Advanced Fulfillment Techniques - Student Guide

Schedule: Timing Topic
05 minutes Lecture and Demonstration
00 minutes Practice
05 minutes Total
This slide lists course learning objectives.
Oracle SCM Cloud: Advanced Supply Chain and Fulfillment Techniques 1 - 2

This slide lists course learning objectives.

This slide lists course part of the course outline.





Oracle Supply Chain Management Cloud documentation (https://docs.oracle.com/en/cloud/saas/supply-
chain-management/20d/books.html) is available in the Oracle Help Center (https://docs.oracle.com/en/).
• Getting Started with Your Manufacturing and Supply Chain Materials Management
Implementation: https://docs.oracle.com/en/cloud/saas/supply-chain-
management/20d/fammi/getting-started-with-your-manufacturing-and-supply-chain-
materials-management-implementation.pdf
• Using Order Promising: https://docs.oracle.com/en/cloud/saas/supply-chain-
management/20d/fascp/using-order-promising.pdf
• Using Order Management: https://docs.oracle.com/en/cloud/saas/supply-chain-
management/20d/fauom/using-order-management.pdf

Cloud Customer Connect (https://cloudcustomerconnect.oracle.com/pages/home ) is Oracle's online
cloud community — specifically designed to promote peer-to-peer collaboration and sharing of best
practices, enable members to keep pace with product strategy, and provide a cloud solution feedback
channel directly to Oracle development. Within this community, members benefit by leveraging the
collective knowledge of Oracle Cloud customers and product experts.
• The Forum (https://cloudcustomerconnect.oracle.com/resources/fb0241b9ef/summary) enables you to

network and collaborate on real-life challenges and solutions with fellow members. Share best practices
as you strive to deliver consistent, personalized customer experiences, and connect every customer
engagement with your brand.
• The Idea Lab (https://cloudcustomerconnect.oracle.com/resources/8e2e77f263/summary) allows you

to contribute to our product roadmap that is derived from a variety of influences, such as market
changes, compliance and regulatory forces, industry trends, and one of our best sources, our customers.
• The Events (https://cloudcustomerconnect.oracle.com/resources/28806a6537/summary) tab lists

upcoming and replays of Supply Chain Management Events
The Order Management Readiness Material

(https://www.oracle.com/webfolder/technetwork/tutorials/tutorial/readiness/offering.html?offering=orde
r-management-order-management-20) allows you to learn about the latest innovations in our Order
Management products.

White Papers
• Back -to- Back Supply Chain Creation and Fulfilment:
https://support.oracle.com/cloud/main/downloadattachmentprocessor?attachid
=2257314.1%3AB2B_SETUP&docType=REFERENCE&action=download
• Contract Manufacturing:
=2257314.1%3ACON_MANF_SETUP&docType=REFERENCE&action=download
• Configure to Order:
=2257314.1%3ACTO_SETUP&docType=REFERENCE&action=download
• Oracle Inventory Management Internal Material Transfer Process Flow:
https://stbeehive.oracle.com/content/dav/st/Fusion_V2.0_Deliverables/Docume
nts/SCM/Logistics/White%20Papers%20and%20Topical%20Essays/Internal_Mat
erial_Transfers_White_Paper_Conslidated.pdf

• Product experts schedule Customer Connect training. These sessions provide more information on
topics already discussed in this training or discuss topics relevant to the implementation and use of the
product. The replays of these sessions are listed in a single forum post to make them easy to find:
https://cloudcustomerconnect.oracle.com/resources/fb0241b9ef/posts. You can also find replays of
these sessions from the Events area. In the Find Events box, enter training and Order Management and
click Find. This filters your results to list only Order Management training events. You can also select one
of the available Event Series. The event series filters the events by training and product areas.
o Order Management Training Replays: Provides quick access to all the Order Management Customer
Connect Training Replays (https://cloudcustomerconnect.oracle.com/posts/a73e39f32f)
• The Oracle Supply Chain Management Integration Lesson
(https://cloudcustomerconnect.oracle.com/posts/5d7d178db7) discusses core integration capabilities for
Supply Chain Management including external web services, integration with PaaS, business events, file-
based data import, ADFdi and common messaging framework.
• The Global Order Promising (https://cloudcustomerconnect.oracle.com/posts/0dd97e63de) video
training series provides a foundational understanding of the Global Order Promising solution.

00 minutes Practice
10 minutes Total
This slide lists the learning objectives for this lesson.

This section discusses the Advanced Supply Chain and Fulfilment Techniques course content.

The Advanced Supply Chain and Fulfillment techniques course covers several integrated, end-to-end
Oracle Cloud cross-product solutions to meet more advanced supply chain business process and
advanced fulfillment options. These end-to-end flows are seamlessly integrated across Oracle Cloud
products using new and enhanced orchestration architectures.
This course covers the following business flows:

• Supplier to Customer Drop Shipments
• Back-to-Back Supply Chain Orders
• Internal Material Transfers
• Consigned Inventory
• Contract Manufacturing

This diagram depicts the global supply chain process.

This diagram depicts that advance fulfillment techniques optimize fulfillment across all channels to
maximize customer service and revenue.

This diagram depicts that in the Supply Chain Management Cloud, the back-to-back process is fully
automated, allowing you to focus your time and energy on your companies core competencies.

Drop Ship
Drop Ship is an order fulfillment strategy where the seller does not keep products in inventory, but relies
on suppliers or contract manufacturers to build, store and ship orders to customers. When a customer
places on order for a drop shipped product, the seller issues a purchase order for the item and provides
instructions for shipping directly to the customer. The suppliers or contract manufacturers ships the
product, and the seller earns a profit.
In the SCM Cloud, this process is fully automated – allowing you to focus your time and energy on your
companies core competencies.
This diagram depicts the process flow from customer placing the order to you, to receiving the order
from the supplier.

This diagram depicts how Oracle SCM Cloud provides end to end support fir the transfer of goods
internally.
Note: For more information on the Transfer Project-Specific Inventory feature, refer to the following
resources:
https://download.oracle.com/ocomdocs/global/apps_20A/scm/Transfer_Project_Specific_Inventory/T
ransfer_Project_Specific_Inventory.doc
https://download.oracle.com/ocomdocs/global/apps_20A/scm/Transfer_Project_Specific_Inventory/in
dex.html

This diagram depicts how SFO supports your complex, global structures without compromising supply
chain efficiency. It separates the physical from the financial, and allows you to model and execute both
independent of each other.
Walk through example:

• Shipment is from China to US
• But Asian HQ in Singapore requires all sales and purchases to go through Singapore
- So I have two ownership transfers, China-Singapore, Singapore-China
- Essentially an internal drop shipment
• Need orders, invoices, payments to back up the sale
• Need to make sure they are in accordance with the transfer pricing and other agreements
you have in place with the governments in the jurisdictions where you are operating
Need a system that can:

• Model those agreements
• Automate execution

This diagram depicts the consigned inventory process flow.
The consigned inventory process is initiated when a consignment agreement is established between a
buyer and a supplier. The consignment agreement stipulates the terms of the consignment relationship
between the buyer and supplier.
Consigned inventory is ordered from the supplier through a consignment order, and is received into the
organization in the same manner as non-consigned inventory.
Change in ownership occurs when the buyer uses the product (for example, issues to manufacturing, or
sells to customer) or after a pre-specified period of time (for example, 30, 60, or 90 days). This time
period is referred to as the aging period.
The consumption advice is used to report consigned inventory usage to the supplier on a periodic basis,
such as daily or weekly. The supplier will send the buyer an invoice for the consigned inventory used.
When the invoice is received from the supplier, it can be match to the associated consumption advice for
audit and reconciliation purposes. Once the invoice is validated, payment will be sent to the supplier.
Optionally, pay-on-use can be used to pay the supplier immediately upon usage of consigned inventory.

This diagram depicts that in the SCM Cloud, this process is fully automated, allowing you to focus your
time and energy on your company’s core competencies.

This section discusses the cloud capabilities of Oracle Supply Chain Orchestration.

This diagram depicts how Oracle Supply Chain Orchestration provides the backbone infrastructure for
delivering end-to-end supply execution and management for SCM Cloud cross-product business
processes and flows such as:
• Back-to-Back Supply Chain Orders
• Internal Material Transfers
• Contract Manufacturing
Powered by the orchestration framework, these complex supply flows are automatically executed step-
by-step through the business process. The supply flows provide visibility to users and alert them when
there are exceptions or jeopardy conditions. This improves the efficiency of the supply chain and
reduces the supply time required to meet demand.

This slide lists a summary of the learning objectives covered in this lesson.

00 minutes Practice
25 minutes Total

This section discusses supply chain orchestration and gives an overview of the SCO Process.

This diagram depicts that Supply Chain Orchestration is designed to execute and manage complex,
cross-product business processes such as Internal Material Transfer (IMT), back-to-back, and contract
manufacturing.
Supply Chain Orchestration provides the ability to:
• Receive supply requests from several Oracle Cloud systems, such as Planning Central, Inventory
Min/Max planning, and Global Order Promising (GOP)
- For demand-specific supply requests, such as back-to-back, SCO combines the demand
from Order Management and the supply suggestion from Global Order Promising to create
supply documents.
• Launch and manage complex business processes to create supply in the warehouse that would
fill the anticipated demands
• Perform automated change management to match supply to demand to ensure that quantity
and fulfillment dates are automatically balanced
- In demand-specific supply creation, Enterprises aim not to create excess supply or fall short
on orders. Balancing supply with demand on order-by-order basis is important for
customer satisfaction and for profitability. The automated exception management
capability of Supply Chain Orchestration supports these goals.
• Provide a 3600 view of the supply-creation process and the relationship between the various
documents of a flow

This diagram depicts the Supply Chain Orchestration process flow.

This diagrams depicts a functional overview of SCO. The functional components of Supply Chain
Orchestration are:
• Decomposition: Receives supply requests from other systems and invokes a predefined
orchestration process to create the supply
• Orchestration: Executes the predefined process that creates supply
- For example, the process may call a manufacturing system to create or modify a
manufacturing work order, or a purchasing system to create or change the quantity on a
purchase order.
• Business Services: Are invoked to send and receive messages from an execution system
The overall Supply Chain Orchestration process consists of four major steps:
1. Receive request to create supply.
2. Determine which orchestration process to use and launch the process.
3. Execute the steps of the orchestration process.
4. Interact with the execution system.
The process is discussed in detail in the lesson titled ‘Lesson 4: Key Setups in Supply Chain
Orchestration.’

This diagram depicts how Supply Chain Orchestration receives request to create supply
When a supply-requesting system sends a request to Supply Chain Orchestration, the SCO process
starts to process the order.
The requesting systems include the following:

• Planning Central: Releases a request for a planned order batch to Supply Chain Orchestration. A
batch may include standard make, buy, or transfer orders. It may also include make orders for
inventory organizations designated as contract manufacturing organizations.
• GOP and OM: Demand data for back-to-back orders scheduled by OM are sent to Supply Chain
Orchestration.
- When an order is confirmed, GOP sends the supply data to Supply Chain Orchestration.
- When a back-to-back order is scheduled by OM, it sends the demand data to Supply Chain
Orchestration.
- SCO matches the data received from GOP and OM, and treats them as one set of data to
launch back-to-back processes. These processes could be back-to-back make, buy, or
transfer processes.
• Inventory: Inventory Min/Max planning can result in a make, buy, or transfer request to Supply
Chain Orchestration .
• Manual spreadsheet upload: You can upload transfer order data to send transfer requests to
Supply Chain Orchestration.

This diagram depicts how Supply Chain Orchestration prepares the payload to create supply.
After receiving a supply request, the next step is to prepare the incoming payload to create supply.
The following steps are involved:

1. Attribute mapping: Attributes specific to requesting system are mapped and transformed to
execution system attributes. For example, the supplier ID from Planning Central is transformed to
Procurement systems supplier ID.
2. Evaluation of execution rules: Transfer requests are evaluated using the execution rules to
determine if they are to be processed as a transfer order or a purchase order. If the decision is to
execute it as a standard transfer, then the decision is made whether or not to route it via Order
Management.
3. Supply created: Predefined supply creation process is selected and launched.

This diagram depicts how Supply Chain Orchestration executes the supply creation process steps
After a predefined supply-creation or orchestration process is selected and launched, the process steps
are executed.
For example, the back-to-back process includes the following steps:

1. Application calls the procurement system to create a purchase order.
2. Application calls the inventory system to reserve a purchase order (PO) against the demand.
3. Supply is received in warehouse.
The orchestration process execution also includes:

• Process Planning: At launch, the overall process schedule is calculated based on the duration of
each constituent task. The start and end dates of each process step are determined.
• Change Management: In case of changes in supply or demand, the change management system
responds and makes adjustments to keep supply and demand in balance.
• Tracking: The status and state of all execution documents are tracked.

This diagram depicts how SCO system interacts with the execution systems.
The predefined supply creation or orchestration process interacts with execution systems to create and
manage supply:
• A payload specific to the target execution system is built and sent to the execution system.
• Updates from the execution system, such as purchase order status change or quantity decrease,
are received and passed to the orchestration system for change management.

This section describes the various SCO process flows.

This slide lists supported supply chain orchestration business process flows.

This diagram depicts how Supply Chain Orchestration provides predefined business processes such as
contract manufacturing, IMT, and back-to-back fulfillment. In addition, all planned orders for the SCM
Cloud from Planning Central are routed through Supply Chain Orchestration for document creation.
Make-to-Stock Contract Manufacturing Process
Consider the schematic diagram of make-to-stock contract manufacturing and back-to-back

procurement processes:
• It starts with creating a paired work order and purchase order.
• The work order tracks the progress of supply in the contract manufacturer’s plant and the
purchase order serves as a contractual agreement between the enterprise and the manufacturing
plant.
• The documents (work order and purchase order) are linked to ensure that their parameters and
progress are automatically synchronized. This synchronization is facilitated by Supply Chain
Orchestration.
Back-to-Back Procurement Process
In the back-to-back procurement process, Supply Chain Orchestration provides an end-to-end process
that is explained on the next slide.

This diagram depicts the Back-to-Back Procurement Process.
1. Supply Chain Orchestration receives a supply request from the Order Management and Order
Promising applications.
2. The two requests are combined to create an entity called Supply Chain Orchestration Supply
Order, which is used to manage the entire process.
3. The back-to-back Purchase process is assigned and launched.
4. The process sends a request to the purchasing system to create a purchase order (PO).
5. After the PO is created, the Supply Chain Orchestration application sends a request to the
Inventory Management system to reserve the supply.
There are many steps required to manage the supply creation process, but they are not presented here
for brevity. You will learn more about the process in the Back-to-Back module of this course.

This diagram depicts that Supply Chain Orchestration enables users to assign each supply request to the
mode of supply creation, which is optimal for an enterprise.
For example, enterprises can reduce cost and extend product offerings by engaging contract
manufacturers with specialized capabilities for specific items. When supply for these specific items are
needed, the supply creation request is routed to the suitable contract manufacturer. This liberates
enterprises from having to spend capital on building manufacturing plants or stocking inventory. By
outsourcing specialized capabilities to manufacturing partners, enterprises can also extend their product
offering without having to build in-house capabilities.

This section describes how automated change management keeps supply and demand balanced.

This diagram depicts how automation in handling changes keeps demand and supply always in balance.
For instance, let’s assume that the line quantity on a Back-to-Back sales order is reduced on the
customer’s request from 10 to 5. Change Management capabilities orchestrate these changes
immediately to the supply document (a Purchase Order in this example). Now the PO is also updated
with the new quantity. In an environment where such changes are not handled, the result would have
been sub-optimal with excess inventory being supplied by the vendor.
All conveniences that accompany automation would also apply in this case. In organizations where
changes are common and require manual intervention, the possibilities of errors and delays can prove to
be bottlenecks in flawless order fulfillment. The Automatic Change Management capability circumvents
the need for manual intervention (except to address an exception), and also precludes delays that could
occur because of human intervention.

Automated system response is available to changes on the demand and supply sides. A comprehensive
set of change management rules are defined to address the changes.
Automated change management is available for the following supply-side change scenarios:
• Increase or decrease in supply quantity
• Supply order cancellation, that is the supplied quantity reduced to zero
• Changes in dates on which supply will become available
• Split in supply, that is the total quantity will become available in more than one delivery
The response to these supply-side changes depends on the type of change and the business process.
An example is shared in the next slide.
Automated change management is available for the following demand-side change scenarios:
• Cancellation of demand
• Increase or decrease in demand quantity
• Change in need-by dates
In case of demand-side changes, the change management system attempts to alter the supply to match
the demand. If supply cannot be changed to satisfy the new conditions, then an exception occurs and it
notifies the fulfillment system, in this case Order Management (OM).
The change management logic depends on the business process used to create supply. It will be
discussed in detail for the supported business processes such as Contract Manufacturing and Back-to-
Back.

This diagram depicts an example of Automated Change Management.
When the supplier reduces the quantity:

• The automated change management system attempts to create supply to fill the gap in supply.
• If supply cannot be created in time, an exception is raised in the order management system, that
is the Order Scheduling system. The exception needs to be addressed by the Order Fulfillment
manager.


This slide provides discussion suggestions for further review of the lesson content.

10 minutes Practice
20 minutes Total

This section describes how Supply Chain Orchestration Setup is performed using the Functional Setup
Manager.

Setup is performed using the Define Supply Chain Orchestration Foundation task. Provide setup
information using the following tasks:
• Manage Supply Orchestration Lookups: Modifies the names and values of lookup parameters
as defined by the user. If you do not need to modify the lookups, you can omit this setup. Lookup
details are predefined for seeded business processes. .
• Manage Supply Orchestration Attachment Categories: Create new attachment categories. The
required attachment categories are already defined for predefined business processes.
• Manage Supply Execution Document Creation Rules: Define rules to determine if a transfer is
executed using a Transfer Order (TO) or a Purchase Order (PO).
• Manage Supply Order Defaulting and Enrichment Rules: Define rules to determine which
transfer orders are to be routed through the Cloud Order Management services.
• Manage User-defined Enterprise Scheduler Jobs for Supply Chain Orchestration: If you do
not need a user-defined schedule, you can omit this setup.

This section discusses how you can secure data in the Supply Chain Orchestration work area.

Here is an overview of steps to enable data security for Supply Chain Orchestration:
• Use the Opt In UI to enable this feature in the Manufacturing and Supply Chain Materials
Management offering.
• Add a global policy to the role where you need full access. The policy is ‘Grant on Supply Order
for ORA_DOS_SUPPLY_CHAIN_OPERATIONS_MANAGER_JOB’. This policy comes as enabled on
the predefined role, by default.
• Create your own role for your new data security policy.
• Use a predefined condition when you create your policy or use your own condition.
• Create the user and assign the role to the user.
• If the predefined condition includes an organization attribute, then bind the user and role to the
organization. If the predefined condition includes a business unit attribute, then bind the user
and role to the business unit.
• Run the Import User and Role Application Security Data scheduled process each time you finish
a set up. This process uses your changes to update security data.
For more information, you can refer to Supply Chain Orchestration white papers (Doc ID 2257314.1
on https://support.oracle.com/).

This section describes how you can access setup tasks Manufacturing and Supply Chain Materials
Management offering. You will also learn how to manage Supply Execution Document Creation Rules
and Supply Order Defaulting and Enrichment Rules through the Oracle Business Rules (OBR) User
Interface.

This screenshot depicts how you can access setup tasks. Supply Chain Orchestration is a feature under
the Manufacturing and Supply Chain Materials Management offering.
1. In the implemented project, find the Manufacturing and Supply Chain Materials Management
offering and expand it. The tasks you need are under the Define Supply Chain Orchestration
Foundation task list.
2. Click a task to navigate to the Oracle Business Rules (OBR) UI.

The purpose of the rule is to decide how to execute a transfer (by TO or PO).
This setup is done using OBR UI.

• Could be based on any set of parameters. But suggested practice is to use one of the below set of
parameters:
- Source Organization and Destination Organization combination. Source organization is the
organization that ships the goods to the Destination Organization.
- Item, Source Organization, and Destination Organization combination.
• Default is to create a Transfer Order for any requested transfer.

This screenshot depicts a predefined rule. For information about editing a rule, see the courses related
to Oracle Business Rules.

Enrichment rules are used to determine which transfer orders will be routed through the Order
Management system. Other enrichment scenarios, such as Supply Chain Orchestration retrieving the
transfer price and tax determinants for a transfer request, do not require setup and are not discussed
here. These scenarios are discussed in the respective flows, such as Internal Materials Transfer.
The purpose of the rule is to decide which transfer orders are routed through the Cloud Order
Management system and which go directly to the Cloud Inventory system.
• Routing the TO through the Order Management Cloud enables the Order manager to have
visibility into internal orders.
- Prioritize between internal and external orders.
• This setup is done using OBR UI.
• Could be based on any set of parameters. But suggested practice is to use Item and Org
combination.
• Limitations: Back-to-Back transfers can’t be routed through the Order Management System.
• Default is to go directly to Cloud Inventory.

This slide displays a screenshot of a predefined rule. For information about editing a rule, see the
courses related to Oracle Business Rules.

This section describes how to schedule processes in Supply Chain Orchestration to create supply. You
can schedule Processes for one-off processes as well as for bulk processing.

Users can decide when to process records from the SCO interface tables to create supply, and can
schedule processes accordingly.
• The scheduled processes the supply requests in the SCO interface table and launches processes
in SCO to create supply.
• For a one-off process, that is not a batch order, the calling system can call the scheduled
processes after the interface table is populated.
• For bulk processing of a batch of orders, the preferred approach is to schedule processes when
transaction loads are low.
• In the practice that follows, you will learn how to schedule processes.

In this practice, you learn how to perform Supply Chain Orchestration setup tasks in Setup and
Maintenance.


15 minutes Practice
30 minutes Total

The Supply Line Overview page is the landing page for Supply Chain Orchestration users. The page
contains a summary of supply lines in exception. It is designed to focus user attention on the supplies
that need their attention.
The page displays aggregated summary of:

• Errors: Refer to instances where a technical or functional error prevents the completion of a
transaction. For example, it is an error if the creation of a reservation fails.
• Exceptions: Refer to the instances where changes in supply cause it to be mismatched to the
demand. For example, if the demand quantity is 100, the supply gets reduced to 80, but the
change management system fails to compensate for the changes in supply, it causes an
exception.
• Jeopardy: Refers to the instances where supply is delayed beyond its need-by date

The supply lines are grouped by parameters that are helpful for users who will be troubleshooting supply
exceptions.

This diagram depicts a 360 degree view of supply order.
• On the summary page, you can click the number counts in the Error, Jeopardy, and Exception
columns to navigate to the Manage Supply Lines page. The Manage Supply Lines page displays
details of the supply, and provides options to act on the supply details, as required.
• On the Manage Supply Lines page, you can view the details of errors and messages by clicking
the Error icon.
- If you choose not to further process a line in error, you can mark the line as inactive.
- Lines with recoverable errors can be resubmitted for processing.
- You can navigate to the Supply Order Line page by clicking the number count in the Supply
Order Number column.
• The Supply Order Detail page presents a 360-degree view of the supply order. It puts the supply
line in context by displaying the entire structure of the supply order.
- You can view the progress of the orchestration process and view all the execution
documents and their current status.
- Click the execution document number count to navigate to the execution document.

In this practice, you will navigate through the work area and look at a 360-degree view of the supply
order.


00 minutes Practice
10 minutes Total

This section describes what is Back to back supply orchestration and how it can be used in a cost
effective manner. You will also learn the difference between supply orchestration and order
orchestration, and how the fulfillment process is selected.

This diagram depicts Back-to-back supply creation and fulfillment. Back-to-back process, where the
supply is received at the warehouse and then shipped to the customer, is a mechanism for cost-effective
fulfillment of high-cost, nonstock, slow-moving products.
Customers would typically use this fulfillment method when they either don’t want to utilize warehouse
space to stock items that rarely sell, or when the items are high cost and therefore expensive to maintain
as on hand inventory.
A business example where back-to-back fulfillment might be used is for specialized medical equipment.
Some specialized medical equipment is very large and/or expensive to build – so not practical to store in
a warehouse, and the equipment is rarely ordered since there are few facilities with medical
practitioners who use the equipment.
This would be an ideal scenario for back-to-back fulfillment. In this use case, the medical facility orders
the specialized equipment, and once the order is placed, sourcing rules determine if the equipment
should be manufactured in house, or procured from a supplier (who might themselves manufacture the
item). Once the manufacturing or procurement process is complete and the medical equipment is in the
designated warehouse, the item is shipped to the medical facility.
There might be other scenarios where warehouse space is very expensive or limited in some regions. So
items are stocked in a less expensive, central location. When customers close to the expensive region
order products, the goods are transferred from the central location to the warehouse close to the
customer and then shipped out. This is another use case for back-to-back fulfillment.

This diagram depicts order fulfilment process.
• Back-to-back order processing can coexist with business processes for drop-ship and standard
fulfillment flows and in fact some Order Management tasks are shared amongst these flows.
• If customers choose to implement more than one of these order fulfillment processes, the
fulfillment method used for an ordered item is chosen at run time based on order scheduling
results.
• The flows shown above represent a high level view of the order orchestration that occurs in
Order Management.
• In the back to back fulfillment process, supply orchestration is also required. Supply
orchestration is initiated by the Request Supply task.

The difference between supply orchestration and order orchestration is that supply orchestration
focuses on creating supply in an internal warehouse and order orchestration focuses on getting the
product to the customer. Since in back-to-back fulfillment, the supply isn’t kept on hand in the
warehouse, both supply and order orchestration is required. Supply orchestration gets the goods for the
order into the warehouse, and then order orchestration ships it to the customer.

The fulfillment process is selected in Order Management after the sales order line is scheduled.
Scheduling results are based on rules set up in Global Order Promising The Back-to-Back Enabled Flag
in selected for an item and organization (warehouse) combination in Product Management.

This diagram depicts the Back-to-back order fulfilment process. The rest of the back-to-back curriculum
will focus on the Supply Orchestration steps that take place once order management assigns back-to-
back fulfillment process to a line and order management requests supply for that line. The remaining
order management steps are not covered because once the supply orchestration portion of the back-to-
back fulfillment is complete, the order management ship and invoice steps are functionally identical to
the same tasks in the standard order flow.

This section describes the process flow of back-to-back fulfillment of standard items only. You will learn
the process followed by Supply Chain Orchestration to ship after receiving a supply request from order
management.

This diagram depicts the Back-to-back fulfilment of standard items. This module deals only with the
back-to-back fulfillment of standard items. Back-to-back fulfillment of configured items and back-to-
back contract manufacturing are covered in other courses.
This slide provides an overall view of the back-to-back fulfillment process. In the Order Management
swimlane, you can see the tasks reviewed in the order orchestration slides. You can also see that once
Supply Orchestration receives the supply request from Order Management, a supply source
recommendation is also sent from Order Promising. The demand information from Order Management,
and the supply recommendation from GOP are combined into a supply order in Supply Chain
Orchestration.
Depending on recommended source, Supply Chain Orchestration sends demand information to either
Manufacturing, Procurement, or Inventory. Those applications will provide the supply, which is then
shipped to the customer. Notice that Supply Chain Orchestration sends a request so that the supply
generated is reserved for the sales order in Order Management. This ensures that the supply is used to
fulfill the customer order instead of being stored in a warehouse or used for some other purpose.
Later slides in this chapter will provide more details on the individual sourcing processes.

This section describes the Back-to-back Fulfilment process flow when you need to create a purchase
order in order to create supply.

This diagram depicts the back-to-back buy flow.
• Order Management
- Customer order is taken and validated. Order is submitted for scheduling, which starts the
fulfillment process.
• Order Promising: Global Order Promising (GOP) recognizes that it is a back-to-back fulfillment
and does two things:
- Sends the scheduling information (fulfillment warehouse and date) to the order
management system
- Sends the supply creation information to Supply Chain Orchestration (SCO). Supply
information in this case will include a Buy recommendation and supplier and supplier site
data.
• Supply Orchestration
- Sends the request to Procurement to create a Purchase Order (PO) as per the supply
payload from GOP
- Upon creation of the PO, sends request to Inventory to reserve the PO against the sales
order
- Tracks the progress of PO and manages any changes in the PO or the sales order

• Procurement
- Creates and dispatches the PO
• Inventory Management
- Reserves supply against demand
- Receives purchase order: Receives finished goods and adds to warehouse
stock for sales order
- Ship sales order: Sends finished goods from warehouse to customer

This section describes the Back-to-back Fulfillment process flow when supply is being created by
manufacturing in the fulfillment organization. This process flow is similar to the previous one, except
that the supply is created by manufacturing instead of procurement.

This diagram depicts the back to back make flow. The back-to-back Make (manufacturing) flow is similar
to the Buy flow except that the supply is being created by manufacturing in the fulfillment organization.
In the below flow description, only the steps that are different from the back-to-back Buy flow are
highlighted.
Steps
management system
information in this case will include a Make recommendation.

- Sends the request to Manufacturing to create a Work Order (WO) as per the
supply payload from GOP
- Upon creation of the WO, sends request to Inventory to reserve the WO
against the sales order
- Tracks the progress of WO and manages any changes in the WO or the sales
order
• Manufacturing
- Creates and completes the WO to create supply
- Reserves supply against demand.
- Ships sales order: Sends finished goods from warehouse to customer.

This section describes the Back-to-back fulfillment process from when supply needs to be transferred to
the fulfillment organization from somewhere else. The back-to-back Transfer flow is similar to the Buy
or Make flows except that the supply is being created by transferring inventory from another
organization to the fulfillment organization.

This diagram depicts the back-to-back transfer flow. The back-to-back Transfer flow is similar to the Buy
or Make flows except that the supply is being created by transferring inventory from another
organization to the fulfillment organization. In the below flow description, only the steps that are
different from the back-to-back Buy or Make flows are highlighted.
Steps
management system
information in this case will include a Transfer recommendation

- Sends the request to Inventory to create a Transfer Order (TO) as per the
supply pay
- Upon creation of the TO, sends request to Inventory to reserve the TO
against the sales order
- Tracks the progress of TO and manages any changes in the TO or the sales
order
- Reserve supply against demand.
- Creates and executes the TO, to create supply in the fulfillment organization.
- Ships sales order: Ships finished goods from warehouse to customer

This section describes the Back-to-back Fulfillment process flow when the supply is available on-hand in
the fulfilment organization. This process flow similar to other back-to-back flows except that the on-
hand supply in the fulfillment organization is being reserved against the sales order.

This diagram depicts hoe the back-to-back on-hand flow is similar to other back-to-back flows except that
the on-hand supply in the fulfillment organization is being reserved against the sales order. In the below flow
description, only the steps that are different from the previous back-to-back flows are highlighted.
Steps
management system
information in this case will include a recommendation to reserve on-hand supplies in the
fulfillment organization.
- Sends the request to Inventory to reserve the on-hand supplies against the sales order
- Tracks the Reservation and manages any changes in the Reservation or the sales order
- Reserves supply against demand
- Ship sales order: Sends finished goods from warehouse to customer.


25 minutes Practice
45 minutes Total
In this lesson, you will be introduced to the back-to-back setup.

This section describes the various cloud applications that participate in Back-to-back sourcing and
fulfillment.

This lesson will cover the setup suggestions for the seven applications listed in the slide. The highlighted
applications are covered in this lesson and the remaining applications will be covered in the next lesson.
Because the back-to-back fulfillment is a variation on a regular order-to-cash process, all setups from
Order-to-cash flow also applies.

This section describes how to set up Back-to-back process for product management.

This screenshot depicts the Edit Item page with the setup details for back-to-back. The only product
setup change required to support back-to-back processing is selecting the Back-to-Back Enabled option
under Specifications > Sales and Order Management.
The Back-to-Back Enabled check box in the item setup is used for driving many back-to-back process
steps and application logic. For example, Order Management and Supply Chain Orchestration (SCO) use
this option to assign the back-to-back orchestration processes. Global Order Promising (GOP) uses this
option to determine when a supply request is to be sent to Supply Chain Orchestration.

This section describes how to set up Back-to-back process for Global Order Processing.

This screenshot depicts the Edit ATP Rule page that shows how you can define ATP rules for back-to-
back.
• Set “Promising Mode” to “Supply chain availability search” to ensure existing supplies are
consumed first. With this promising mode selected, if there is existing supply, a supply
recommendation of On Hand with be made.
• Under “Supply Types”, select the sources that will be used to generate back-to-back supply.
• If one of the selected supply sources is Make, enable “Search components and resources” to
ensure component availability.
• GOP will assume goods will be available if the requested date is beyond the value set in the
Infinite Availability Time Fence Definition.
• Since back-to-back items often require long lead times for manufacturing, or procurement, make
sure this definition is set with this in mind
• For example, if all Make orders require between 30 to 40 days for manufacturing, and the time
fence is set to 20 days, orders with requested ship dates that are 21 days away will be promised
when in reality the goods will not be available until at least 9 days later. In this scenario, the
lowest number used for the infinite availability time fence definition should be 41 days lead time.
Navigation: Navigator > Order Promising > Tasks panel tab > Manage ATP Rules

This screenshot depicts how to define source rules for back-to-back.
• For back-to-back functionality, select “Local” for Organization Assignment Type.
• Depending on the general setup, ranking of sources, and the ability to provide supply in the
required lead time,
• GOP will recommend on-hand, Make, Buy, or Transfer recommendations.
Navigation: Navigator > Order Promising > Tasks panel tab > Manage Sourcing Rules

This section describes how to set up Back-to-back process for Business Rules and Processes.

Order Management
• Order management has predefined back-to-back processes that are assigned to sales orders for
back-to-back items.
• Order Management requires no mandatory setup beyond the normal order-to-cash setups to
support back-to-back.
Supply Chain Orchestration

• Supply orchestration processes are predefined and are automatically assigned to orders for items
that are back-to-back enabled to manage purchase orders, work orders, and transfer orders.
They are used to process a supply request, monitor progress, and report delays to Order
Management.
• A back-to-back process is assigned to orders for the items for which the Back-to-Back Enabled
option set to “Yes” and the mode of supply (Make, Buy, and so on) is suggested by GOP during
scheduling.
• The default option is to process a Transfer recommendation as a Transfer but enterprises have the
option to set up Execution Document Creation Rules that determine if the recommended Transfer is
to be executed as a Transfer or as a Purchase from the shipping (supplying) organization by the
Receiving (or Destination) organization.
Navigation: Navigator > Setup and Maintenance work area > Manufacturing and Supply Chain Materials
Management offering > Define Supply Chain Orchestration Foundation

This section discusses Back-to-back Fulfillment Flow Practice.

This diagram depicts the back-to-back buy flow. The Practice for this lesson will walk you through the
execution of a back-to-back buy flow. In this lesson, you will enter a sales order in OM that gets
scheduled in GOP. You will see that a supply order is automatically created in SCO to create the back-to-
back supply. These steps of the back-to-back flow are highlighted in red in the slide. The remaining
steps of the flow are discussed in the next lesson titled “Set Up Back-to-Back Supply Creation and
Fulfillment.”
Note: Change management processing is also supported for this process flow. For details, see the lesson
titled “Back-to-Back Supply Creation and Fulfillment: Change Management” in this course.

In the practice for this lesson, you will enter the sales order (SO) information to create a sales order and
submit it for processing.
The order is scheduled in GOP that provides the fulfillment warehouse and sends the supply request to
Supply Chain Orchestration.
On scheduling, you will view and verify the state of the order. After the order is scheduled, you will see
that a supply order has been created automatically in Supply Chain Orchestration to create the supply.
In this lesson, you will review the progress of the fulfillment process in appropriate UI that provides you
with the complete picture of the state and status of the order.

In this practice, you will learn how to perform end-to-end fulfillment of Back-to-Back Order.


20 minutes Practice
30 minutes Total

This section describes the applications that participate in the end-to-end processing of back-to-back
products.

The listed applications participate in the end-to-end processing of back-to-back products. The
applications highlighted in bold are discussed in this lesson. The previous lesson titled “Set Up Back-to-
Back Supply Creation and Fulfillment” covered the setup for other applications.
Setup details of the applications, which participate in back-to-back fulfillment but are not included in this
course, are discussed in prerequisite courses such as Plan-to-Produce and Order-to-Cash.
• Planning Central is a part of generic supply planning flow. It is used for planning components of a
back-to-back item when the mode of fulfillment is Make.
• Inventory Management requires no back-to-back specific setup. It is listed in the slide for
completeness.

This section describes how to set up Back-to-back process for Manufacturing.

This screenshot depicts the setup details for manufacturing. Manufacturing requires no setup that is
specific to back-to-back manufacturing of a standard or configured item. Ensure that the system has a
Work Definition for the back-to-back item.
• Navigation: Navigator > Manufacturing > Work Definition
• Associated task is: Manage Work Definitions
For a back-to-back item, create a work definition that describes the manufacturing process to build the
item and is used to automatically create the work order:
• Navigate to the Work Definition work area in the Manufacturing application.
• In the Manage Work Definition Names page, create the work definition name and select Used in
Planning to enable the use of Planning Central to plan back-to-back item components and
resources. This step is optional if a work definition name already exists.
• In the Manage Work Definitions page, create a work definition by entering an item and a work
definition name.
• Add work definition operations as a sequence of manufacturing tasks to make the item.
- Assign all item structure components to the operations where they will be consumed.
- Add equipment and labor resources to the operations where they will be used.
• If you are manufacturing a configured product, add applicability rules to the option-
dependent operations.

This section describes how to set up Back-to-back process for Purchasing.

This screenshot depicts how to set up purchasing. Enable the Customer Sales Order Fulfillment option
when selecting feature choices during the Procurement application installation.
• Navigation: Navigator > Procurement > Purchasing
• Associated task is: Manage Agreements
Blanket Purchase Agreement
Create a blanket purchase agreement for back-to-back items to automate creation of purchase orders
from requisitions:
1. Navigate to the Purchasing work area in the Procurement application.
2. Choose the following purchase agreement options to automate purchase order creation and
submission for approval:
- Automatically generate orders
- Automatically submit for approval

This section describes Back-to-back Fulfillment Flow Practice.

The diagram depicts order sourcing and fulfillment for back-to-back procurement. This process is the
background for the activity included in this lesson. The process steps highlighted in red are discussed in
this lesson.
Steps Covered in Practice

1. Request purchase order.
2. Create purchase order and send item specifications to supplier.
3. Request reservation.
4. Reserve supply against demand.
5. Receive purchase order: Receive finished goods and add to warehouse with reference to
reservation for sales order.
6. Ship sales order: Send finished goods from warehouse.
Note: Change management processing is also supported for this process flow. For details, see the lesson
titled “Back-to-Back Supply Creation and Fulfillment: Change Management” in this course.

In this practice, you will review the Supply Order that was created in the previous lesson by searching on
the PO number. From the Supply Chain Orchestration order, you will review the PO and it’s status. You
will then review the associated reservation and receive the PO. After the PO is received and supply
becomes on-hand, you will ship the order to the customer. Finally, you will see in Oracle Fusion Order
Management how the entire process of back-to-back is tracked.

In this practice, you will learn how to Perform End-to-End Fulfillment of a Back-to-Back Order.


00 minutes Practice
15 minutes Total

This diagram depicts an overall view of the back-to-back fulfillment process. An order is promised and a
supply order created. Depending on the source of the item, Manufacturing, Procurement, or Inventory
will provide the supply, which is then shipped to the customer.
The steps highlighted in red indicate the possible points of introduction of change which may trigger
change management.

Demand-Side Changes
Scenarios:
• Customer requests a different quantity of the item.
• Customer cannot take delivery on the scheduled date and asks for a schedule change.
• Customer cancels the order.
• Order Manager takes supply scheduled for one customer and reschedules it for a higher-priority
customer.
Supply-Side Changes
Scenarios:
• Supplier cannot provide the requested quantity of the item and an additional source must be
found.
• Supplier or Manufacturing cannot meet the scheduled date and asks for a schedule change.
• Supplier cancels the supply (purchase) order.
• Buyer changes the delivery date because supply is needed for a higher-priority order.

What happens when a sales order change is received?
Order Management
1. When a change order is received from an order capture system, original order is identified and
the changes determined.
2. Constraint rules are applied to determine permissible actions based on the identified deltas. If
constraints are violated, the change order is rejected. For example, a change will not be accepted
if an item has been shipped.
3. Change management processing works forward through the orchestration process, carrying out
the compensation actions, to return processing to the step where the change was received.
Supply Chain Orchestration

• When a demand change is received from Order Management, Supply Chain Orchestration makes
a corresponding change on the supply side so that supply and demand are kept in sync.
• Change Management processing works forward through the supply orchestration process,
carrying out the compensation actions, to return processing to the step where the change was
received. Changes can be rejected by execution systems and alternative supply options are
utilized if possible.

What happens when a supply change is received?
Purchasing
• Allows buyers and suppliers to suggest and implement changes on back-to-back
purchase orders
• Raises event to signal to subscribing applications that a change has occurred
Supply Orchestration
• Automation in change management triggers identification of an alternative source
of supply when the original supply document (PO in this instance) is cancelled.
• Order Manager is notified in the case of a supply exception.
Inventory Management can support changes to unshipped quantities after the appropriate
supply has been provided.
Examples of supply-side changes:
1. Date Pushed Out: In the case of back-to-back Buy, this exception occurs when the
supplier is unable to deliver goods on the promised date and, therefore, pushes out
the promised date on the purchase order schedule. The change is relayed to Supply
Orchestration, and Supply Orchestration publishes a Date Pushed Out exception on
the workbench and notifies Order Management.
A similar scenario can occur in the case of a back-to-back Transfer, in which case the
warehouse manager of the source organization pushes out the scheduled ship date
on the transfer order line. For back-to-back Make, a date pushed out exception is
triggered when the planned completion date is pushed out.
2. Date Pulled In: A Date Pulled In scenario in the case of a back-to-back Buy occurs
when the supplier commits to delivering goods earlier than the date originally
promised. In such a case, status quo is maintained on the supply order and sales
order. Date Pulled In scenarios for back-to-back Make and back-to-back Transfer are
also treated similarly.
3. Supply Quantity Reduced: When the supply quantity is reduced on the supply
document, Supply Orchestration will split the tracking line and initiate search for an
alternative source of supply for the quantity that has been reduced. If an alternative
source cannot be found, an exception is logged and Order Management is notified.

In this demonstration, you will learn how the change management capabilities handle the change in
order from either demand or supply side.


00 minutes Practice
10 minutes Total

This section describes what is drop ship, what order fulfillment processes are available, how to select
drop ship process and the key features of drop ship.

This diagram depicts that drop shipping is an order fulfillment strategy where the seller does not keep
products in inventory, but relies on suppliers or contract manufacturers to build, store, and ship orders
to customers.
• When a customer places an order for a drop shipped product, the seller issues a purchase order
for the item and provides instructions for shipping directly to the customer.
• The suppliers or contract manufacturers ship the product, and the seller earns a profit.
In the Oracle SCM Cloud, this process is fully automated. This allows you to focus your time and energy
on your company’s core competencies.

This diagram depicts the drop ship order fulfilment process.
• Drop ship order processing can coexist with business processes for back-to-back and standard
fulfillment flows and in fact some Order Management tasks are shared amongst these flows.
• If customers choose to implement more than one of these order fulfillment processes, the
fulfillment method used for an ordered item is chosen at run time based on order scheduling
results.
• The flows shown above represent a high level view of the order orchestration that occurs in
Order Management.

This diagram depicts how the fulfillment process is selected. The fulfillment process is selected in Order
Management after the sales order line is scheduled. Scheduling results are based on rules set up in
Global Order Promising.

This diagram depicts the drop ship order fulfilment process. The drop ship curriculum will focus on the
fulfillment steps that take place once order management assigns drop ship fulfillment process to a line.
The invoice step is functionally identical to the same task in the standard order flow and won’t be given
as much attention as the steps that are drop shipment specific.

Fulfill a Customer Order Through Drop Shipment
An out-of-the box, automated order-to-cash process where a supplier ships the goods directly to the
customer.
The process involves the following steps:
• Considers drop ship sourcing rules
• Promises orders based on those sourcing rules
• Creates a purchase requisition and drop ship purchase order
• When the supplier ships the goods, automatically submits a billing request to invoice the
customer
Fulfillment Visibility
Gives the order manager visibility to the status of the purchase order.
Automatic Change Management
Keeps the supplier up to date by automatically updating the purchase order to reflect the customer
order changes. It also works the other way where a change to the purchase order is automatically
reflected on the order in order management.
Automatic Accounting
Automates the ownership change documentation and accounting from the supplier to the enterprise to
the customer once the supplier notifies that goods have been shipped. An agreement defined for the
drop ship financial flow can support multiple ownership changes as required to support global business
agreements.

This section describes the components required for the drop ship flow.

This diagram depicts that the seeded flow makes use of Cloud products.
• Order Management and Orchestration is done by Oracle Order Management Cloud.
• Order Promising is done by Oracle Global Order Promising Cloud.
• Drop Ship Requisition and Purchase Order are created in Oracle Procurement Cloud.
• Supplier may enter ASN using Supplier Portal in Oracle Procurement Cloud.
• Receiving, Financial Orchestration, and Costing is done in Oracle Inventory Management Cloud.
• Customer invoicing is done in Oracle Financials Cloud.

This diagram depicts the drop shipment process:
• Each swim lane represents a system or business function that is integral to this flow.
• This is a variation of an order-to-cash process where goods are shipped by the supplier rather
than being shipped from an internal warehouse.
• After a sales order is received from a capture system, it goes through the steps required for
fulfillment.
• In our out-of-the-box fully integrated flow, Oracle Order Management Cloud is the capture
system as well as the system that orchestrates the fulfillment process.
Schedule Order
In the Schedule Order task or sub-process, a scheduling request is sent to Oracle Global Order Promising
(GOP) Cloud, which considers the sourcing rules, supplier calendar, capacity, and so forth to determine
how best to promise the order. In the context of drop shipment, the order is promised from a supplier
(and a specific supplier site).
Note: The customer order itself may specify a supplier, and this will always be honored.

Get Financial Agreement
The next swim lane is for Oracle Fusion Supply Chain Financial Orchestration (SFO) where
the supplier-to-customer drop ship financial flow is defined and ultimately executed. The Get
Financial Agreement sub-process fetches the requisition organization for creation of the
purchase requisition.
Create Purchase Request and Purchase Order
Next, a purchase request is sent to Oracle Procurement Cloud. Here, a requisition is created
followed by a purchase order. The requisition may be sourced from a blanket purchase
agreement, if one exists. The purchase order is issued to the supplier.
Ship Goods and Enter ASN
After the supplier ships the goods to the customer, he or she enters an advance shipment
notice (ASN). As represented in this swim lane, the ASN is entered through the Supplier
Portal. The ASN is broadcast to interested parties and intercepted by Oracle Fusion Supply
Chain Financial Orchestration and Oracle Fusion Receiving.
Receipt and Cost Accounting
Oracle Fusion Supply Chain Financial Orchestration executes the financial flow and Oracle
Fusion Cost Management performs the receipt and cost accounting.


00 minutes Practice
25 minutes Total

This section describes how to configure the relevant features in the Order Management and
Procurement offerings.
These features are:

• Order Management Offering
• Procurement offering

This screenshot depicts drop ship setup features.
Prerequisites: Setup Features

Before you can begin using the drop shipment process to fulfill orders, you need to configure the
relevant features in the Order Management and Procurement offerings. Here are the features that you
must enable:
• Order Management offering: Turn on the drop ship feature by selecting the Drop Ship check
box. Doing this, gives you access to the Oracle Fusion Supply Chain Financial Orchestration (SFO)
setup tasks that are required in order for the drop ship flow to work.
• Procurement offering: Turn on the customers sales order fulfillment feature by selecting the
Customer Sales Order Fulfillment check box. This setting allows Oracle Fusion Procurement to
accept purchase requests for sales orders that will be fulfilled by a drop ship supplier.
Navigation: Navigator > Setup and Maintenance > (select) Order Management (offering) > (Actions)
Change Configuration > Features (edit)
Navigation: Navigator > Setup and Maintenance > (select) Procurement (offering) > (Actions) Change
Configuration > Features (edit)

This section describes the drop ship setup tasks.

This slide provides a list of set up tasks.

This screen shot depicts how to manage items in Drop ship.
Only items defined as Purchasable are candidates for drop shipment. Therefore, you must define the
items that you would like your suppliers to ship directly to your customers as Purchasable in the
organization that will be responsible for purchasing those items. This is done on the Manage Items page.
As shown, the property is on the Specifications tab within the Purchasing attribute group within the item
organization.
Navigation: Home > Product Management > Product Information Management > Manage Items

This screenshot depicts how to manage sourcing tasks.
You may define a global buy from type of sourcing rule with supplier and supplier site populated. At the
time of order promising, Oracle Fusion Global Order Promising will evaluate this sourcing rule and take
into consideration the supplier calendar, supplier capacity, and supplier lead times.
• Supplier Calendar
- Defines working days for the supplier and can vary by supplier site
- Considers only working days when accounting for lead times
• Supplier Capacity
- Specify capacity of the supplier by item, supplier, and supplier site.
- Supplier capacity is assumed to be based on arrival date.
• Supplier Lead Times
- Item processing lead times are specified on the item master in Oracle Fusion Product Model
and collected.
- Supplier-specific lead times can be specified within Oracle Fusion Global Order Promising.
Navigation: Home > Value Chain Planning > Order Promising > Manage Sourcing Rules

This screenshot depicts how to manage Drop Ship financial flows.
Receiving Trade Organization

On the Manage Drop Ship Financial Flows user interface, you specify the receiving trade organization for
every selling business unit in your enterprise. The receiving trade organization:
• Is the organization that will place the requisition for the goods
• Acts as the receiving organization for the drop ship purchase order
• Is where the receipt and shipment accounting for the drop shipment is performed
The receiving business unit and the receiving legal entity are defaulted based on the receiving trade
organization.
For example, in the screenshot above, the system is set up to specify that any drop ship sales order that
is taken in the Vision Operations business unit creates a requisition in the Vision Operations inventory
organization.

Define Different Requisition Trade Organizations
• In some cases, you may need to define different requisition trade organizations for
different drop ship orders that are sold out of the same selling business unit.
• To do this, you can add multiple drop ship financial flows with different orchestration
qualifiers.
• For example, if you need to buy out of China when your supplier is in China, but buy
out of the US when your supplier is in the US or Europe, then you can create a
second drop ship financial flow, with a qualifier of the Chinese supplier site, and a
receiving trade organization of your Chinese inventory organization.
Event to Trigger Ownership Change
• Finally, for each drop ship financial flow, you can determine whether the ASN or the
supplier invoice should be used as the event that will trigger ownership change from
the supplier to your company.
Selling Business Unit and Requisition Business Unit
• If the selling business unit and the receiving business unit are different, then Oracle
Fusion Supply Chain Financial Orchestration determines if there any additional
financial and accounting transactions that need to be performed based on
procurement and shipping flows defined in the system.
• Drop ship purchase requisitions are created by Order Management Cloud on external
suppliers which requires the requisition organization. This is where Order
Management Cloud derives the requisition organization and requisition business unit
from.
Navigation: Navigator > Setup and Maintenance > (select) Order Management (offering) >
Setup (action) > Orders (functional area) > Manage Drop Ship Financial Flows

This screenshot depicts how to manage order management parameters.
Manage Order Management Parameters is a task in Oracle Fusion Order Management where your
administrator can set up preferences needed for Order Management implementation.
To successfully send a purchase request to Oracle Procurement Cloud, at least one value needs to be
defined for the Preparer for Procurement attribute.
• The default value applies across all business units.
• Specific values can be set up at the level of each sales business unit.
• The preparer is the person that your buyers are expected to reach out to if they need to discuss
something within the context of fulfillment of the customer order.
• If a value is defined for the sales business unit stamped on the order, that value will be picked up.
Otherwise, the default value across all business units will be picked.
• This attribute is mandatory for sending a purchase request to Oracle Procurement Cloud. If a
default value is not defined either, an error message will be sent back by Oracle Procurement
Cloud in response to a purchase request.
Navigation: Navigator > Setup and Maintenance > (select) Order Management (offering) > Setup (action)
> Orders (functional area) > Manage Order Management Parameters

This screenshot depicts how to manage suppliers and supplier sites.
The setup for supplier and supplier site enablement is done in the Manage Suppliers area in Oracle
Fusion Purchasing. You must enable the site for Purchasing (as shown in the slide) for it to be
considered a valid supplier site. Also, on the Site Assignments tab, you must associate the requisition
business units as client business units for which the supplier site needs to be used for the purchasing
function.
Navigation: Home > Procurement > Suppliers > Manage Suppliers

This screenshot depicts how to manage agreements.
In Oracle Fusion Purchasing, your buyer can create blanket purchase agreements for the items to be
drop shipped from a supplier. Each blanket purchase agreement is defined for a specific supplier and
supplier site and associates one or more items with it. The prices mentioned in the agreement will be
used for defaulting in the purchase documents.
Automatically Generate Orders Option
If you select the Automatically generate orders option, any requisition that is sourced from this blanket
purchase agreement will automatically get converted to a purchase order. Therefore, your buyer does
not need to do so manually.
Use Customer Sales Order Option
If you select the option to group requisitions using customer sales order, the system will enable grouping
of requisition lines with the same sales order number to be placed on a single purchase order.
Navigation: Home > Procurement > Purchasing > Manage Agreements

This screenshot depicts how to manage orchestration process definitions
The orchestration process DOO_OrderFulfillmentGenericProcess has been seeded for your benefit. It
contains conditional branches for drop shipment, fulfillment from internal warehouse, and back-to-back.
You may use this as the default process assignment in your Assign & Launch rule. The condition that
determines which branch the flow will take is:
• If the supplier attribute is populated on the fulfillment line, take the drop shipment branch.
• Otherwise, if the item is defined as Back-to-Back enabled in the inventory organization, take the
back-to-back branch.
• Otherwise, take the remaining branch where shipment is from on-hand quantity in your
warehouse (reservation and shipping branch).
You may define your own orchestration processes as well and define which one to pick in the Assign &
Launch rules.
Navigator > Setup and Maintenance > (select) Order Management (offering) > Setup (action) > Orders
(functional area) > Manage Orchestration Process Definitions

This screenshot depicts how to generate shipping documents for Drop Ship and RMA orders.
You can generate shipping documents for orders shipped directly from Suppliers to Customers i.e., Drop
Ship Orders. Advanced Shipment Notifications (ASN) are generated for drop ship orders which can be
sent to customers. In addition, you can generate shipping documents for customer returns to be sent to
carriers or customers, to accompany the returned goods.
To print shipping documents for the Drop Ship orders, select the ‘Print shipping documents for drop
ship orders’ check box on the ‘Manage Receiving Parameters’ page. Likewise, to print shipping
documents for RMA orders, select the ‘Print shipping documents for return material authorizations’
check box on the ‘Manage Receiving Parameters’ page.


15 minutes Practice
60 minutes Total

This section describes the drop ship integration points. You will learn:
• Order Promising
• To identify the requisition business unit and requisition inventory organization
• To create a purchase requisition
• To ship goods against Purchase Order
• To create an invoice for the customer

This diagram depicts the integration point of order promising.
• Scheduling is the first step in the orchestration process and is meant for Order Promising. Oracle
Order Management Cloud sends a request to Oracle Global Order Promising (GOP) Cloud to
schedule (promise the order).
• Global Order Promising examines the sourcing rules to determine the best possible sourcing
option to fulfill the order.
• If there is a Buy From type of sourcing rule that is found to be suitable to promise the order
based on the available supplier capacity, lead time, supplier calendar and the Requested Date on
the order, Global Order Promising will assign the supplier and supplier site on that sourcing rule
to the order.
• After supplier is stamped on the fulfillment line, Order Management knows that the fulfillment
line will be drop shipped.
• When Order Management absorbs the response from Global Order Promising, the fulfillment line
status is set to Scheduled status. This implies that the fulfillment line now has the attributes for
scheduled ship and arrival dates, shipment method, and source (in this case, the supplier and
supplier site). This completes the auto-scheduling interaction between Order Management and
Global Order Promising.

This diagram depicts the integration point of getting requisition BU and organization.
• After it is known that the fulfillment line will be drop shipped, Oracle Fusion Order Management
needs to identify the requisition business unit that will be responsible for sourcing the item and
the requisition inventory organization where the logical receiving would be done.
• In the lesson titled “Drop Ship Setup,” you examined the Manage Drop Ship Financial Flows task
where the drop ship financial flow is defined. In this integration, Order Management sends a
request to Oracle Fusion Supply Chain Financial Orchestration (SFO) to fetch these details from
the appropriate drop ship financial flow and stores the response. These values are
communicated to Oracle Procurement Cloud. These are also displayed on the fulfillment line in
Order Management and you will see that in one of the following slides.

This diagram depicts the integration points of drop ship purchase requests.
• In this interaction, Oracle Fusion Order Management calls the Purchase Request service (Create
operation) with details such as the following:
- Customer (ship-to address, ship-to contact, sold-to contact)
- Source Order business keys (Number, Line Number, Schedule Number)
- Customer Purchase Order business keys (Number, Line Number, Schedule Number)
- Requisition BU, Requisition Organization
- Item (ID, quantity)
- Ship Method
- Scheduled Ship / Arrival Date
• These details are used by Oracle Fusion Procurement to create a purchase requisition and an
acknowledgement is sent back with the requisition number and requisition line number.
• These details are saved on the fulfillment line in Order Management and the status of the
fulfillment line is Requisition Created.
• At the time of creating the requisition, Procurement checks whether a valid blanket purchase
agreement exists for that supplier and item combination. If so, the requisition is sourced from
that blanket purchase agreement and the price is defaulted.

• If the blanket purchase agreement has the Automatically Generate Orders option
selected (as described in the previous lesson), a purchase order is automatically
created. If not, a buyer needs to create it manually from the requisition. Drop ship
purchase orders are deemed to be automatically approved and don’t need to go
through an approval workflow within Oracle Fusion Procurement if the
“Automatically submit for approval” check box is selected for sourced agreements,
and the corresponding approval rules are set up in Procurement.
• The purchase order is sent to the supplier for fulfillment and a notification is sent
to Oracle Fusion Order Management.
• Order Management calls the Purchase Order service (Get operation) to fetch the
details of the purchase order from Procurement.
• The purchase order references are stored on the fulfillment line for future
communication with Procurement.
• After the purchase order details are recorded in Order Management, the
fulfillment line status is set to Awaiting Shipping to indicate that the next logical
step is for the supplier to ship.

This screenshot depicts how you can review drop ship orders in order management. After Oracle Fusion
Global Order Promising schedules the order to be fulfilled from a supplier, the fulfillment view of the
order in Oracle Fusion Order Management shows a Drop Shipment region in the Supply Details tab for
the fulfillment line. This region:
• Shows the supplier information, requisition business unit, and requisition organization that were
obtained from Oracle Fusion Supply Chain Financial Orchestration
• Contains references to the requisition and purchase order in Procurement as well as the name of
the buyer
As shown here, once requisition details are available, they are displayed. The fulfillment line has a status
of Requisition Created at this point in time until the purchase order information becomes available.
Navigation: Home > Order Management > Manage Orders (search using order number and click on
order number in search result) > Actions > Switch to Fulfillment View

This screenshot depicts how you can review drop ship PO references in order management. Once Oracle
Fusion Order Management gets the reference to the drop ship purchase order in Oracle Fusion
Procurement, it stores that on the fulfillment line and the details are visible in the Drop Shipment region
as shown. The fulfillment line status is updated to Awaiting Shipping as shown in this screenshot.
order number in search result) > Actions > Switch to Fulfillment View

This screenshot depicts how you can review drop ship purchase orders. A buyer can review the drop ship
Purchase Order in Oracle Fusion Procurement. A drop ship Purchase Order schedule is identified
through these characteristics:
1. Destination Type attribute has a value of Drop Ship.
2. Ship-to Location is that of the customer.
3. The Customer Sales Order attribute shows the sales order number in the source order system.
Navigation: Home > Procurement > Purchasing > Manage Orders

This diagram depicts the integration points of shipment of goods against PO.
• An advance shipment notice (ASN) is created when the supplier ships the goods. The ASN can be
loaded manually or electronically via XML/EDI. The manual option is available for the supplier
using the Create ASN, Create ASBN, or Upload ASN or ASBN tasks in the Supplier Portal. These
same options are also available from the Receipts work area allowing a warehouse manager to
manually enter the ASN in cases where informal communication such as e-mail is used by the
supplier to report the shipment of drop shipped purchase orders.
• Once this happens, a logical receipt is created in Oracle Fusion Receiving against the drop
shipment of the purchase order and a notification is sent to Oracle Fusion Order Management.
• Order Management calls the Get Shipment Details web service to fetch all of the details of the
shipment such as ASN, waybill, bill of lading, item and shipped quantity, and so forth.
• If the entire ordered quantity is shipped, the fulfillment line is set to Shipped status and the flow
moves to the billing step.
• ASN also signals to Oracle Fusion Supply Chain Financial Orchestration to execute the financial
flow to create the cost accounting distributions. This is to track the cost and liability for
ownership transfers between parties. It also creates intercompany invoices for internal ownership
transfers whenever necessary.
• If the supplier ownership change event is AP Invoice Match, the AP Invoice creation automatically
drives the receiving process. The receiving process then works similar to that explained for the
ASN option except that an ASN is never generated. The special drop ship receipt and delivery are
generated based on the creation of an accounts payable invoice for the drop ship purchase
order.

This screenshot depicts how you can create ASN against drop ship purchase orders. To create an ASN
against a drop ship purchase order in the Supplier Portal:
• A supplier logs in to the Supplier Portal and navigates to the Create ASN page.
• There, he or she searches for the drop ship Purchase Order using the PO number.
• He or she then selects the relevant purchase order schedule and clicks the Create ASN button.
In this graphic, you see the page where the supplier enters the details of the shipment. Upon entering
the shipment details, he or she clicks the Submit button and will get an acknowledgement that the ASN
was created. If a warehouse manager were to enter the ASN in the Receipts work area, the experience
would be the same.
Navigation: Home > Warehouse Operations > Receipts > Create ASN

This screenshot depicts how you can manage shipments for drop ship orders. The Manage Shipments
page allows you to search for Drop Ship orders. To determine Drop Shipments, select ‘Drop Ship’ in the
‘Order Type’ list and ‘Creation date’ as ‘System Date’.
In addition, you can search for shipments created for the Drop Ship orders on the ‘Manage Shipments’
and ‘Manage Shipment Lines’ pages using the ‘Way Bill Number’ provided by the Supplier on the ASN.

This screenshot depicts that the Packing Slip number displayed in the report is a system generated
number and does not use the Packing Slip number specified by the supplier in the ASN.
The Ship-From field on the Packing Slip displays supplier’s name and address for Drop Ship orders. The
Ship-To field on the Packing Slip displays customer’s name and address.
The Serial numbers specified by the supplier in the ASN for the Drop Ship Purchase Order are displayed
in the Packing Slip report for the shipment created for Drop Ship orders.

This screenshot depicts customer invoices for drop ship orders.

This diagram depicts the integration points of Invoice Customer.
• Once the ordered goods are shipped to the customer, the process reaches the point of billing the
customer for the order. Billing is done by Receivables, an application within Financials Cloud.
Order Management calls the Create Invoice web service provided by Receivables and sends all
the relevant details that include the following:
- Customer (bill-to address, bill-to contact)
- Source Order business keys (Number, Line Number, Schedule Number)
- Customer Purchase Order business keys (Number, Line Number, Schedule Number)
- Sales Order business keys (Number, Line Number, Fulfillment Line Number)
- Item (ID, quantity, price, and so forth)
• When the request is acknowledged by Receivables, the status of the fulfillment line is set to
Awaiting Billing.
• Receivables typically generates invoices on a periodic basis (for example, once a day or other
frequency). When the invoice for drop shipment is generated by Receivables, Order Management
is notified.
• The invoice details such as invoice number, date, and amount are saved against the fulfillment
line and the status of the fulfillment line is Billed.
• Because all fulfillment and billing activity is completed against the fulfillment line, it is closed and
it is no longer open for any changes.

This section discusses how to track progress with fulfillment line statuses.

Fulfillment Line Status
This table discusses how to track progress with fulfilment line statuses. It lists each fulfilment line status
in the first column and what it signifies in the corresponding column.
Because fulfillment line belongs to the order as viewed in Oracle Fusion Order Management, the status
values on the fulfillment line are reflective of an Order Management centric view of the progress of the
fulfillment line. There could be a small latency, possibly a few seconds, in communication from Oracle
Fusion Procurement, Oracle Fusion Receiving, and Oracle Fusion Receivables where the fulfillment line
status in Order Management may appear to be lagging the progress in the other systems.
• Scheduled: Once Oracle Fusion Global Order Promising provides the scheduling details to Order
Management, the status of the fulfillment line is set to Scheduled. At this time, the fulfillment line
has the scheduled ship date, scheduled arrival date, supplier, and supplier site.
• Requisition Created: Next, once Procurement responds back to Order Management’s purchase
request with the requisition details, the fulfillment line status progresses to Requisition Created.
The requisition details are recorded on the fulfillment line.
• Awaiting Shipping: Once Procurement provides the purchase order details to Order
Management, the fulfillment line status progresses to Awaiting Shipping. At this point, the
purchase order details and buyer are captured on the fulfillment line.
• Shipped: Once Receiving notifies Order Management that the supplier has shipped the goods
and Order Management gets the shipment details, the status of the fulfillment line is set to
Shipped.

• Awaiting Billing: In order to invoice the customer, Oracle Fusion Order
Management sends an invoicing request to Oracle Fusion Receivables, which
acknowledges the request. This is when the status of the fulfillment line is set to
Awaiting Billing.
• Billed: Finally, when Receivables sends a notification with details of the
Receivables invoice to Order Management, the fulfillment line status progresses to
Billed.

In this demonstration, you will learn how a drop ship order progresses in Oracle Fusion Order
Management. You will also learn how to review the drop ship purchase order in Oracle Fusion
Purchasing. This is a variation of the Order-to-Cash flow where drop shipment is the means to fulfill the
customer order. In addition, you will learn how to run shipping reports.

In this practice, you will:
• Query a blanket purchase agreement using supplier name
• Submit an order using order data
• Review an order as it goes through scheduling and procurement steps
• Log in to Oracle Fusion Receiving and create an advanced shipment notice
• Review a fulfillment line in Oracle Fusion Order Management to ensure it is at invoicing step


25 minutes Practice
45 minutes Total

This section describes how a drop ship order undergoes changes.

There are several ways for a drop ship order in Oracle Fusion Order Management to undergo a change.
Channel System
Channel system where the order originated could submit a change. This change is submitted by calling
the Order Import service from the Order Capture system.
Order Management
• An order entry specialist can search the drop ship order in Order Management. Once the order is
pulled up, use the Create Revision option from the Actions menu to open the Revise Order page
where changes can be made and submitted.
• An order manager can make a change to an order on the Order Orchestration work area using
the Edit action on the fulfillment line.
• To improve the results of automatic order promising by Oracle Fusion Global Order Promising,
an order manager can click the Check Availability button on the Order Orchestration work area
page. This brings up the Check Availability page where a different source may be used to
reschedule the order.

Planning
A planner may make changes on the planned order using the Planners Workbench and
submit those changes using the Order Management Loopback service. This will result in a
change order.
Procurement
• A buyer may make changes to a drop ship requisition using the Process Requisitions
page for requisitions not yet placed on a purchase order. Oracle Fusion Order
Management updates the order in response to the requisition changes.
• A buyer or supplier may make changes to a drop ship purchase order using the
Manage Orders page. Order Management updates the order in response to the
purchase order changes.

This section describes how changes in drop ship orders are processed.

Before Purchase Request Is Sent to Oracle Procurement Cloud
You should have learned the terms compensation, delta attributes, and constraints in the Order-to-Cash
course. If a change is made on a drop ship order before the start of the Oracle Fusion Procurement step
during the orchestration of the order in Oracle Fusion Order Management, such a change will apply to all
the executed tasks. In the seeded orchestration process, it will impact the Scheduling task provided any
of the delta attributes associated with the Scheduling task were changed. Because the Procurement step
was not even started, the upstream changes will be merged with the order and won’t be visible to the
Procurement task.
After Requisition Is Created in Procurement, but Before Purchase Order Is Created
Procurement currently does not allow changes to the requisition other than cancellation. Therefore,
Order Management has implemented a constraint that prevents such changes from being sent to
Procurement. The constraint will fail with the result that the change order will be rejected.

Once Purchase Order Is Created, but Not Shipped
Once a Purchase Order has been created, there is more flexibility in making changes and
communicating those to Oracle Fusion Procurement provided items have not yet shipped.
The change compensation depends upon the type of change.
• If the requested arrival date is changed (Oracle Fusion Global Order Promising will
change the scheduled arrival date accordingly), this is simply an update of the
purchase order.
• If ordered quantity is changed such that the supplier capacity in Global Order
Promising indicates that it could still be fulfilled, this would also be an update of the
purchase order.
• If the item is changed (for example, the previous item is effectively canceled), the
purchase order schedule will need to be canceled.
• If the purchase order had a single line and schedule, the purchase order would also be
canceled. A new purchase request will be sent to Procurement and it would start with
the creation of a new requisition.
• If supplier is changed, the previous purchase order must be canceled and a new
purchase request submitted.
After Purchase Order Is Shipped
If the purchase order schedule corresponding to the fulfillment line has been partially
shipped, the only change allowed is to cancel the unshipped portion of the ordered
quantity. This is consistent with order fulfillment lines that are fulfilled from on-hand
inventory. If such a fulfillment line is partially shipped, the only change allowed is
cancellation of the back-ordered quantity.

This diagram depicts changes to drop ship orders from order capture. The scenario shown here is one
where the change order was received by Oracle Fusion Order Management when the Oracle Fusion
Procurement task was in progress.
• The Procurement task will be placed on hold by calling the Purchase Request web service
(Control operation with Hold).
• In the first step, Scheduling will be compensated and the changes will be sent to Oracle Fusion
Global Order Promising for promising the change order.
• Next, the Procurement task will be compensated as described in the previous slide.

This screenshot depicts changes to drop ship order from workbench. An order manager will usually
make changes only to those orders that have a fulfillment exception, manifested as jeopardy on the
order and order fulfillment line. Changes to the attributes shown in this screenshot can be done by the
order manager and once those are saved, the fulfillment line will be rescheduled.
order number in search result) > Actions > Switch to Fulfillment View > Edit action on Fulfillment Line

This screenshot depicts how an order manager may try to improve the order promising result from the
Check Availability page. The user can take the following steps:
• Select the fulfillment line and click the Edit action .
• In the dialog box that opens, select Yes for the Ignore Reservation attribute, clear the existing
drop ship supplier, and save.
• Click the View Availability Options button.
This shows all possible sources to fulfill the fulfillment line, including other suppliers and even on-hand
from your warehouses. The user can select an alternative source under Availability Options and click the
Select and Schedule button to make the changes.
order number in search result) > Actions > Switch to Fulfillment View > Check Availability

This diagram depicts how changes are made to drop ship orders in planning. Your planner is looking to
match order demands to available sources of supply. There may be times when the planner may need to
intervene and improve the results of automated planning by Oracle Fusion Global Order Promising.
• Revision of planned orders is done from the Planners Workbench.
• The changes to planned orders are released through the Order Management Loopback service.
• This tells Oracle Fusion Order Management to revise the fulfillment lines in response to the
recommended changes.
• If Order Management can accept those changes (constraints are not violated), the changes will be
applied and compensation for those changes will be initiated.
The types of changes done by the planner and the corresponding compensation to the Procurement
task are mentioned in the slide.
Note: To learn details about making changes to the Planned Order and submitting them through the
Order Management loopback service, it is recommended that you take the Planning Central course.

This diagram depicts how changes are made if buyer or supplier revise purchase order.
In Oracle Fusion Procurement, the buyer responsible for fulfilling the demand sent by Oracle Fusion
Order Management through the purchase request may make changes at the requisition stage and at the
purchase order stage based on the recommended supplier’s ability to fulfill that demand on time. The
supplier also has the ability to request changes to the purchase order.
Purchase Order Revision Goes Through Approval
Revision of the purchase order goes through approval. The types of changes that may be done include:
• Requisition stage:
- Split requisition line: Generally done to fulfill from multiple suppliers
- Cancel requisition line: When a buyer knows that the recommended supplier can’t meet the
demand, and there is no other supplier who can meet it on time. Cancellation may be done
after splitting the requisition line, and in effect, accepting the demand for partial quantity.
• Purchase Order stage
- Promised date may be changed.

- Purchase order schedule may be split to stagger shipment and delivery across
multiple dates.
- Purchase order schedule may be canceled to signify inability to fulfill.
- Quantity on purchase order schedule may be reduced to indicate supplier
capacity to meet demand partially, but not fully. The system will prevent a
quantity increase on a purchase order schedule that belongs to a drop ship
purchase order.
Changes Are Synced in Order Management
Oracle Fusion Order Management makes corresponding changes to the fulfillment lines.
• If there is a quantity reduction (partial cancellation) on the purchase order schedule,
the fulfillment line will be split, and the fulfillment line having the canceled quantity
will be on the scheduling step. It can be rescheduled by the order manager.
• If the purchase order schedule is canceled, the fulfillment line will be regressed to the
scheduling step so that an order manager may reschedule it from a different source
(including on-hand).
Once there is a shipment against a purchase order schedule, no other changes are expected
from Oracle Fusion Procurement. Even if there is a partial shipment and a supplier
expresses inability to meet the remaining demand, the buyer must communicate that to the
order manager and the cancellation of the remaining quantity should come from the Order
Capture system.
Global Order Promising Compensated with ATP Override
Promised date change and quantity reductions are fed back to Oracle Fusion Global Order
Promising to correct the supply picture at the supplier.

This screenshot depicts how changes are made to drop ship purchase orders in procurement. A buyer
can select the purchase order to be revised and choose Edit under the Actions menu. A new tab opens
(as shown in this graphic) that shows the revision number. The buyer selects the schedule to be edited
and performs an action such as Edit, Split, or Delete. These actions are represented by icons on the left.
In this example, the schedule is split and the quantity is adjusted across the two schedules. Once the
changes are complete, the buyer enters a description for the changes and clicks the Submit button.
The approval workflow is initiated and once approved, the changes take effect on the purchase order.
They are communicated to Oracle Fusion Order Management through an event and Order Management
calls the Purchase Request web service (Get operation) to determine the changes that have been applied
and mirror those on the fulfillment line.
Navigation: Home > Procurement > Purchasing > Manage Orders > Edit action

This sections discusses the limitations in the changes that can be made in drop ship orders.

It is neither possible to apply changes to drop ship orders all the time, nor are all types of changes
possible. The specifics about the timing of changes as well as the types of changes allowed or not
allowed are summarized in this slide.
After Requisition is Created, but Before PO Created
After the requisition is created in Oracle Fusion Procurement, but before the purchase order is created,
only cancellation is allowed on standard lines. This is due to a Procurement limitation. No changes are
allowed on lines with models and shipment sets at this stage. If the purchase order is set to be auto-
created from requisition in the blanket purchase agreement from where the requisition is sourced, this
stage will generally be very short.

Once PO is Created, but Not Yet Shipped
Once the purchase order is created, but not yet shipped by the supplier, it is generally
expected that the changes will be honored by the supplier. However, if changes are made to
the purchase order too close to shipping, such as once picking or packing is done at the
supplier site, those changes could be rejected by the supplier.
• You can prevent submission of a change order on the purchase order to the supplier
by creating appropriate constraints that would reject the customer change order
upstream in the process.
• By not doing so, please note that change management would be able to apply a hold
on the purchase order successfully and Oracle Fusion Procurement will take the
changes, but the change order against purchase order must be accepted and
approved by the supplier.
• The supplier’s shipping system may reject the change. If that happens and
Procurement rescinds the change that was previously accepted, Oracle Fusion Order
Management is unable to process the rejection, and the sales order will be out of sync
with the purchase order.
• Thus, it is very important that you define constraint conditions in Order Management
to reject such changes to the sales order upstream.
After PO Is Partially Shipped
After the purchase order is partially shipped, the only change allowed is cancellation of the
remaining quantity from the Channel/Order Capture system so that the change
management process in Order Management orchestrates this change.
• Changes made by a buyer or supplier to the purchase order can’t be absorbed by
Order Management at this stage.
• Please note that partial shipment triggers a split of the fulfillment line in Order
Management.
• This leads to complexity in processing changes to a partially shipped purchase order
schedule that affect one of those fulfillment lines, but not both, because both
fulfillment lines belong to the same orchestration process instance.

It is neither possible to apply changes to drop ship orders all the time, nor are all types of changes
possible. The specifics about the timing of changes as well as the types of changes allowed or not
allowed are mentioned here.

In this demonstration, you will learn how to split a purchase order schedule and observe the effect of the
purchase order revision in Order Management. You will also see ASN creation against each of the
purchase order schedules, one at a time, and observe the impact in Order Management.

In this practice, you will learn how to split a purchase order schedule and observe the effect of the
purchase order revision in Order Management. You will also see ASN creation against each of the
purchase order schedules, one at a time, and observe the impact in Order Management. Finally, you will
see what happens when invoicing is completed for the entire order.


00 minutes Practice
10 minutes Total

This section describes what are internal material transfers and gives a brief overview of the same.

Internal material requests are requests made for goods to be fulfilled internally. The internal material
request and fulfillment process can range from simple processes to extremely complex processes,
spanning multiple legal entities, across geographies, and involving multiple shipment points.
• A transfer order is created from transfer sources including min-max planning, back-to-back,
spreadsheet upload, and planning. Other sources include entry of internal material transfers via
Manage Item Quantity UI, Self Service Procurement (SSP) IMT Requisition Lines, and Supply
Request Web Service.
• Oracle Fusion Supply Chain Orchestration evaluates the supply execution document creation
rules to determine if an internal material transfer should be executed using a transfer order or a
purchase order.
• The transfer price and tax are calculated and applied to the transfer order.
• Costing and accounting of internal material transfers is performed automatically by Oracle
Fusion Cost Management.

• The pick, ship, receive, put away, and return processes can be performed against a transfer order
document.
• You can specify more than the requested quantity on your pick-and-move requests for sales
orders, transfer orders, work orders, and movement requests.
• Full visibility is provided to shipments and receipts associated with a transfer order.
• Internal material transfers can optionally be fulfilled through Oracle Fusion Order Management.

This diagram depicts an overview of Internal Material Transfer.
Internal material transfers offer benefits for both the requesting and fulfilling organization:
• Requesting organization can increase sales, reduce lead time, and improve customer service.
• Fulfilling organization can reduce working capital, stock write-offs, and improve inventory
turnover.

This section describes the internal material transfer process flow.

This diagram depicts the internal material transfer flow and the products involved:
• The process starts with a transfer source. Multiple transfer sources are supported such as min-
max planning, back-to-back, spreadsheet upload, and planning. Other sources include entry of
internal material transfers via Manage Item Quantity UI, Self Service Procurement (SSP) IMT
Requisition Lines, and Supply Request Web Service.
• During the supply creation process, Oracle Fusion Supply Chain Orchestration (SCO) evaluates
the supply execution document creation rules to determine if an internal material transfer should
be executed using a transfer order or a purchase order. SCO also provides sourcing tools to assist
users in creating internal material transfer requisition lines in Self Service Procurement as well as
those creating supply requests out of the Inventory's Manage Item Quantity UI. The sourcing
tools provide a default source organization for the casual self-service procurement users and
allow access to source organization rankings and available to promise quantities for the more
advanced users. Supply Chain Orchestration works with Global Order Promising and Inventory to
identify the source organization rankings based on pre-established rules.
• The transfer order is a new document created in Oracle Fusion Inventory Management to
support the internal material transfer process. It represents demand and supply in a single
document.

• Processes such as pick, ship, receive, put away, and return can be performed
against a transfer order document. Warehouse managers have full visibility to
shipments and receipts associated with a transfer order. Attributes on a transfer
order can be updated such as source organization, requested delivery date, and
requested quantity.
• Oracle Fusion Supply Chain Financial Orchestration (SFO) allows the supply chain
controller to model financial flows between business units involving different
pricing and accounting requirements. The Supply Chain Financial Orchestration
framework provides an estimate of the transfer price for creation of transfer
orders to transfer goods between internal organizations. Once the transfer price is
calculated, Supply Chain Financial Orchestration calls the tax application to
determine the tax applicable on the transfer price. In addition, it supports pricing
on internal material transfer requisition lines, ensuring that prices are available at
time of entry of the requisition for approval designation as well as for budgetary
control and encumbrance accounting purposes.
• Oracle Fusion Cost Management has an infrastructure in place to trigger costing
and accounting of internal transfers automatically. Internal material transfer
transactions such as Transfer Order Shipment and Transfer Order Receipt are
interfaced to Cost Management. Trade events are interfaced from Supply Chain
Financial Orchestration to Cost Management. Cost Management also provides the
ability to analyze the gross margin earned for internal sales transactions
separately.
• Oracle Fusion Planning and Fusion Global Order Promising (GOP) provide further
support for internal material transfer features. They provide visibility into activity
from transfer orders showing them as outgoing demand in the source
organization and in the inventory destination scenarios as incoming supply in the
destination organization.
Note: Internal material transfers can be optionally fulfilled through Oracle Fusion Order
Management. Order Management enables the orchestration of transfer orders across
fulfillment systems. Order Managers can centrally monitor the fulfillment of transfer orders
and sales orders, and prioritize shipments across these orders.

This diagram depicts the internal material transfer process flow. Transfer orders are used to transfer
inventory for inter-organization, intra-organization, and intercompany flows.
• Transfer orders can be created by sources such as back-to-back, planning, inventory min-max
planning, and spreadsheet upload. Other sources include entry of internal material transfers via
Manage Item Quantity UI, Self Service Procurement (SSP) IMT Requisition Lines, and Supply
Request Web Service.
• Oracle Fusion Supply Chain Orchestration (SCO) provides visibility to supply and demand in
addition to providing rules to determine if a transfer order or purchase order is created.
• Oracle Fusion Supply Chain Financial Orchestration (SFO) calculates the transfer price and
integrates with tax for tax calculation.
• Optionally, transfer orders can be fulfilled using Oracle Fusion Order Management. Order
Management users have visibility to internal and external orders.
• Transfer orders can be processed using the standard pick, pack, ship, deliver, and return
processes.
• Supply Chain Financial Orchestration orchestrates the accounting and documentation required
based on the physical movement of goods.


20 minutes Practice
50 minutes Total

This section describes how to create transfer requests from various sources.

This diagram depicts transfer order sources. Transfer requests can be created from multiple sources.
Transfer sources include min-max planning, back-to-back, spreadsheet upload, and planning. Other
sources include entry of internal material transfers via Manage Item Quantity UI, Self Service
Procurement (SSP) IMT Requisition Lines, and Supply Request Web Service. A transfer order or purchase
order can be created based on document generation rules. Oracle Fusion Supply Chain Orchestration
(SCO) document creation service creates transfer orders or purchase orders based on the transfer
source.

This section describes internal material transfer requisition lines.

Self Service Procurement has been integrated with Oracle Fusion Supply Chain Management to allow
preparers to initiate the transfer of goods from one internal location to another. Internal material
transfers originate in Self Service Procurement when a user manually creates requisition lines for items
going to either an expense or an inventory destination.
Internal material transfer requisition lines can have a different approval routing from purchasing
requisition lines. Once the requisition is approved, requisition lines for internal material transfers are
submitted to Oracle Fusion Supply Chain Orchestration for orchestration and fulfillment. Similar to
purchase orders associated to requisition lines, users now have full visibility of the transfer order,
shipments, and receipts directly from the Manage Requisitions task. They can also perform some minor
updates and request cancellation of transfer order lines.
You can capture project attributes on expense destination transfer orders, transfer from common or
pooled inventory, and track costs against a project. You can also use multilevel approval workflow to
create the transfer order and issue material to projects.
You can find more information on capturing project attributes on the Cloud Readiness page:
https://www.oracle.com/webfolder/technetwork/tutorials/tutorial/cloud/r13/wn/inv/releases/19B/19B
-scm-inventory-wn.htm#F7189

The internal material transfers for expense destination can be subject to budgetary control and
encumbrance accounting just like the purchase requisitions. Upon shipping the transfer order, an
actual receipt at the destination may or may not be required. If a receipt is required, the self-
service user may record the receipt directly in self-service receiving UIs, similar to the way this is
done for self-service purchase order receipts. For more advanced users, warehouse receiving UIs
are also available when receipts require additional control. Upon shipment or upon delivery,
depending on whether or not a receipt is required, costing is performed.

This section describes how Internal Material Transfer (IMT) eliminates manual intervention in the supply
creation process. You will learn how to create supply using IMT.

This diagram depicts how to orchestrate IMT.
Oracle Fusion Supply Chain Orchestration eliminates manual intervention in the supply creation process.
• The supply execution document creation rules allow the supply chain administrator to configure
whether an internal material transfer should be executed using a transfer order or a purchase
order.
• Supply Chain Orchestration provides two setup user interfaces (Manage Execution Document
Creation Rules and Manage Supply Order Enrichment Rules) to enable the supply chain
orchestration process.
• The supply orchestration workbench provides visibility to the progress of supply creation.
• The supply chain operations manager can view execution documents as well as the supply and
demand details.
• Supply Chain Orchestration also integrates with Oracle Fusion Supply Chain Financial
Orchestration for transfer price and tax calculation.

Manage Execution Document Creation Rules
The supply execution document creation rules offer configurability to an organization to determine if an
internal material transfer should be executed using a transfer order or a purchase order.
During the supply creation process, upon evaluation of the supply execution document creation rules, if
it is determined that the supply document should be a purchase order, the supply type on the internal
material transfer request is updated to Buy and the Supplier/Supplier Site associated to the source
organization is used to create supply documents (PR & PO).
Navigation: Setup and Maintenance > Manage Supply Execution Document Creation
Note: IMTs sourced from Self-Service Procurement requisition lines cannot be setup with a document
creation rule to create purchase orders. Only transfer orders may be created in this situation. The
decision on whether or not to create an IMT or purchase order requisition line is made at the point of
entry of the requisition line in Self-Service Procurement.

Manage Supply Order Defaulting and Enrichment Rules
The internal material transfer process offers organizations an option to route shipments of items
on an internal material transfer request through Oracle Fusion Order Management. This feature
provides the order manager with capability to view transfer orders, as well as regular customer
sales orders, on the Order Workbench. This capability enables the order manager to reprioritize
shipments from the Order Workbench when needed.
The routing of an internal material transfer shipment through Order Management is a

configurable business rule in the Manage Supply Order Enrichment Rules user interface.
Organizations can set up business rules that run at the time of supply creation and set or enrich
the value of the Order Management Shipment Flag. During transfer order, the Order
Management Shipment Flag attribute is evaluated to determine if the transfer order line should
directly interface to Oracle Fusion Shipping, or if it should pass through Order Management (and
go from Order Management to Shipping).
Note: Internal material transfer requests that originate from back-to-back sales order demands
cannot be routed through Oracle Fusion Order Management. Expense destination internal
material transfers originating from requisitions also cannot be routed through Oracle Fusion
Order Management.
Navigation: Setup and Maintenance > Manage Supply Order Defaulting and Enrichment Rules

This screenshot depicts how IMT is orchestrated. All supply requests are orchestrated through Oracle
Fusion Supply Chain Orchestration. This screen depicts the Supply Orchestration landing page. The user
interface provides an overview of supply lines and their current status including supply line errors,
exceptions, jeopardy, and on track. Additionally, an analytics region is provided with a graphical
presentation of supply lines by supply type.
Navigation: Supply Orchestration > Supply Lines Overview

This screenshot depicts that the Supply Orchestration Workbench provides a 360 degree view of
demand and supply. The Supply Orchestration Workbench also provides visibility to the progress of
supply creation. Users can take corrective action to address errors from the Workbench. Additionally,
execution documents, transfer order and purchase order, can be viewed from the Workbench.
Navigation: Supply Orchestration > Manage Supply Lines > Supply Order Details

The Use Descriptive Flexfields with Transfer Orders feature allows you to define the Manage Transfer
Order task by adding descriptive flexfields. Descriptive flexfield support allows integrations to support
various reporting, labeling, compliance, and analytics requirements. For example, once transfer order
descriptive flexfields are entered using the Manage Transfer Order task, interfacing systems can access
these fields to support user-defined applications using the transfer order REST resource.
Descriptive Flexfields with Transfer Orders are automatically available; there is no opt-in option.

Descriptive Flexfields can be accessed by:
• Navigating to the Edit Transfer Orders page, then updating the Additional Information area in the
transfer order header section
• Opening a transfer order, navigating to the transfer order line or transfer order distribution level, and
clicking the icon in the Additional Information column
This slide shows a screen image of a transfer order, the Additional Information icon, and the Additional
Information window for editing descriptive flexfields.

Descriptive flexfields are automatically available, do not have an opt-in option, and have no new security
privileges or job roles to access them. However, some setup is required.
The setup task ‘Manage Inventory Descriptive Flexfields’ is accessible from the Setup and Maintenance
work area, in the Manufacturing and Supply Chain Materials Management Offering. The task is included
in the ‘Inventory Management’ functional area.
The descriptive flexfields for transfer orders must be setup in the Manage Inventory Descriptive
Flexfields task before they can be used in the Manage Transfer Orders task.
To set up the descriptive flexfields at the transfer order header, line, or distribution levels, search for
“Transfer Orders” in the Module search attribute in the search area. Then edit the header, line, or
distribution levels, and add the descriptive flexfields needed for the desired definitions.

The Transfer Order REST resource helps address high priority and immediately needed gaps by
developing and using user-defined applications. To do so, the REST resource provides read-only access
to transfer order details at the header, link and distribution line levels.
User-defined applications that streamline an integration can be based on Oracle PAAS, external clouds,
or on-premise, and can easily integrate with the Inventory Management Cloud. These resources include:
Fulfill, Fulfillment Visibility, Search and View, Source and Promise, and Reporting and Analytics.
For example, transfer order descriptive flexfields can be created and entered on the transfer order using
the Manage Transfer Orders task., The Transfer Order REST resource can then be used to access and
pull these user-defined transfer order descriptive flexfield values into interfacing systems.
This feature is ONLY accessed through the Warehouse Manager job role. The business process
associated with this feature is Materials Management and Logistics.
View Inventory Transfer Orders using a REST Service is automatically available, does not require an Opt-
In option, and does not require any associated setup.

This section describes how to plan and execute internal material transfer.

This diagram depicts how you can plan and execute internal material transfers.
Transfer order is a document created in Oracle Fusion Inventory Management. It represents demand
and supply in a single document. Transfer orders support both inter-organization and intra-organization
transfers. Additionally, support is provided to pick, ship, receive, deliver, and return against a transfer
order document. Full visibility is provided to shipments and receipts associated with a transfer order. A
transfer order can be edited by updating attributes such as source organization, requested delivery date,
and requested quantity.

This screenshot depicts how attributes such as source organization, requested delivery date, and
requested quantity can be updated on the transfer order. Warehouse managers can monitor the line
status, fulfillment status, and interface status.
Additionally, the transfer price and associated tax is displayed on the Edit Transfer Order page.
You can search for Transfer Orders by using the Supply Request Reference search field. This aligns
fields between Supply Chain Orchestration and Inventory Management, to identify transfer orders based
on the source of the transfer order, and allows you to view the supply request reference and reference
line number in the search results.
Note that the Supply Request Reference Number search field is not displayed in the default search and
must be added to the advanced search. Additionally, the columns Supply Request Reference Number
and Request Reference Line are not displayed in the default search results and must added to the search
results view.
For internal material transfers, you can use the destination organization as the customer. This allows
you to use the inventory organization as a customer when shipping. This capability is also supported by
SOAP and REST services, and consistently applies to all transfer order types originating from all sources.
Note: Shipping and Order Management will NOT display the transfer order requester.
To implement this capability, the customer must enable this feature through the Shipping Manager and
Warehouse manager job riles. This will effect Materials Management and Logistics.
Navigation: Supply Chain Execution > Inventory > Manage Transfer Orders > Edit Transfer Order

Use Item Lead Times in Calculation of Expected Ship Date on Transfer Orders
This feature allows you to use item processing lead time when calculating the expected ship date for a
transfer order. Processing lead time is defined in number of days and refers to the time needed by the
source organization to prepare goods for shipment to the destination organization or destination
subinventory. Using processing lead times provides your organization with ample time to process and ship
internal material transfers. Processing lead time can be used for both interorganization and
intraorganization internal materiel transfers. Additionally, processing lead time can be configured at various
levels including item organization, subinventory, and item subinventory.
To illustrate how processing lead times are used, say you create a supply request with a requested delivery
date of January 31, 2020. The scheduled ship date will be calculated by removing the transit time of 3 days
and the processing lead time of 1 day. This will result in a scheduled ship date of January 27, 2020.

This screenshot depicts how warehouse managers can view shipment and receipt details associated with
a transfer order. The table columns Shipment and Receipt provide links to view the associated shipment
and receipt. You can view discrepancies between shipments and receipts for a specific transfer order.
Navigation: Supply Chain Execution > Inventory > Manage Transfer Orders > View Shipment and
Receipts

This screenshot depicts that if receiving is required upon shipping a transfer order, the Receiving system
provides a number of different ways of receiving the item.
The first is Self-Service Receiving as shown. Self-Service Receiving can only be used when receiving
transfer orders sourced from requisition lines. The self-service receiving UIs allow receiving of transfer
order shipments by the requestor or preparer of the associated requisition. If multiple accounting
distributions exist on a transfer order line, then receiving transactions are performed at the distribution
level, similar to the way transactions against purchase order documents are entered. In order to use self-
service receiving UIs for transfer orders, the receipt routing must be set to use a “direct” routing.
Warehouse receiving UIs also allow receipt of requisition-sourced transfer orders. These UIs allow
viewing and entry of receipts and put away transactions for individual accounting distribution line
quantities associated with a transfer order line.
The Confirm Receipt Notifications feature allows you to generate receipt notifications for transfer orders,
similar to the way this is provided for self-service requisitions sourcing purchase orders. Confirm Receipt
Notifications can only be used with transfer orders sourced from requisition lines. These workflow
notifications go to the requestors, letting them know that the item needs to be received. Upon opening
these notifications, requestors can select an option to confirm or not confirm the receipt of the goods. If
confirmed, a receipt is automatically created, simplifying the receiving process for the self-service
procurement user. The Confirm Receipt Notifications feature is activated for transfer orders by enabling
the ‘Transfer orders included for Confirm Receipt Process’ profile option.
Receiving transactions can also be loaded into the system from external sources using the Receiving
Receipt Import template.

This diagram depicts how to plan and execute IMT.
The Manage Interorganization Parameters and Manage Intersubinventory Parameters setup tasks are
used to configure parameters for transferring material between two organizations or between two
subinventories within an organization. Consider the following parameters:
• The 'Transfer Type" parameter is used to identify whether an inventory destination transfer
should be considered received at the time of shipping or whether it will go in-transit and be
received manually in the Receiving system.
• The ‘Receipt Routing’ is used to determine how the receipt will be managed in Receiving when a
receipt is required. There are two receipt routing parameters. One for inventory destination
transfers and a separate parameter for expense destination transfers.

• The “Transfer Order Required” indicator is only used by the Create Interorganization
Transfer task to identify whether or not a transfer from a given ‘from’ and ‘to’
organization requires the use of a transfer order.
• The “Receipt Required” parameter is used to identify whether or not expense destination
transfers require a receipt at the destination location.
• On the Manage Interorganization Parameters setup task the distance parameter for a
given ‘from’ and ‘to’ organization pair will be used to rank source organizations on the
Select Supply Source page for items that are not planned. This page is available when
creating IMT lines from requisitions or from the Manage Item Quantities task. If you want
to use the distance for rankings, you can enter the distance between the organizations,
and the ranking will be done based on those distances, ranking the shortest distance’s
‘from’ organization as the top-ranked source organization when supplying the given ‘to’
organization.

In this demonstration, you will learn how to review an internal material transfer setup.

In this practice, you will review a transfer order and transfer order details such as source organization,
destination organization, and requested quantity. Additionally, you will review the shipments and
receipts associated with the transfer order.

In this practice, you will review the internal material transfer setup, including the inter-organization
parameter configuration


00 minutes Practice
25 minutes Total

This section describes the physical and accounting process flow.

This diagram depicts the physical and accounting return process flow. The approach to return internal
material transfers begins in Oracle Fusion Receiving. A return can involve a physical return of material or
not. The Physical Material Return Required field displays on the Return Lines user interface. In both
cases, the return transaction is initiated in the manage returns process.
The transfer order type of Return is created with reverse locations for both scenarios (with or without
physical returns). In the case that physical return of material is required, the transfer order is interfaced
to Shipping. Returns are not supported by Oracle Fusion Order Management.
If physical return of material is not required, the transfer order is not interfaced to Oracle Fusion
Shipping. This document is used for tax, accounting, and audit trail purposes. A distinction is made
between the two types (with or without physical return) return transfer orders.
Returns are captured in the manage return process defining the source of the return, item, UOM,
quantity returned and reasons for returning. Further, transfer prices, payment terms, and shipping
terms are also derived, while defining the return. The source of the return is an IMT transfer order
document.
The document creation service will create a transfer order document for the return. This document is a
special type of document, called IMT Return. Downstream processes such as Oracle Fusion Supply Chain
Financial Orchestration (SFO) will interpret this special transfer document type as a return in order to
reverse material and financial transactions. Logistics will treat the physical transfer process of pick, pack,
and ship no different from that of a regular IMT, but will need to make sure that same material is
allocated for shipping the return back.

This section describes how IMT supports Physical and accounting only returns.

This screenshot depicts that for returns that do not require physical return of material, an inventory
transaction type of transfer order return is created. Shipment lines and reservations are not created in
this case. An Oracle Fusion Supply Chain Financial Orchestration event is also raised. The transfer order
line status is set to closed automatically. The transfer order does not have shipped or received quantity
populated.
The Physical Material Return Required check box is displayed on the Return Lines user interface. If the
field is deselected, the return is considered an accounting only return. If the field is selected, transactions
are created for the physical return of the material.
Note: Transfer orders that do not require physical return of material are not interfaced to Oracle Fusion
Shipping.
Navigation: Warehouse Operations > Receipts > Return Receipts

This screenshot depicts that for returns that require physical return of material, an inventory transaction
type of transfer order return is created. Shipment lines and reservations are created in this case. Full
pick, pack, and ship support is provided for physical material returns. The Edit Transfer Order user
interface displays a Physical Material Return Required indicator. This informs the user that the material
was physically returned to the fulfillment inventory organization. The Edit Transfer Order user interface
also provides a reference to the original transfer order.
Navigation: Warehouse Operations > Inventory > Manage Transfer Orders > Edit Transfer Order

In this demonstration, the instructor will review the return transfer order details. The Edit Transfer Order
user interface will be used to show how users can search for return transfer orders and view the Physical
Material Return Required indicator.


00 minutes Practice
30 minutes Total
• Understand separation of physical and financial flows: Oracle Fusion Supply Chain Financial
Orchestration (SFO) captures business events raised for physical transactions. For example,
goods shipped from an organization or goods received into an organization. Supply Chain
Financial Orchestration identifies the financial orchestration flow, and then determines what
tasks are required for accounting and documenting the transfer of ownership along the financial
route, and the sequence in which they need to be performed.
• Describe cost accounting for internal material transfers: Oracle Fusion Cost Management has
the infrastructure in place to trigger costing and accounting for internal transfers automatically.
• Understand consigned inventory internal material transfers: Consigned inventory is
supported for internal material transfer flows. Material can remain in a consigned state when it is
transferred from a source organization to a destination organization.
• Explain how additional transfer order charges are used: Additional transfer order charges can
be added to a transfer order line. These costs will be picked up by the Cost Management system,
and provide a method for adding additional charges to a transfer order line for costs associated
with shipping, handling, storage, and administration, for example.
• Describe fulfillment of transfer orders using Order Management: Support is provided for
automatic orchestration of transfer orders across fulfillment systems.

This section describes how supply chain financial orchestration manages all the trade relationships
between internal parties belonging to a large corporation, spread across geographies.

This diagram depicts how Oracle Fusion Supply Chain Financial Orchestration (SFO) is a configurable
application that manages all the trade relationships between internal parties belonging to a large
corporation, typically spread across geographies. The supply chain business flows supported are
customer shipment (between internal parties), global procurement, and internal transfers.
Supply Chain Financial Orchestration supports:

• Infrastructure and framework to define the financial trade and physical flows independently
• Configuration to define cost-based, document-based, support for third-party transfer pricing
rules
• Configuration that supports compliance with legal and internal control requirements for creating
the appropriate transactions and documents in the financial trade route
• Ability to define various supply chain execution events to trigger financial orchestration
Example:
In this example, Vision Operations sources supplies from the manufacturing facility in China for
electronic components. The goods are shipped directly from China to the warehouse in the United
States. Upon receipt of goods, the ownership transfer is documented and accounted through China-
Singapore-US. The financial flow is independent of the physical movement of goods.
You can monitor the execution of the financial flow between the entities. The user interface gives you
the status of the financial orchestration transactions.

This section describes how Oracle Fusion Cost Management has the infrastructure in place to trigger
costing and accounting of internal material transfers automatically.

This diagram depicts how Oracle Fusion Cost Management has the infrastructure in place to trigger
costing and accounting of internal material transfers automatically.
• Processes physical and trade execution events for IMT transfers and creates accounting
• Processes physical and accounting-only return transactions
• Reports gross margin for intercompany trade flows
• Reports in-transit valuation for goods in trade in-transit
• Supports intercompany, intraorganization trade accounting
The automated process performs a sequence of steps in real time:
• It interfaces internal material transfer transactions such as Transfer Order Shipment from
Inventory Management and Transfer Order Receipt from Receiving.
• It interfaces trade events from Supply Chain Financial Orchestration (SFO) based on the
agreement.
• The Receipt Accounting processor processes receipt transactions and creates relevant
intercompany accruals if invoicing enabled, or books intercompany payables.
• The Cost Accounting processor processes the shipment transactions and computes the
Intercompany Cost of Goods Sold if invoicing is enabled, or books intercompany receivables.

This screenshot depicts that in a supply chain flow, when goods are transferred internally between
organizations belonging to different business units, the execution of the financial flow is initiated
automatically once the ownership is transferred from the seller to buyer.
• The title transfer may happen when goods are shipped or received, depending on the nature of
trade relationship defined in the financial flow.
• The supply chain events raised on physical transactions trigger the execution of financial flow
independent from the physical movement of goods.
Physical flow is not impacted by the execution of the financial flow.
Transfer Price
The Oracle Fusion Supply Chain Financial Orchestration (SFO) framework provides the ability to estimate
transfer price for the creation of a transfer order for transfer of goods between internal organizations.
• If the transfer order is crossing business units, the transfer price is calculated based on the
transfer pricing method specified in the configurable transfer pricing rules for the financial route
between the shipping organization and the receiving organization.
• Transfer pricing options provide the capability to derive the transfer price based on the shipping
organizations transaction cost or a third-party pricing service.
• If the internal material transfer involves the shipping and receiving inventory organizations
belonging to a single business unit, then Supply Chain Financial Orchestration will use the cost of
the item in the source organization as the transfer price.
Once the transfer price is calculated, Supply Chain Financial Orchestration calls the tax application to
determine the tax applicable on the transfer price.
Navigation: Warehouse Operations > Inventory > Manage Transfer Orders > Edit Transfer Order

Example
Costing and Accounting

The above example helps us better understand the costing and accounting of transfer
events.
In this example, Vision Operations sources supplies from the manufacturing facility in
China for electronic components.
• The goods are shipped directly from China to the warehouse in Seattle, US.
• The financial flow is independent of the physical movement of goods, which is
routed through Singapore.
• Upon receipt of goods, the ownership transfer is documented and accounted
through China-Singapore-US.

Costing and Accounting
Now, you will review the costing and accounting of different physical and financial events
generated between these entities at every leg of the trade flow.
• The financial flow is set up so that the execution transaction between China and
Seattle will follow the financial route CN-SNG-US.
• The documentation and accounting rules for the financial flows between CN-SNG
and SNG-US indicate that the receipt transaction in Seattle triggers the ownership
change.
• The transfer pricing rule is set up so that when the Chinese facility engages in the
trade relationship with the Singapore entity , it incurs a markup of 12% over its
manufacturing cost. Similarly, when the Singapore entity engages in trade with the
US entity , there is a markup of 60% of the item cost.
• Profit tracking is enabled between the financial routes.
• To meet the regulatory guidelines, intercompany invoices are generated during
these Buy Sell transactions.

There are two broad types of trade accounting
• With intercompany invoicing enabled
• Without intercompany invoicing enabled
Cost Management for Internal Material Transfers

• Oracle Fusion Cost Management supports costing and accounting for internal
material transfer transactions both forward and returns. It also facilitates
streamlining accounting when physical flow of shipping goods is different from
the financial flow.
• Cost Management also helps in providing better visibility of internal markups in
intercompany trade flows by automatically tracking profit earned on internal
transfers using a separate cost element of type Profit in Inventory.
• As depicted in the slide, when profit tracking is enabled, the profit earned at each
leg of the transfer is automatically visible. For example, goods received in Vision
Operations (B3), at a price of $56.00 would be further segmented into profit
earned by Vision China ($3.75) business unit, Singapore Distribution ($21.00)
business unit, and the original cost of the material at ($31.25).
Instructor Note

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the financial flow.
Instructor Note


the financial flow.
Instructor Note


the financial flow.
Instructor Note

These cost distributions and accounting are generated as follows:
• Physical events accounting is purely inventory movement accounting, and is
always the same irrespective of whether or not invoicing is enabled.
• The accounting for non-SFO flows is independent of accounting for SFO flows
(SFO = Supply Chain Financial Orchestration).
• Accounting of intercompany accrual (if invoicing is enabled) or interorganization
payable (if invoicing is not enabled) is maintained in the Receipt Accounting
subledger.
• In-transit accounting is maintained in the Cost Accounting subledger.
• Accounting of intercompany COGS (if invoicing is enabled) or interorganization
receivable (if invoicing is not enabled) is maintained in the Cost Accounting
subledger.

This diagram depicts how as part of trade accounting, Cost Management facilitates track the cost from
the origination point to the last point in the internal material transfer flow. Apart from tracking costs, the
system also tracks internal markups using the Profit in Inventory cost element type defined as part of
the Costing setup.
Example Overview
Vision Operations sources supplies from the manufacturing facility in China for electronic components.
The goods are shipped directly from China to the warehouse in the US. Upon receipt of goods, the
ownership transfer is documented and accounted through China-Singapore-US. The financial flow is
independent of the physical movement of goods. You can monitor the execution of the financial flow
between these entities at every leg of the trade flow and view the internal profit from the previous leg
included in the inventory.
Example Results
• Goods in inventory of Vision China at a cost of $31.25, are shipped to Singapore Distributions at a
transfer price of $35.00
• Internal profit of $3.75 is included in the inventory cost of $35.00 received at Singapore
Distribution, which is finally transferred to the destination Vision Operations at a transfer price of
$56.00
• Goods are received at Vision Operations at a landed cost of $56.00, which further breaks down
to:
- Original material cost of $31.25
- Internal profit of Vision China included in inventory $3.75
- Internal profit of Singapore Distribution included in inventory $21.00

This screenshot depicts how you manage cost accounting got IMT. Oracle Fusion Cost Management
provides the ability to analyze the gross margin earned from internal sales transactions separately.
Improved visibility of the cost of goods sold is provided to facilitate better decision making. The Analyze
Product Gross Margins user interface enables the Cost Accountant to analyze the product gross margin
earned from both internal and external sales.
Navigation: Supply Chain Execution > Cost Accounting > Cost Processing > Analyze Product Gross
Margin

This topic describes how consigned inventory is supported by IMT and how the transfer of consigned
inventory takes place in IMT.

This diagram depicts how consigned inventory can be transferred across inventory organizations or
within inventory organizations without forcing a change in ownership. Organizations have a need to
transfer consigned inventory between locations while having the inventory remain consigned.
Consumption rules can be configured to determine whether the transfer of consigned inventory
between two inventory locations triggers consumption (ownership change). A transfer between
inventory organizations is know as an interorganization transfer. When a transfer is executed between
organizations, consumption rules determine whether or not the transfer results in a change of
ownership.
Note: The transfer of consigned inventory from one inventory organization to another inventory
organization does not impact the aging period calculation. The aging period calculation is not reset
based on the transfer of the consigned inventory. The original aging period is calculated based on the
receipts or shipment date on the advanced shipment notice (ASN).

This screenshot depicts how consigned inventory is supported for internal material transfer flows.
Material can remain in a consigned state when it is transferred from a source organization to a
destination organization. Consigned inventory consumption is determined by consumption rules. Once
consumption occurs, the consumption advice will be generated and reported to the supplier.
The Manage Consumption Rules user interface is used to determine which transaction types trigger
consumption. In addition to transaction type, consumption rules also support attributes such as owning
party of the consigned inventory, from inventory organization, to inventory organization, from
subinventory/locator, to subinventory/locator, and so forth.
Navigation: Setup and Maintenance > Manage Consumption Rules

This section describes how IMT enables you to route shipments of items on an internal material transfer
request through Oracle Fusion Order Management.

This screenshot depicts that the internal material transfer process offers organizations an option to route
shipments of items on an internal material transfer request through Oracle Fusion Order Management.
The routing of an internal material transfer shipment through Oracle Fusion Order Management is a
configurable business rule in the Manage Supply Order Enrichment Rules user interface. Organizations
can set up business rules that run at the time of supply creation and set the value of the OM Shipment
flag. During transfer order creation, the process evaluates the OM Shipment flag attribute to determine if
the transfer order line should be directly interfaced to Oracle Fusion Shipping, or if it should pass through
Oracle Fusion Order Management (and from Order Management to Shipping).
Details of fulfilling transfer orders through Order Management include:
• Automated orchestration of transfer orders across fulfillment systems
• Centralized fulfillment monitoring of transfer orders and external sales orders:
- Order managers can centrally monitor both internal orders as well as regular sales order
within a single user interface in Oracle Fusion Order Management.
- Order managers can monitor fulfillment statuses of orders and proactively identify and
resolve exceptions.
• Ability to prioritize shipments across transfer orders and external customer sales orders:
- Order managers can prioritize and reallocate supply across internal material transfers and
external sales orders using the Check Availability functionality in Order Management.

Note: Return transfer orders are not supported by Order Management. In addition,
expense destination transfer orders originating from Self-Service Procurement requisition
lines are not supported by Order Management.

This screenshot depicts how to fulfill transfer order through order management. Oracle Fusion Order
Management has out of the box integration with Inventory to receive interorganization transfer orders.
Existing capabilities of Order Management for managing customer sales orders apply to internal
material transfers:
• Orchestration of orders across fulfillment systems
• Workbench actions
• Process planning for identifying exceptions
• Use the source organization’s business unit on sales orders created from transfer orders, to more
accurately represent demand at the source
Order Management provides internal integrations to enable scheduling, inventory reservation, and
shipping of internal material transfer orders.
Users can search and identify internal material transfer orders using the source document type attribute
in the Order Management workbench.
When you create sales orders from transfer orders, the business unit from the destination’s inventory
organization is used on the sales order. This is applicable to sales orders mandated by Supply Order
Defaulting and Enrichment Riles. However, this is applicable only when Supply Order Defaulting and
Enrichment Rules are configured to create sales orders from transfer orders. In the case of a transfer
order with multiple lines/source organizations, the first line will be used to determine the sales order’s
business unit. Also, grouping options defined at the transfer source determine consolidation of
transactions.
Navigations: Order Management> Tasks > Manage Orders; Order Management> Search

This screenshot depicts how to check supply availability, perform what-if analysis, and re-allocate supply
across orders.
• The order manager can utilize the check availability functionality in Oracle Fusion Order
Management to look for alternative supply options and perform what-if analysis for scheduling
internal material transfer orders.
• This also provides capability to prioritize orders and re-allocate supply between one or more
transfer orders and sales orders.
• Analytics also support internal material transfers.
Navigation: Order Management> Tasks > Manage Fulfillment Lines > Check Availability (button)
Navigation: Order Management> Manage Orders > View Order > Fulfillment View > Check Availability
(button)

This section describes how additional order charges are applied to transfer order line.

Additional Transfer Order Charges
Additional transfer order charges can be entered against transfer order lines when transfer orders are
created using the supply request web service or the supply request file based import spreadsheet
template.
As transfer orders are created in Inventory and Shipping the shipping charges flow into the Shipping
system and from that point will behave just like any other shipping cost. These shipping costs will be
picked up directly from Shipping when the shipping inventory transaction is passed into Cost
Management.
Shipping Cost Types are used to identify these additional shipping charges and they must be setup
using the Manage Shipping Cost Types setup task.

Manage Execution Document Creation Rules
• The additional transfer order charges are treated just like any other shipping cost once they are
in the Shipping system. They can be viewed, updated and cancelled using the Record Shipping
Costs UI. Additional charges can also be added directly from Shipping.
Charges added using the web service or the spreadsheet import are always entered at the transfer order
line-level. But, charges added directly in the Shipping module can also be added at the shipment or
container level of a transfer order shipment.
The additional transfer order charges will be processed by Cost Management when the Transfer
Inventory Transactions to Costing process is run passing the inventory shipping transaction into
Costing.
Shipment, container and line-level charges will be passed into Cost Management. The shipment and
container level costs will be prorated down to the transfer order line-level providing a cost per shipment
line. Shipping charges cannot be changed once the transfer order line has been shipped and interfaced
to Inventory.
Intra-organization transfers will not be costed unless subinventories are setup as profit centers.
Shipping will send a summarized value of all shipping costs recorded on the transfer order shipment as
Freight. Cost Management provides functionality for tracking such shipping cost throughout the cost
structure and also account for them along with the “Transfer Order Shipment” event. All such shipping
costs modeled as ‘additional transfer order costs’ will be expensed in the source organization and will
also be considered when monitoring the adjusted gross margin earned to facilitate decision making.

This section describes all the additional IMT setup tasks such as manage supply chain financial
orchestration transfer pricing rules, manage supply chain financial orchestration flows, manage item
cost profiles, etc.

This table discusses Additional Internal Material Transfer Setup tasks. The first column lists setup tasks
that are described in the corresponding row under the second column.

This table, continues from the previous slide, lists setup tasks in the first column and provides a
description for each task in the corresponding row under the second column.

This section describes IMT reports such as In-Transit Inventory Valuation Report, Consumption Advice
Report, Transfer Order Status Report, Print Cancel Transfer Order Report.

This table describes IMT reports. The first column lists report names each report is described in the
corresponding row under the second column.

In this demonstration, you will learn how to review transfer price and tax on transfer orders.


00 minutes Practice
10 minutes Total

This topic describes what is consigned inventory, consignment agreement, and what are the
benefits offered to both buyer and supplier by consigned inventory.

Consigned inventory refers to items in the possession of one party (for example, customers, contract
manufacturers, and so forth), but remain the property of another party (for example, the manufacturer)
by agreement with those in possession.
In a business use case where the product is sold between two parties, a consignment agreement is
typically used to defer the change in ownership past the arrival or acceptance of the material to some
mutually agreed upon later point in time or event.
Change in ownership typically occurs when the customer uses the product (for example, issues to
manufacturing or sells to an end customer), or after a prespecified period of time (for example, 30, 60,
or 90 days). This time period is referred to as the aging period.
Purchase Agreement Includes the Terms of the Consignment Arrangement
The purchase agreement includes the consignment terms. These are the terms of the consignment
arrangement agreed upon between the buyer and supplier.
Consumption Advice Reports Consigned Inventory Usage to Supplier
The consumption advice is the document that reports the consumption of consigned inventory from the
buyer to the supplier. Consumption of consigned inventory can be reported to the supplier on a daily,
monthly, or weekly basis.

Buyer Owns Inventory Once It Is Consumed
Once consigned inventory is consumed, the ownership of the material will get transferred
from the supplier to the buyer.
Supplier Paid Upon Consigned Inventory Usage
Once the buyer takes ownership of consigned inventory, the financial settlement process is
initiated with the supplier.
Consumption Advice Used for Financial Settlement
The consumption advice is the document used to initiate financial settlement with the
supplier.
Payables Provides Ability to Match Consumption Advice to Supplier Invoice
The consumption advice matching process resides within Oracle Fusion Payables. Users can
create consumption advice matched invoices.
Supplier Visibility to Consignment Process Through Supplier Portal
Suppliers can monitor the consigned inventory process through the supplier portal. They
can review consigned inventory on-hand quantities, transactions, and aging details.

The Consigned Inventory from Supplier solution offers benefits for both the buyer and supplier:
• Buyers can reduce working capital, stock write-offs, and lead times.
• Suppliers can increase sales, reduce lead times, and strengthen relationships with their
customers.
Overall:
• Suppliers can compete on the basis of availability and delivery when finished goods are at the
customer site, particularly when lead times are lengthy.
• Holding material on consignment reduces lead times for items that might be required to fill sales
orders.
• Buyers experience increased inventory turns, thus reducing funds invested in inventory.
Financial resources are available until customer commitments are ensured, or items are used in
production.

This topic describes the consigned inventory process flow from signing the consignment agreement to
sending he payment to supplier.

Consigned Inventory Process Flow
The buyer in the diagram represents the SCM Cloud user.

• The consigned inventory process is initiated by the establishment of a consignment agreement
between a buyer and supplier. The consignment agreement stipulates the terms of the
consignment relationship between the buyer and supplier.
• Consigned inventory is ordered from the supplier through a consignment order.
• Consigned inventory is received into the organization in the same manner as nonconsigned
inventory.
• Change in ownership typically occurs when the buyer uses the product (for example, issues to
manufacturing or sells to end customer), or after a prespecified period of time (for example, 30,
60, or 90 days). This time period is referred to as the aging period. The consumption advice is
used to report usage of consigned inventory to the supplier on a periodic basis such as daily or
weekly.
• The supplier will send the buyer an invoice for the consigned inventory used.
• When the invoice is received from the supplier, it can be matched to the associated consumption
advice for audit and reconciliation purposes. After the invoice is validated, payment will be sent
to the supplier for the consigned inventory used. Optionally, pay-on-use can be used to pay the
supplier immediately upon usage of consigned inventory.

This diagram depicts the consigned inventory from supplier process flow across products.
• The process begins in Oracle Fusion Purchasing with a consignment agreement between the
buyer and supplier. The consignment agreement includes terms and conditions of purchase,
pricing, and terms related to managing the consignment relationship. A consignment order is
used to purchase consigned inventory from the supplier in response to requisition demand.
• Consigned inventory is received in the same manner as nonconsigned inventory.
• Oracle Fusion Cost Management calculates the cost of consigned inventory for valuation
purposes. However, the ownership of the consigned inventory remains with the supplier.
• The consigned inventory ownership transfer typically occurs when consigned inventory is
consumed. Oracle Fusion Inventory Management will automatically generate a consumption
transaction when consigned inventory is consumed. A consumption advice is created to inform
the supplier of item quantities, price, and dates when the consigned items were consumed.
• The supplier will use the consumption advice to generate an invoice to initiate financial
settlement. In Oracle Fusion Payables, the supplier’s invoice can be matched to the associated
consumption advice and submitted for payment to the supplier. Optionally, pay-on-use can be
used to pay the supplier immediately upon usage of consigned inventory.


00 minutes Practice
20 minutes Total

This topic describes the Consigned Inventory process flow from making the consignment agreement to
making the payment to the supplier.

This diagram depicts the consigned inventory process flow. The buyer in the diagram represents the
Oracle SCM Cloud user. The focus of this lesson is on the procurement of consigned inventory, which
includes the creation of the consignment agreement and consignment order.
• Consigned inventory is received into the organization in the same manner as non-consigned
inventory.
manufacturing or sells to end customer), or after a pre-specified time (for example, 30, 60, or 90
days). This time period is referred to as the aging period. The consumption advice is used to
report usage of consigned inventory to the supplier on a periodic basis such as daily or weekly.

This topic describes how the consignment agreement establishes the terms and conditions governing
the consignment arrangement and how the agreement lifecycle shows the agreement amount and
summarized information from downstream execution documents such as amount ordered, received,
delivered (which includes consumed amount), and invoiced.

This screenshot depicts how the consignment agreement establishes the terms and conditions
governing the consignment arrangement.
Consignment agreement terms include:

• Aging Onset Point: The aging onset point indicates the point in fulfillment process, Receipt or
Shipment, at which the consigned goods start aging.
• Aging Period Days: When suppliers consign goods to buying organizations, the expectation is
that the buying organization will use them at a certain point in the future and subsequently pay
for them. The supplier will allow the buying organization to hold the goods in a consigned state
without using or paying for the goods only for a certain period of time, called the aging period. If
the goods are not used within that aging period, then the goods are considered aged and the
buying organization has to take ownership of the goods and pay for them.
• Consumption Advice Frequency: This term indicates the frequency (Daily, Weekly, or Monthly)
at which the buying organization informs the supplier about usage of consigned goods through a
consumption advice.

• Billing Cycle Closing Date: This term indicates when the current billing period closes.
The current billing period starts from when the last billing period ended and extends
up to the billing cycle closing date. After the current billing period ends, the buying
organization generates a consumption advice and all consumption transactions
created within this billing period will be included on that advice.
• Consumption Advice Summary: This term indicates how the consumption
transactions are summarized on the consumption advice. For example, transaction
can be summarized and displayed by inventory organization and item.
• Pay on use: This terms indicates that the buying organization intends to perform self-
billing for consigned inventory usage and generate an invoice on behalf of the
supplier.
• Default line as consignment line: This indicator will automatically default the line as
a consignment line when creating the consignment agreement.
Consignment agreements can be created through the user interface as well as the Excel
file–based data import process and the import blanket agreements process. The file based
import templates and the import blanket agreement process have been enhanced to
support the additional new consignment terms at the blanket header and the line.
Navigation: Procurement > Purchasing > Manage Agreements > Consignment Terms

This screenshot depicts how the lifecycle tracking pages provide the capability for buying organizations
and suppliers to monitor usage of the consignment agreement through the fulfillment process.
The agreement lifecycle shows agreement amount and summarized information from downstream
execution documents such as amount ordered, received, delivered (which includes consumed amount),
and invoiced. This information is available for the entire agreement and its line items, and gives the
trading partners at-a-glance information on the current state of the consignment process.
Navigation: Procurement > Purchasing > Manage Agreements > Life Cycle icon

This section describes how the consignment orders are created.

This screenshot depicts how the consignment orders can be created in response to requisitions for
replenishment of consigned inventory originating from upstream products such as Oracle Fusion
Inventory Management or from self-service procurement. These orders are released against the
consignment agreement and existing functionality to limit orders issued to the amount limit on the
consignment agreement will continue to apply.
The consignment order line has a Consignment line flag to indicate to the supplier that the item is
ordered under a consignment arrangement. The consignment order is used only to bring in the
consigned items and is not used for billing consigned inventory used by the buying organization. The
invoice match option on the order line is set to Consumption Advice because billing for the used
consigned items is done against the consumption advice.
Consignment orders can also be created without a requisition by referencing the consignment
agreement on the consignment order issued.

Lifecycle Tracking Pages
Lifecycle tracking pages are provided for both the consignment agreement and
consignment order. This enables both the buying organization and supplier to monitor
usage of the consignment agreement and consignment order throughout the fulfillment
process.
• The order lifecycle page provides summarized information on the fulfillment
status and billing status. The fulfillment status pie chart breaks up information by
fulfillment stage, namely the amount/quantity currently:
- Pending fulfillment action from the supplier
- Goods that are shipped and in transit and not yet received
- Goods in receiving, but not yet put away
- Goods that have been received and placed in consigned inventory
- Goods that have either been consumed from consigned inventory or
delivered
• In addition, it also shows the shipments in-transit, receipts, and invoices related to
the order.
• The In-Transit Shipments region shows shipments for this order sent by the
supplier but not yet received by the buying organization. This gives the buying
organization information on incoming shipments and the expected receipt date.
• The Receipts region shows the receipts for this order, and in addition shows the
amount received, and the amount currently in-receiving but not delivered, amount
currently in-consigned inventory, and the amount that has been used or
consumed. The amount consumed is shown in the amount delivered column for
consigned receipts. In addition, the receipts region also shows the amount that has
been invoiced and how much is open-to-invoice.
• The Invoices region shows the invoices for this order, along with the information
on how much was matched and paid against the consumption advice, receipt, or
packing slip.
Note: There is no new consigned inventory–related functionality for self-service

procurement requisitions. If a requisition is created for an inventory item and if it is
sourced to a consignment agreement line, then a consignment order will be created for it.
Navigation: Procurement > Purchasing > Manage Orders > Life Cycle icon

This screenshot depicts how the consignment order PDF indicates that the consignment lines should not
be billed.
Navigation: Procurement > Purchasing > Manage Orders > View PDF

This section describes how the setup for consignment terms on the supplier site page.

This screenshot depicts the setup for consignment terms on the supplier site page. These terms can be
set up optionally to default consignment terms onto the consignment agreement.
Supplier site setup is performed within the Supplier work area.

Navigation: Procurement > Suppliers > Manage Suppliers > Supplier Sites

This section describes the purchasing setup tasks for purchasing consigned inventory. These tasks
include Configure Procurement Business Function and Manage Supplier Sites.

This table discusses Purchasing consigned inventory setup tasks. The first column lists the setup tasks
and each task is described in the corresponding row under the second column.
Consignment terms can be set up to default on the consignment agreement.

• Configure Procurement Business Function: Consigned inventory related setups include Aging
Onset Point, Aging Period Days, Consumption Advice Frequency, and Consumption Advice
Summary.
• Supplier Site: Consigned inventory related setups include Pay on Use, Aging Onset Point, Aging
Period Days, Consumption Advice Frequency, and Consumption Advice Summary.
The procurement business unit configuration setup is performed through Setup and Maintenance work
area:
• Within the Procurement Offering
• Purchasing Functional Area
• Task associated with the setup is: Configure Procurement Business Function
Navigation: Setup and Maintenance > Configure Procurement Business Function

In this demonstration, the instructor will review a predefined consignment agreement and consignment
order. Additionally, the instructor will review the consignment agreement and consignment order life
cycle tracking pages.


15 minutes Practice
45 minutes Total
• Receive consigned inventory: The important point to understand is receiving consigned
inventory is identical to receiving nonconsigned inventory.
• Understand consigned inventory tracking and visibility: Consigned inventory tracking and
visibility refers to managing consigned inventory on-hand quantities and monitoring consigned
inventory subject to aging.
• Explain consigned inventory consumption transactions: Explain how consigned inventory is
consumed by the buying organization through consumption transactions.
• Review consumption advice: Review consumption advice generation process. Understand how
to create and review a consumption advice.
• Understand the consigned inventory return to supplier process: Consigned inventory can be
returned to the supplier at any point in the consignment process. Users can also return both
consigned and nonconsigned inventory in single transaction.
• Understand inventory counting and reconciliation: Organizations can perform cycle and
physical inventory counting on consigned inventory. Both cycle count and physical inventory
count UIs and reports have been extended to include consigned inventory owning party.
• Set up consigned inventory consumption rules: Consumption rules are used to determine
ownership change of consigned inventory. Consumption rules are based on Inventory
Transaction Type along with other attributes such as From Organization, To Organization, From
Subinventory, To Subinventory, From Locator, To Locator, Item, and Owning Party.
• Understand consigned inventory–related reports: Understand and explain the various reports
available for consigned inventory.

This section describes the consigned inventory process flow.

Oracle SCM Cloud user. The focus of this lesson is on consigned inventory management including
consigned inventory tracking and visibility, creating consumption advices, returning consigned
inventory, and setting up consigned inventory.
inventory.
manufacturing or sells to end customer), or after a pre-specified period of time (for example, 30,
weekly.

This section describes how the consignment line indicator shows that the receipt is for a consigned
inventory.

This screenshot depicts the Receive Expected Shipments user interface, which includes a Consignment
Line indicator. This is a visual indicator to the receiving agent that the receipt is for consigned inventory.
From the receiving agent’s perspective, receiving consigned inventory is identical to receiving non-
consigned inventory. Both consigned lines and non-consigned lines can be received on a single receipt.
Additionally, the advanced search criteria allows users to search for consignment lines.
Navigation: Warehouse Operations > Receipts > Receive Expected Shipments > Receive Lines

This section describes how the consigned inventory details are viewed in the Manage Item Quantities
user interface.

This screenshot depicts how to view consigned inventory details.
The Manage Item Quantities user interface includes consigned inventory–related details.
• Search criteria enables users to search for consigned inventory by owning party site.
• Consigned Details tab is available in the Details region.
• The consigned inventory on-hand quantity associated with the owning party is shown in the
Details region.
• Receipt number, material location, and lot and serial number details are shown for consigned
inventory.
The Manage Item Quantities user interface is navigable from the Inventory work area. The “Show
consigned inventory only” field in the search criteria allows users to search for consigned inventory only.
Navigation: Warehouse Operations > Inventory > Manage Item Quantities

This section describes what are consigned transactions, types of transactions and inter-organization
transfers of consigned inventory.

Inventory Consumption Transaction
Ownership changes from the supplier to the buyer when the consigned inventory is used by the buying
organization. This process is referred to as consumption. Consumption transactions are reported to the
supplier periodically on the consumption advice. Consumption transactions are performed either
explicitly or implicitly.
Explicit Consumption
Explicit consumption is performed when the user creates a transfer to owned transaction. There is a
separate user interface, the Create Separate to Owned Transaction page, that allows users to perform
explicit consumption.
Implicit Consumption
Implicit consumption occurs as a result of an inventory transaction such as a sales order issue. The
majority of transactions will occur through implicit consumption. Users can configure the transaction
types that will result in consumption. For example, the user can configure a transaction type of
Subinventory Transfer to trigger consumption.
When implicit consumption occurs, there are two separate inventory transactions generated:
• Transaction to represent the consumption or change in ownership
• Transaction to represent the movement of inventory

Modeling implicit consumption as two separate transactions allows the segregation of
transactions involving the change in ownership and the movement of material.
Inventory consumption rules are defined to automatically consume material based on

certain criteria such as transaction type, item, supplier, and material location.
Transaction Types Resulting in Consumption
This slide depicts three examples of transaction types that can result in consumption:
• Interorganization Transfer: Material transferred between two inventory
organizations
• Subinventory Transfer: Material transferred between two subinventories
• Miscellaneous Issue: Material issues out of the inventory organization

This diagram depicts inter-organization transfers of consigned inventory. Consigned inventory can be
transferred across inventory organizations without forcing a change in ownership. Organizations have a
need to transfer consigned inventory between locations while having the inventory remain consigned. A
transfer between inventory organizations is know as an interorganization transfer.
Consumption Rules
When a transfer is executed between organizations, consumption rules determine whether or not the
transfer results in a change of ownership.
• The Manage Consumption Rules page enables you to configure which transaction types trigger
consumption.
• In addition to the transaction type, the setup also supports the following associated attributes
such as inventory organization/supply chain nodes, owning party of the consigned inventory,
from inventory organization, to inventory organization, from subinventory/locator, to
subinventory/locator, and so forth.
Note: The transfer of consigned inventory from one inventory organization to another inventory
organization does not impact the aging period calculation. The aging period calculation is not reset
based on the transfer of the consigned inventory. The original aging period is calculated based on the
receipt or shipment date.

In this demonstration, the instructor will review consigned inventory on-hand quantities and associated
consigned inventory details such as owning party and receipt number. Consigned inventory subject to
aging will also be reviewed. The demonstration will conclude by transferring consigned inventory that
has aged to owned inventory.

In this demonstration, the instructor will review an inventory consumption rule created between a “from
subinventory” and a “to subinventory”.

This section describes what is a consumption advice and how users can search for consumption advices.

The consumption advice is a document used to communicate usage of consigned inventory to the
supplier.
The consumption advice:

• Includes information such as the item, item quantity, and item price
• Is created through a Scheduled Process (Create Consumption Advice) and supports multiple
communication methods including email, Supplier Portal, and print
• Provides full traceability to the various source documents. For example, visibility is provided to
the receipt, purchase order and purchase agreement associated with the consumed inventory.
• Provides visibility to consumption transactions that triggered ownership change
As depicted in this slide, the transaction type of Subinventory Transfer triggers the consumption of
consigned inventory. If the item is lot and/or serial controlled, lot and serial number details are shown.

This screenshot depict the Review Consumption Advice user interface. The Review Consumption
Advices user interface is available from the Inventory and Supplier Portal work areas. Users can search
for consumption advices by attributes such as purchase agreement, consumption advice number, and
supplier. The View Consumption Transactions button enables users to the view the inventory
transactions that triggered consumption. Additionally, users can view the consumed quantity along with
purchase order and receipt details.
Navigation: Warehouse Operations > Inventory > Review Consumption Advices

User Interfaces
There are two user interfaces that allow creation of consigned inventory transactions.
Create Transfer to Owned Transaction page
The Create Transfer to Owned Transaction user interface allows transfer of consigned inventory to
owned inventory. This page can be used to transfer the ownership of consigned inventory where it is
nearing the aging limit or the aging period has expired.
Create Transfer to Consigned Transaction page
There can be instances within the organization where consigned inventory is consumed by mistake. The
Create Transfer to Consigned Transaction page allows the transfer of owned material back to a
consigned state. The Create Transfer to Consigned Transaction user interface automatically identifies
the original ownership change transaction, thereby eliminating the need for manual identification of the
original transaction.
These two user interfaces allow you to easily select lot and serial numbers associated with the
transactions. Both pages are navigable from the Inventory work area. Both Transfer to Owned and
Transfer to Cosigned transaction types will appear on the consumption advice.

This section describes how the inventory counting process allows organizations to perform cycle and
physical inventory counting on consigned inventory.

This diagram depicts how the inventory counting process allows organizations to perform cycle and
physical inventory counting on consigned inventory. Both cycle count and physical inventory count user
interfaces and reports include the owning party. When recording count sequences and physical
inventory tags, users can enter the owning party associated with the count.
Capturing the owning party on cycle and physical inventory counts enables organizations to properly
segregate consigned inventory counts from owned inventory counts. This ultimately leads to increased
cost savings and more accurate inventory counting practices within the organization.

This section describes how the consigned inventory returns process enables the return of material to the
supplier at any point in the consignment process.

This screenshot depicts how the consigned inventory returns process enables the return of material to
the supplier at any point in the consignment process. Consigned inventory can be returned prior to
consumption and after consumption. Additionally, material can be returned after the consumption
advice has been created.
The Return Lines page displays a consignment line indicator. This indicator allows users to search for
and process consigned inventory–related return lines. The user interface provides the ability to return
both consigned and non-consigned lines in a single transaction. The Return Lines page is navigable
from the Receipts work area.
Navigation: Warehouse Operations > Receipts > Return Receipts > Return Lines

This section describes how the Oracle Fusion Cost Management recognizes consigned and non-
consigned purchase order receipts.

This screenshot depicts how the Oracle Fusion Cost Management has the ability to recognize consigned
and non-consigned purchase order receipts. Additionally, Cost Management can account for the
transition of goods from consigned to non-consigned and vice versa.
The accounting line types used for consigned receipts are different than regular non-consigned receipts.
In most regions, consigned (non-owned) inventory is valued at zero. Users can decide whether or not
they want to post accounting entries for consigned transactions into the general ledger. If accounting
entries for consigned transactions are posted into the general ledger, there is a special accounting line
type that directs the entries to the appropriate clearing accounts.
When Oracle Fusion Inventory Management transitions an item from consigned to non-consigned, Cost
Management creates the required cost accounting distributions. These details can be seen on the
Review Cost Accounting Distributions user interface.
Sometimes, items transition from consigned to nonconsigned, and an event may trigger a reverse flow
where nonconsigned items need to be reverted to consigned. Oracle Fusion Cost management supports
the accounting for these reverse flows.
In most regions, the inventory value of consigned items should be zero. The inventory value reports and
analytics will list the quantity of consigned items along with the contingent value for purposes such as
insurance and management information about the potential value of consigned items.
Navigation: Costing > Cost Accounting > Review Cost Accounting Distributions

This section describes how consumption rules are used to determine ownership change of consigned
inventory and describes the additional setup task of managing cost profiles.

This screenshot depicts the Manage Consumption Rules user interface.
Consumption rules are used to determine ownership change of consigned inventory.
• The Manage Consumption Rules task is accessed through the Manufacturing and Supply Chain
Materials Management offering.
• Consumption rules are based on Inventory Transaction Type along with other attributes such as
From Organization, To Organization, From Sub inventory, To Sub inventory, From Locator, To
Locator, Item, and Owning Party.
Use Case
Organization ABC has two sub inventories: Sub inventory 1 and Sub inventory 2. They would like to
establish a consumption rule that when material is transferred from Sub inventory 1 to Sub inventory 2,
ownership change occurs. That is, after consigned inventory is transferred from Sub inventory 1 and Sub
inventory 2, a ownership transaction occurs and ownership is transferred from the Supplier to
Organization ABC. The consumption rules can be defined at a more granular level to include inventory
locator, item, and owning party.
The consumption transactions that are created will ultimately be communicated to the supplier through
the consumption advice.
Note
• For all inter-organization consigned inventory movement, the default behavior is ownership
change (transfer to regular) occurs.
• For intra-organization consigned inventory movement, the default behavior is material remains
consigned.
Navigation: Setup and Maintenance > Manage Consumption Rules

This table describes the additional consigned inventory setup tasks, where the first column names the
setup task and its description can be found in the corresponding cell in the same row under the second
column.

This section describes the following consigned inventory reports:
• Consumption Advice Report
• Physical Inventory Missing Tag Listing Report
• Physical Inventory Tag Listing Report
• Physical Inventory Tags Report
• Cycle Count Listing Report
• Asset Inventory Valuation Report

This table discusses Consigned inventory reports. The first column lists report names and these reports
are described in the corresponding cell in the same row under the second column.
Payable Matching Detail Report: Matching details report shows the Invoice details that are matched to
consumption advice.


00 minutes Practice
20 minutes Total


Oracle SCM Cloud user. The focus of this lesson is on the new Supplier Inventory Manager job role and
the addition of consigned inventory–related tasks in the Supplier Portal.
inventory.
manufacturing or sells to end customer), or after a pre-specified period of time (for example, 30,
weekly.

This sections describes the job role of the Supplier Inventory Manager in the Supplier Portal, how the
Supplier Portal enables suppliers to monitor the consigned inventory process within the buyer’s
organization and how the Review Consigned Inventory user interface provides the supplier inventory
manager with the capability to review consigned inventory on-hand quantities and aging expiration
details.

This diagram depicts how the job role of the Supplier Inventory Manager.
• The supplier inventory manger in a supplier organization is responsible for managing inventory
process control from beginning to end. This includes monitoring available supplies, materials,
and products to ensure that customers, employees and production have access to the materials
they need.
• The Supplier Portal enables suppliers to monitor the consigned inventory process within the
buyer’s organization. Suppliers can review consumption advices, track consigned inventory on-
hand quantities, review inventory transactions, and monitor consigned inventory aging.
• The Consigned Inventory task group is available on the Supplier Portal work area. This allows
suppliers to easily navigate to all consigned inventory–related tasks. Suppliers have access to
information such as consumed quantities and inventory on-hand quantities. For example, how
much consigned inventory does the buyer have on hand and how much has been consumed
over the past month. These features provide the supplier with full visibility of the consignment
process. The supplier consigned inventory user interfaces are navigable from the Supplier Portal
work area.

This screenshot depicts how the Supplier Portal enables suppliers to monitor the consigned inventory
process within the buyer’s organization. Suppliers are able to review consumption advices and
associated consumption transactions. The supplier inventory manager can review the consumption
advice details including creation, start, and end date. Additionally, the Supplier Inventory Manger can
review the consumption transactions associated with the consumption advice by clicking the View
Consumption Transactions button.
Navigation: Supplier Portal > Consigned Inventory > Review Consumption Advices

This screenshot depicts how the Review Consigned Inventory user interface provides the supplier
inventory manager with the capability to review consigned inventory on-hand quantities and aging
expiration details. The Supplier Inventory Manager can review consigned inventory quantities at the
buyer’s inventory organization. Additionally, the supplier inventory manager can review consigned
inventory subject to aging.
Navigation: Supplier Portal > Consigned Inventory > Review Consigned Inventory

This screenshot depicts how the Review Consigned Inventory Transactions user interface provides the
supplier inventory manager with the capability to review consigned inventory–related transactions. The
supplier inventory manager can review both Transfer to Owned and Transfer to Consigned transaction
types. A transaction type of Transfer to Owned transfers consigned inventory to owned inventory. A
transaction type of Transfer to Consigned transfers owned inventory back to its original consigned state.
Navigation: Supplier Portal > Consigned Inventory > Review Consigned Inventory Transactions

In this demonstration, the instructor will review the inventory consumption advice in the Supplier Portal.
The instructor will search for a consumption advice and review details such as purchase agreement,
supplier, start date, and end date. Additionally, the instructor will review the consumption transactions
associated with the consumption advice.


00 minutes Practice
15 minutes Total


Oracle SCM Cloud user. The focus of this lesson is on matching financial settlement between the buyer
and supplier for consigned inventory.
• Consigned inventory is received into the organization in the same manner as nonconsigned
inventory.
manufacturing or sells to end customer), or after a prespecified period of time (for example, 30,
weekly.

This section describes how Oracle Fusion Payables supports the ability to match invoices to
consumption advices. You will learn the multiple ways in which invoices can be matched to a
consumption advice.

This diagram depicts how Oracle Fusion Payables supports the ability to match invoices to consumption
advices. This enables the accounts payable specialist to enforce control over excess billing for
consumption advice matched invoices. Also, invoice adjustments, such as price and quantity correction,
can be performed for consumption advice–matched invoices. The consumption advice is referenced on
supplier payments and supplier remittance advices.
The accounts payable specialist can also adjust consumption advice invoices for returns if the goods are
returned after the ownership changes. The debit memo can be automatically generated based on
supplier setup.

This diagram depicts the multiple ways in which invoices can be matched to a consumption advice
created in Oracle Fusion Payables:
• Invoices can be created automatically when the consumption advice is generated and the Pay on
Use option is enabled on the agreement. In this case, the invoice is created using predefined
document number generation logic. You can also configure gapless invoice numbering specific
to a supplier.
• Invoices can be created manually in the Invoice work area. The accounts payable specialist can
identify the consumption advice number based on the Purchase order Number and create
invoices matched to specific or multiple consumption advices.
• Invoices can also be created manually through Supplier Portal. The supplier can log in based on
the login credentials provided and create an invoice.
• Consumption advice–matched invoices can be created using a spreadsheet.

This screenshot depicts how Oracle Fusion Payables supports the ability to match invoices to
consumption advices. This enables the accounts payable specialist to enforce control over excess billing
for consumption advice–matched invoices. Also, invoice adjustments, such as price and quantity
corrections, can be performed for consumption advice–matched invoices. The consumption advice is
referenced on supplier payments and supplier payment remittance advices.
The accounts payable specialist can also adjust consumption advice invoices for returns if the goods are
returned after the ownership changes. The debit memo can be automatically generated based on
supplier setup.
Navigation: Payables > Invoices > Create Invoice > Match Invoice Lines

Oracle Fusion Payables supports the ability to match invoices to consumption advices. This enables the
accounts payable supervisor to enforce control over excess billing for consumption advice–matched
invoices. Also, invoice adjustments, such as price and quantity correction, can be performed for
consumption advice–matched invoices. The consumption advice is referenced on supplier payments
and supplier remittance advices.
The accounts payable supervisor can also adjust consumption advice invoices for returns if the goods
are returned after the ownership changes. The debit memo can be automatically generated based on
supplier setup.
Navigation: Payables > Payments > Manage Payments

This screenshot depicts how the consumption advice document number is referenced on the supplier
payment remittance advice. This provides the supplier with the ability to trace payment back to the
associated consumption advice.
Navigation: Payables > Payments > Manage Payments > Print Remittance

This section describes the consigned inventory setup on the supplier site and the two types of quantity
tolerances used for consigned inventory.

Supplier Site Setups
Pay on use
If the “Pay on use” option is enabled at the supplier site level and also at the agreement level, upon
generation of the consumption advice, the invoice is created automatically.
Create debit memo from return
If the “Create debit memo from return” option is enabled at supplier site level, upon generation of
consumption advice with returns, the debit memo is created automatically.

Invoice Tolerances
Two types of quantity tolerances are used for consigned inventory:

• Consumed Percentage
• Maximum Consumed Quantity
Based on the definition of these tolerances, when you validate an invoice matched to a consumption
advice, matching holds may be applied if the billed quantity is in excess of the consumed quantity.
Navigation: Setup and Maintenance > Manage Invoice Tolerances

This section describes consigned inventory reports.

This table provides a brief description of the Payable Matching Detail Report.


00 minutes Practice
15 minutes Total

This section describes the key capabilities and benefits of the contract manufacturing solution.

This diagram depicts the key capabilities and benefits of the contract manufacturing solution.
Key Capabilities
• Enables the Original Equipment Manufacturers (OEMs) to outsource their manufacturing process
to a contract manufacturer.
• Supports outsourcing of manufacturing in the build-to-plan and build-to-order manufacturing
strategies.
• Enables OEMs to supply components to a contract manufacturer.
• Enables OEMs to track and monitor the manufacturing process in the contract manufacturer’s
facility.
• Enables the OEMs to track the inventories they own, be it components or finished goods, at the
contract manufacturer’s facility.
Key Benefits
• Enables OEMs to efficiently manage the extended supply chain and seamlessly collaborate with
external parties or contract manufacturers.
• Helps the OEMs to significantly reduce the order fulfillment cycle time by leveraging the
outsourcing capability to supplement in-house manufacturing. This enables the OEMs to quickly
adapt to customer needs, thereby improving the response time.
• Provides a 360-degree visibility of the entire supply creation process.

This section describes how the contract manufacturing process starts with a request from the planning
system to create supply in the contract manufacturing organization.

This diagram depicts how the contract manufacturing process starts with a request from the planning
system to create supply in the contract manufacturing organization.
• Supply Chain Orchestration (SCO) creates a work order (WO) for the finished goods and a
matching purchase order (PO) on the contract manufacturer.
• The WO is used to fulfill sales orders, and is used by the enterprise to replicate and track the
production progress at the contract manufacturer’s plant.
• The PO serves as a contract for supply of goods by the contract manufacturer.
• Supply Chain Orchestration keeps the WO and PO synchronized.

This section describes how a high-level contract manufacturing business flow used to fulfill a customer
order.

This diagram depicts how a high-level contract manufacturing business flow used to fulfill a customer
order. The parties involved in this business flow are a customer, an OEM, and a contract manufacturer.
Steps
Customer
• Places an order for an item on the OEM
OEM
• Receives the customer order and identifies that the ordered item is a contract manufacturing–
enabled item
• Sends a purchase order to the contract manufacturer to outsource the manufacturing process for
that item to a contract manufacturer
• Creates a work order within the enterprise to track the manufacturing process at the contract
manufacturing facility
Contract Manufacturer
• Receives the OEM purchase order and starts manufacturing
• Reports the production progress to the OEM on each milestone of operation completion in the
manufacturing process
• Reports consumption of components supplied by the OEM
• Completes manufacturing, stocks the finished goods in its facility, and sends a production
completion report to the OEM

OEM
• Records and tracks stock based on contract manufacturer reporting
• Receives the production report from the contract manufacturer and updates the
work order created internally in the OEM’s enterprise to track the manufacturing
process at the contract manufacturer’s facility
• Records any OEM-supplied component consumption
• Sends shipment request to contract manufacturer
Contract Manufacturer
• Ships the finished goods to the OEM’s customer
The finished goods stocked at the contract manufacturer’s facility are owned by the OEM.
The OEM can track the components supplied by them and the finished goods stock in the
contract manufacturer’s facility by reviewing the inventory levels in the contract
manufacturing organization that the OEM has created within the enterprise. After finished
goods are shipped, OEM updates the inventories in the contract manufacturing
organization.
Note
If this business flow was to fulfill a planned order, on OEM’s request the contract
manufacturer would ship the finished good to one of the OEM’s internal warehouses.

This section describes the Contract Manufacturing Solutions process flow.

This diagram depicts the Contract Manufacturing Solution process flow. This is the first of three parts of
a detailed contract manufacturing flow that explains the role and function of each product within the
SCM cloud. The practices in lessons titled “Contract Manufacturing Solution: Plan-to-Produce Flow” and
“Contract Manufacturing Solution: Change Management” provide further details about these steps.
A contract manufacturing flow is initiated either to fulfill a customer sales order or in response to a
planned order generated based on forecasting.
• The contract manufacturing flow fulfilling a customer sales order is also called a back-to-back
contract manufacturing flow. This is covered in the lesson titled “Contract Manufacturing
Solution: Plan-to-Produce Flow”.
• The flow fulfilling a planned order is called a plan-to-produce contract manufacturing flow. This
is covered in the lesson titled “Contract Manufacturing Solution: Change Management”.
A Plan-to-Produce contract manufacturing flow starts when the planner releases the planned orders to
Supply Chain Orchestration that were generated based on the forecast.
Steps for Planned Order Fulfillment

• Planning: Releases planned orders that are generated based on forecast
• Supply Orchestration:
- Creates a supply order and automatically assigns a predefined business process, based on
the rules defined in Supply Chain Orchestration, to execute a Plan-to-Produce contract
manufacturing flow
- Requests work order creation in Manufacturing

• Manufacturing: Creates work order to track the manufacturing process at the
contract manufacturer’s facility
• Supply Orchestration: Requests purchase order creation in Purchasing
• Inventory Management: Reserves supply against demand
• Purchasing: Issues a purchase order to the contract manufacturer for the contract
manufacturing service item. The purchase order includes contract manufacturing
work order details.
• Supply Orchestration: Sends update request to Manufacturing to update work
order with purchase order details
• Manufacturing: Updates work order to link work order and purchase order
A back-to-back contract manufacturing flow starts with an order entry specialist entering
a sales order in order management on receipt of a customer order for a back-to-back
enabled contract manufactured item.
Steps for Back-to-Back Order Fulfillment
• Order Management:
- Enters sales order: Selects item, quantity, date, and start fulfillment
processing
• Order Promising:
- Schedules sales order line: Identifies promise dates and sourcing information
for the ordered item
- Releases planning recommendations (scheduled process): Notifies Supply
Chain Orchestration of ordered item sourcing
- Creates supply order: Matches sales order to order planning
recommendations to identify sourcing requirements
- Requests work order creation in Manufacturing
• Manufacturing: Creates work order to track the manufacturing process at the
contract manufacturer’s facility
• Supply Orchestration: Requests reservation from Inventory Management
• Inventory Management: Reserves supply (work order) against demand (sales
order)
• Supply Orchestration: Requests PO creation in Purchasing
work order details.
• Supply Orchestration: Sends update request to Manufacturing to update work
order with purchase order details
• Manufacturing: Updates work order to link work order and purchase order
Note: The plan-to-produce contract manufacturing process flow is identical to the back-
to-back contract manufacturing process flow except for the reservation step highlighted
in the RED dotted box in the slide. In the Plan-to-Produce contract manufacturing flow,
the supply is not hard-pegged to the planned order demand and, therefore, there is no
reservation of supply. Except for this, the remainder flow is identical to the back-to-back
contract manufacturing flow.

This is the second of three parts of a detailed contract manufacturing flow that explains
the role and function of each product within the SCM cloud. This part is common between
the Plan-to-Produce and Back-to-Back contract manufacturing flows.
Steps for Sales Order
In continuation to the previous slide where Supply Chain Orchestration had sent a request
to Purchasing to create a purchase order (PO):
work order details. A work definition, indicating milestone operations on which
contract manufacturer needs to report production progress, is also sent through
the PO as an attachment.
• Contract Manufacturer:
- Starts manufacturing process
- Reports production progress on each operation milestone to the OEM
• Manufacturing:
- Receives production progress from contract manufacturer
- Records consumption of OEM-supplied components
• Inventory Management: Decrements OEM-supplied components in the contract
manufacturing organization created within the OEM enterprise

• Contract Manufacturer:
- Completes the manufacturing process. Sends the production completion report to
OEM. The contract manufacturing finished good item is stocked in their premises
but the inventory is owned by the OEM. The contract manufacturing finished goods
items are shipped based on the OEM’s request.
• Manufacturing:
- Updates work order completion status
- Invokes receiving of contract manufacturing service item
• Inventory Management:
- Performs a logical receipt of the service item against the purchase order
- Creates service item inventory in contract manufacturing organization
• Manufacturing:
- Completes work order
- Creates finished goods inventory in contract manufacturing organization
- Consumes contract manufacturing service item into the work order
- Yields the contract manufacturing finished good into the contract manufacturing
organization
• Manufacturing:
- Decrements contract manufacturing service item inventory from the contract
manufacturing organization
- Increments contract manufacturing finished good item inventory in the contract
manufacturing organization
- Records work order completion
- Notifies supply availability to order management in case of back-to-back contract
manufacturing flow
• Order Management: Records supply availability
The sales order fulfillment of shipment flow description continues in the next slide.
For the plan-to-produce contract manufacturing flow, Supply Chain Orchestration does not need to
notify Order Management of the supply availability and instead closes the supply order. This
completes the plan-to-produce flow.
Note: Contract manufacturers can report production progress in two ways:
• Directly invoking the Operation Transaction and Material Transaction web services that are
exposed as public web services by the OEM. The tracking work order in Manufacturing is
automatically updated with the production progress.
• Reports progress in a predefined spreadsheet format. Production supervisor manually
uploads the spreadsheet into manufacturing which would automatically update the tracking
work order with the reported production progress and adjust the OEM-supplied
components.
• Reporting using other communication methods, such as by e-mail or phone. The production
supervisor manually updates the tracking work order with the production progress.

This diagram is the last of three parts of a detailed contract manufacturing flow that explains the role
and function of each product within the SCM cloud.
Steps for Sales Order

• Order Management: Records supply availability and send shipment request to Inventory
Management
• Inventory Management: Sends shipment request to contract manufacturer
• Contract Manufacturer: Ships finished goods to customer
• Customer: Receives finished goods
• Contract Manufacturer: Sends shipment confirmation
• Inventory Management:
- Receives shipment confirmation and decrements finished goods inventory
- Notifies Order Management that shipping has occurred
• Order Management: Records shipment and sends shipment completion to Supply Chain
Orchestration
• Supply Orchestration: Records shipment and closes supply order
This completes the overall contract manufacturing solution process flow.
Note: To enable costing of the contract manufacturing finished goods, all inventory and manufacturing
transactions are transmitted to the costing application. Costing computes the final costs of the contract-
manufactured finished goods based on the information provided.


25 minutes Practice
55 minutes Total

This section describes the setups performed in the following:
• Suppliers
• Functional Setup Manager
• Product Information Management
• Planning Central/ Global Order Promising

The Purchasing and Manufacturing setups are discussed in the lesson titled “Contract Manufacturing
Solution.”
There are no additional setups required to support the contract manufacturing solution in the following
applications that participate in the overall flow:
• Costing (setup is the same as for a manufactured item)

This slide discusses a summary of setup steps performed in planning central or global order promising.
Oracle SCM Cloud: Advanced Supply Chain and Fulfillment Techniques 24 - <#>
This section describes how to define the contract manufacturer as a supplier and each of its
manufacturing facilities as a supplier site.

Supplier’s Setup Detail
• Navigation: Navigator > Procurement > Suppliers
• Task associated with the selection: Create Suppliers
As shown in the slide, define the contract manufacturer as a supplier and each of its manufacturing
facilities as a supplier site.
As you can see in the first screenshot, the Supplier Type is set to Supplier and the contract
manufacturer’s site is specified as the same location as the actual contract manufacturer’s location.

This section describes the Contract Manufacturing Inventory Organization setup.

Contract Manufacturing Inventory Organization Setup Details
• Navigation: Navigator > Setup and Maintenance work area > Manage Inventory Organizations
From Setup and Maintenance

• Functional Area is Enterprise Profile.
• Task associated with the setup information is:
- Manage Locations
• Functional Area is Organization Structures.
• Tasks associated with the setup information are:
- Manage Inventory Organizations
- Manage Cost Organizations
Contract Manufacturing Organization Setup Best Practices

• Each contract manufacturer site or location must be modelled as one inventory organization.
• Name the organization with the contract manufacturer’s name and site to avoid confusion.
• Define a subinventory for tracking finished goods inventory.
• Define a subinventory for tracking component inventory.

The slide displays the key attributes setup required to define a contract manufacturing
organization.
• A contract manufacturing organization is set as an external organization.
• The check boxes “Organization is a manufacturing plant” and “Organization
represents a contract manufacturer” are set to “Yes”.
• For the supplier and supplier site attributes, the actual contract manufacturer and
its site are selected.

This section describes the Product Information Management service item and finished goods setups.

Product Information Management Service Item Setup Detail
Navigation: Navigator > Product Management > Product Information Management
Tasks associated with the selection are:

• Manage Items (to update an existing item)
• Create Items (to create a new item)
The slide displays the key attributes setup required to define a contract manufacturing service item.
• The predefined item template “Contract Manufacturing Service Component” is applied after the
item is created in PIM. This indicates that all the mandatory attribute value setups are required.
• This item is set as a Buy item and the Contract Manufacturing field is set to Yes.
Contract Manufacturing Service Item Setup Best Practice

• For easy identification, create the service item number in the format: contract manufacturer
name or initial + contract manufacturing finished good item number.

Navigation: Navigator > Product Management > Product Information Management
Tasks associated with the selection are:

• Manage Items (to update an existing item)
• Create Items (to create a new item)
The finished goods item structure must include all components used to construct the item so that they
are available in the work definition. Additionally, the associated service item to be used for procurement
must be included as a component (see next slide).
The slide displays the key attributes setup required to define a contract manufacturing finished good
item:
• The predefined item template “Contract Manufacturing Finished Goods” is applied after the item
is created in PIM. This ensures that all the mandatory attribute value setups are required.
• This item is set as a Make item and the Contract Manufacturing field is set to “Yes”.
Create an Item Structure for the contract manufacturing finished good item and include the contract
manufacturing service item as a component to the contract manufacturing finished good item.

This section describes the Planning Central/Order Promising setup availability and sourcing.

Navigation: Navigator > Value Chain Planning > Order Promising
Task associated with the selection is: Manage ATP Rules
The Availability to Promise (ATP) rules are required for finished goods item and its components. On
setting the promising mode to “Supply chain availability search,” the promising engine considers
components availability when setting dates for an order. This enables order promising even if finished
goods are not yet in inventory.
The overall sequence for setup of order promising is as below. Note that many steps do not have specific
contract manufacturing requirements. For details of general order promising setup, refer additional
available courses.

Sequence of Operations for Order Promising Setup
1. Navigation: Navigator > Setup and Maintenance work area > Manage Planning
Source Systems
- Enable the contract manufacturing organization for collections.
2. Collect Planning Data (to collect the organization) under Scheduled Processes.
3. Navigation: Navigator > Value Chain Planning > Order Promising > Manage ATP
Rules
- Contract manufacturing finished good item and components
4. Navigation: Navigator > Value Chain Planning > Order Promising > Manage
Sourcing Rules
- Contract manufacturing organization
5. Navigation: Navigator > Value Chain Planning > Order Promising > Manage
Assignment Sets
- Contract manufacturing finished good item and components
6. Navigation: Navigator > Scheduled Processes > Collect Planning Data. Collect the
following entities:
- Item
- Item Structures
- Work Definitions
7. Navigation: Navigator > Scheduled Processes:
- Refresh and start the Order Promising server.

Navigation: Navigator > Value Chain Planning > Order Promising
Task associated with the selection is:

• Manage Sourcing Rules
• Manage Assignment Sets
Sourcing rules provide the planning engine with information about how and where the items must be
supplied for fulfillment. For the contract manufacturing solution, it is important to include a rule that
specifies that the item can be provided (or made) by the contract manufacturing organization. Sourcing
rules are not item specific.
Sourcing assignment rules (or assignment sets) are used to assign sourcing rules to items and
organizations, so that maximum flexibility is provided when there is more than one source for an item.
For the contract manufacturing solution, it is important to include at least one assignment rule using the
sourcing rule for the contract manufacturing organization.
The contract manufacturer’s organization is associated with the supply network model. Practice 23-4
provides a view of this association.

This section describes the business rules and processes setup.

Navigation: Navigator > Setup and Maintenance work area
From Setup and Maintenance
• Functional Area is Order Management.
• Tasks associated with the setup information are:
- Manage Orchestration Process Assignment Rules
• The DOO_OrderFulfillmentGenericProcess predefined orchestration process can be used to carry
out back-to-back contract manufacturing processing.

In this practice you will:
• Navigate through the Inventory Organization Parameters page
• Review Item Parameters in PIM
• Review the ATP and Sourcing Rules for contract manufacturing
• Review Supplier Association to Inventory Organization in Supply Network Model.


25 minutes Practice
45 minutes Total

This section describes the setup tasks performed in Manufacturing, Purchasing, Functional Setup
Manager, and Inventory Management and costing.

The setups for Supplier, Inventory Organization, Product Information Management, Planning, and Global
Order Promising were discussed in the lesson titled “Contract Manufacturing Solution (Application Setup
Part 1).”
In this lesson, setups performed in Manufacturing, Purchasing, and Item Transaction Defaults are
explained.
The key setup tasks that are performed within the Manufacturing application are.
• Manage Work Areas: Define work areas in the contract manufacturing organization.
• Manage Work Centers: Define work centers in the contract manufacturing organization.
• Manage work Definition: Define work definition for the contract manufacturing finished good
item.
• Print Work Definition Report: Print the work definition PDF or XML document, which is sent to the
contract manufacturer.
The key setup tasks that are performed within Purchasing application are:
• Manage Agreement: Create a blanket purchase agreement on the contract manufacturer and
attach the work definition PDF or XML document to the “To Supplier” category in the agreement.
There are no additional setups required to support the contract manufacturing solution in:
• Costing (setup is the same as for a manufactured item)

This slide describes the summary for setups performed in purchasing.
Oracle SCM Cloud: Advanced Supply Chain and Fulfillment Techniques 25 - <#>
This section describes how the work definition enables users to model milestone operations performed
by the contract manufacturer and indicate the operation at which OEM-owned components are
consumed.

This diagram depicts how the work definition enables users to model milestone operations, which are
performed by the contract manufacturer, and indicate the operation at which OEM-owned components
are consumed. It is used later to create a work order that will be used to track actual production progress
at the contract manufacturer.
• Add operations to the work definition, which represent the key points at which to retrieve
progress updates from a contract manufacturer.
• Associate components you own with the operation that will consume them.
• Associate service item to the final operation as an “operation pull” component. Later, when you
create and transact the contract manufacturing work order, this will allow the system to calculate
a cost for the finished goods by adding the cost of the service plus the cost of any components
you provided to the contract manufacturer.
• Navigation: Navigator > Manufacturing > Work Definition
• Task associated with the selection: Manage Work Definitions task

This section describes how to set up a blanket purchase agreement to automate purchase order creation
for a specific contract manufacturer (supplier).

This screenshot depicts that you can set up a blanket purchase agreement to automate purchase order
creation for a specific contract manufacturer (supplier). The work definition of the contract
manufacturing finished good item is attached in the blanket purchase agreement at the “To Supplier”
category. Whenever a purchase order is created on the contract manufacturer, the work definition is
sent as an attachment. The work definition indicates the milestone or count point operations at which
the contract manufacturer needs to report the production progress.
The slide shows how a blanket purchase agreement is created, and highlights the contract
manufacturer, contract manufacturing service item, and the work definition attachment for the contract
manufacturing finished goods.
Points to notice for a purchase order based on a purchase agreement:

• Item is the contract manufacturing service item.
• Details are communicated to the contract manufacturer via an email or as a PDF document, and
include the work definition print as an attachment to the purchase order.
• Processing tasks include:
- Creation of contract manufacturing purchase requisitions
- Processing of contract manufacturing purchase requests into purchase orders
- Communication of work order details, finished good item details, and work definition
attachment to a contract manufacturer
- Search of purchasing transactions using work order information
Navigation: Navigator > Procurement > Purchasing > Manage Agreements

This section describes how to define a default Receiving sub inventory for contract manufacturing
service item.

This screenshot describes how to define a default Receiving sub inventory for contract manufacturing
service item and set it same as the supply sub inventory for the service item in the work definition for
the finished goods item. This will ensure that when a contract manufacturing purchase order is received,
the service item will be received into this sub inventory by default and when the work order is completed,
the contract manufacturing service item is merged back from this sub inventory.
Navigation: Navigator > Setup and Maintenance work area > Manage Item Transaction Defaults

This section describes how the inventory organization at the contract manufacturer is physically
managed by the contract manufacturer but the OEM has ownership of the goods in the organization.

This diagrams depicts how the inventory organization at the contract manufacturer (referred to as the
CM Org), is physically managed by the contract manufacturer but the OEM has ownership of the goods
in the organization. Essentially, the contract manufacturer operates the warehouse on behalf of the OEM
but all transactions in the warehouse have to be recorded in the OEM’s ERP.
Receiving in the CM organization can happen when OEM-supplied components are received at the
contract manufacturing plant.
This slide displays the details of the process that is used by the OEM to instruct the contract
manufacturer to receive components in the organization.
• A Receipt Advice is sent from OEM’s receiving system to the contract manufacturer.
• The contract manufacturer physically receives the goods and puts them away.
• Contract manufacturer sends a Receipt Confirmation to the OEM.
• Based on the Receipt Confirmation, OEM updates the entry in OEM’s Receiving system and
updates inventory records.

This section describes how to instruct contract manufacturer to ship finished goods.

This diagram depicts how to instruct contract manufacturer to ship. Shipment happens in the contract
manufacturing organization when OEM requests the contract manufacturer to ship the finished goods
either to an OEM’s customer or to an OEM warehouse.
This slide displays the details of the process that is used by the OEM to instruct the contract
manufacturer to ship the goods:
• A Shipment Request is sent from OEM’s Shipping system to the contract manufacturer.
• The contract manufacturer physically ships the goods.
• Contract manufacturer sends a Shipment Confirmation to the OEM.
• Based on the Shipment Confirmation, OEM updates the entry in OEM’s Shipping system and
updates inventory records.
With this slide, the discussion on communication considerations related to supply and fulfillment is
complete.

This section describes how to plan and account costs.

This diagram depicts how to plan and account costs. Costing is used to estimate material, resource, and
overhead costs, and to perform cost roll-up to calculate standard costs. It supports detailed planning and
estimation of costs for items and resources, and provides a holistic view of product profitability and
costs across the supply chain.
Costing can be used to:

• Account for OEM-supplied components consumed by contract manufacturer
• Include purchase receipts to account for manufacturing services
• Create accounting entries for work order transactions
• Review costs incurred against work order
• Track performance through detailed variances
Costing setup is covered in a separate course.

In this demonstration you will learn how to set up an item transaction default for the contract
manufacturing service item.

In this practice you will:
• Review a purchase agreement and the attached work definition document.
• Review supplier setup in procurement.


40 minutes Practice
45 minutes Total

This slide lists an overview of the topics covered in the practice exercises.

In this practice, you will perform will be to create a sales order for a back-to-back item that will be
manufactured by a contract manufacturer.
1. You will create a sales order in the Order Management system and schedule it. Scheduling will
happen behind-the-scenes in Global Order Promising (GOP).
2. You will release the Planning Recommendation that will send the supply request to Supply Chain
Orchestration. You will then navigate to the fulfillment view in the Order Management system
and review the status of the Sales Order. You will then use the Action menu to switch to the
Fulfillment View, which will take you to Supply Chain Orchestration.
3. You will review contract manufacturing work order and its reservation against the sales order,
and also review purchase order details stamped on the work order.
4. You will review the purchase order and finished good details stamped on the purchase order.

In this practice, you will:
1. Update the manufacturing work order with completion records. This creates the inventory for the
finished goods in the contract manufacturing organization.
2. Review the records to ensure the receipt of service item against purchase order in the contract
manufacturing organization, the finished goods item inventory created in the contract
manufacturing organization, and the service item being consumed.
3. Review that the reservations for the finished goods are transferred to on-hand inventory.
4. Review the status of finished goods availability in Order Management to confirm that the goods
are available for shipment.

In this practice, you will process shipment of finished goods from the Contract manufacturing
organization to the end customer, review Shipping records to confirm that shipment was completed, and
review Order Management records to confirm that order fulfillment was completed.
The script has optional steps for simulating how an OEM sends Ship Requests to a contract
manufacturer, who ships the goods on behalf of the OEM. However, for the sake of time and setup
issues, these steps will be skipped in this course. In real-time implementation, these 3PL warehouse
setups are the responsibility of the Inventory Management implementers. If the Inventory Management
system has functioning Ship Request and Shipment Confirmation, these steps could be tested.


00 minutes Practice
10 minutes Total

This table discusses the differences between Plan-to-Produce and Back-to-Back contract
manufacturing, based on the parameters listed in the first column. Column headers are: Parameter,
Plan-to-Produce, and Back-to-Back. Rows are specific parameters that are described.


15 minutes Practice
30 minutes Total

The Change management process:
• Is completely automated in contract manufacturing solution flows
• Promptly responds to any demand or supply changes and tries to maintain the demand and
supply balance
• Notifies exceptions and enables users to take appropriate actions to mitigate the exceptions
• Enables OEMs to efficiently handle customer requirements and act in a timely manner on any
exceptions originating from the contract manufacturer

This screenshot depicts demand side changes in contract manufacturing. Supply Chain Orchestration
provides automatic change management in the contract manufacturing solution that helps maintain the
demand and supply balance.
• Enables handling of changes originating from the demand side, be it from the customer or a
planned order
• Provides the ability to respond to any quantity or date changes and demand cancellations
• Relays changes to the contract manufacturer
• Synchronizes the contract manufacturing work order and purchase order
• Notifies the order manager of an exception when a demand change cannot be met
The slide displays how a demand-side change is handled by Supply Chain Orchestration and how the
changes are relayed to the contract manufacturing purchase order.
In Practice 28-1 (demand-side change), you will perform the following three steps:
1. Search for a predefined, scheduled sales order for a contract manufacturing item.
2. Trigger a demand-side change by reducing the quantity on the sales order.
3. Show how PO, WO, and reservations quantities are changed to align with the sales order.

This screenshot depicts supply side changes in contract manufacturing. Automatic change management
also enables the handling of exceptions originating from the contract manufacturer:
• Enables reaction for quantity or date changes and supply cancellations
• Relays exceptions so that corrective action can be initiated
• Synchronizes the contract manufacturing work order and purchase order
The slide displays an exception message (highlighted in red box) from contract manufacturer in Supply
Chain Orchestration work bench. The exception is also relayed to the order manager in case of back-to-
back contract manufacturing flow.
In Practice 28-8 (supply-side change), you will perform the following four steps:
1. Search for an existing supply order for a contract manufactured item.
2. Note the contract manufacturing purchase order number.
3. Trigger a supply-side change (contract manufacturer pushes out the delivery date) in Purchasing
by updating the PO Promised date.
4. Show how the WO completion date is changed and an exception logged in Order Management.

In the first practice you will execute a demand-side change flow for a back-to-back contract
manufacturing flow.
In the second practice you will execute a supply-side change for a back-to-Back contract manufacturing
flow.


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Advanced Fulfillment Techniques - Student Guide

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05 minutes Lecture and Demonstration

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• The Forum (https://cloudcustomerconnect.oracle.com/resources/fb0241b9ef/summary) enables you to

• The Idea Lab (https://cloudcustomerconnect.oracle.com/resources/8e2e77f263/summary) allows you

• The Events (https://cloudcustomerconnect.oracle.com/resources/28806a6537/summary) tab lists

The Order Management Readiness Material

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10 minutes Lecture and Demonstration

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This course covers the following business flows:

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Walk through example:

Need a system that can:

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25 minutes Lecture and Demonstration

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The requesting systems include the following:

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The following steps are involved:

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For example, the back-to-back process includes the following steps:

The orchestration process execution also includes:

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Make-to-Stock Contract Manufacturing Process

Consider the schematic diagram of make-to-stock contract manufacturing and back-to-back

Back-to-Back Procurement Process

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When the supplier reduces the quantity:

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