check for OSP Accuracy?
Look at anyone one of the following reports.
- Receiving Transactions Register Report
- WIP Discrete Job Value Report
- Purchase Price Variance Report
- WIP Account Distribution Report
7. When the Job released for OSP item Request Import and Create Release concurrent are completed with normal but in Autocreate form no requisitions were found?
In this case first we have to run the Request Import exceptions report in this report we can identify the error. Because of list price request not created. OSP item in the item master level purchasing tab list price should be at least 1. Once you done this request will create automatically.
8. Job Created and Released. Request import also done. Requisition is available through auto create PO Release also done but in the 57F (4) form no data found in the line level?
The OSP Item is Excisable item. We have to do Item Classification. Now in the 57F(4) form line details also will come.
9. 57F (4) form in the line level system will show two line one line for original assembly item the second line for OSP Dummy item. But in this case the Dummy Item lines only correct one. The original assembly line is wrong one?
In the Bill of Material line level operation sequence is 1. Because of this system will show two lines. But it should be 10. How this issue is happening first we have to create routing then we have to do BOM creation. In Wise versa system will show operation Seq 1. So that this issue will come.
10. When you are approve the 57F (4) form system will show one note. OSP Sub inventory not defined like?
This is Note only there is no issue, even though you are not using the OSP subinventory in the name of 'OSP' subinventory is crated and bonded means this note message will not come for every time.

11. OSP Resource cost will calculate whenever the OSP Job created?
In the OSP Assembly Routing line level you have attached the resource 10 sequence means whenever the job created before the move transaction process Request Import & Create Release concurrent will run also resource will calculate this is wrong. So that we have to attach the OSP Resource in the 20 Seq level.
12. What are all the items will come in the 57F (4) form?
In the 57F (4) form both item will come. Line level first four fields is like serial number, job number, original assembly item and description. After that in the Parent Item field original assembly item next field dummy item, description, unit of measure, original despatch quantity etc.,