INTERNAL REQUISITION- INTERNAL SALES ORDER

SETUP & SCENARIOS

Author Faizan Khalid

Email faizan.khalid.mahmood@gmail.com
Blog https://fkmahs.wordpress.com/
Creation Date 12th January 2017
Last Updated 12th January 2017 (v1)
 TABLE OF CONTENTS

1 IR-ISO SETUP.............................................................................................................................. 2
1.1.1 ITEM SETUP ........................................................................................................................................... 2
1.1.2 DEFINE INTERNAL LOCATION ..................................................................................................................... 3
1.1.3 DEFINE PRICE LIST................................................................................................................................... 5
1.1.4 DEFINE ORDER TYPE................................................................................................................................ 6
1.1.5 DEFINE CUSTOMER ................................................................................................................................. 7
1.1.6 DEFINE IR PURCHASING OPTIONS (OPTIONAL) ............................................................................................. 9
1.1.7 DEFINE PURCHASING DOCUMENT TYPE (INTERNAL REQUISITION) .................................................................. 10
1.1.8 DEFINE SHIPPING NETWORK ................................................................................................................... 11
1.1.9 DEFINE INTER-COMPANY TRANSACTION FLOW ........................................................................................... 14
1.1.10 DEFINE PROFILE OPTIONS....................................................................................................................... 16
2 SCENARIOS ............................................................................................................................... 17
2.1 INTER-ORGANIZATION STOCK TRANSFER ............................................................................................ 17
2.1.1 RAISE INTERNAL REQUISITION ................................................................................................................. 17
2.1.2 RUN ‘CREATE INTERNAL ORDERS’ CONCURRENT REQUEST ............................................................................ 19
2.1.3 RUN ‘ORDER IMPORT’ CONCURRENT REQUEST ........................................................................................... 20
2.1.4 VIEW IMPORTED INTERNAL SALE ORDER ................................................................................................... 21
2.1.5 RELEASE SALE ORDER ............................................................................................................................ 24
2.1.6 ALLOCATE/TRANSACT MOVE ORDER ........................................................................................................ 25
2.1.7 VIEW INTERNAL ORDER PICK ................................................................................................................... 27
2.1.8 AUTO-CREATE DELIVERY AND SHIP CONFIRM ............................................................................................. 28
2.1.9 RUN ‘INTERFACE TRIP STOP - SRS’ ........................................................................................................... 30
2.1.10 VIEW INTERNAL ORDER SHIPMENT ........................................................................................................... 31
2.1.11 VIEW COSTING AND ACCOUNTING OF THE SHIPMENT .................................................................................. 33
2.1.12 RECEIPT AT THE DESTINATION ................................................................................................................. 34
2.1.13 VIEW COSTING AND ACCOUNTING OF THE RECEIPT...................................................................................... 36
2.2 INTER-COMPANY SALE / PURCHASE .................................................................................................. 38
2.2.1 IMPORTED INTERNAL SALE ORDER............................................................................................................ 38
2.2.2 VIEW SHIPMENT COSTING & ACCOUNTING ................................................................................................ 40
2.2.3 VIEW RECEIPT COSTING & ACCOUNTING ................................................................................................... 43
2.2.4 RUN ‘CREATE INTERCOMPANY AR INVOICES’ REQUEST ................................................................................ 47
2.2.5 RUN ‘AUTOINVOICE MASTER’ PROGRAM .................................................................................................. 49
2.2.6 VIEW IMPORTED AR INVOICE .................................................................................................................. 50
2.2.7 RUN ‘CREATE INTERCOMPANY AP INVOICE’ REQUEST .................................................................................. 52
2.2.8 RUN ‘PAYABLES OPEN INTERFACE IMPORT’ REQUEST................................................................................... 53
2.2.9 VIEW IMPORTED AP INVOICE .................................................................................................................. 54
 IR-ISO
SETUP & SCENARIOS

1 IR-ISO Setup
The following Steps are required for the Setup and processing of the Internal Requisition - Internal
Sales Order process flow. The complete Setup and scenario in this Document has been carried out in
an Average Costing environment.

1.1.1 Item Setup

The item must be internal Order Enabled in order to be processed in the Internal Sale Order flow.

Make sure the Item is assigned to all the Inventory Organizations in which it has to be processed.

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1.1.2 Define Internal Location

Make sure that ‘Internal Site’ is checked.

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It is important to attach the Destination Inventory Organization to the Destination Location. This
Internal location will be provided on the Ship-to information at the site level of the internal customer.
An internal location can be assigned to only one customer.

During the processing of the transaction through the IR-ISO flow, this Internal Location will be
provided on the Internal Requisition by the Destination Operating Unit when raising the IR. During
Order Import in Order Management, Oracle locates the Customer to which this Internal Location is
assigned and establishes the customer into which the ISO will be imported into in the Source
Operating Unit.

Hence, the link between the Internal Requisition & the customer is formed through the Internal
Location that is defined and mentioned on the customer’s ship-to information.

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1.1.3 Define Price List

The Price List has to be Global for the IR-ISO setup in order to receive the shipment at the Transfer
Price in the Destination Organization. (Requirement may depend on business scenario)

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1.1.4 Define Order Type

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1.1.5 Define Customer

Bill To:

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Ship To:

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1.1.6 Define IR Purchasing Options (Optional)

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1.1.7 Define Purchasing Document Type (Internal Requisition)

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1.1.8 Define Shipping Network

Transfer Type: The Transfer type should be ‘Intransit’ in order to automatically generate Inter-
Company invoices.

FOB: The FOB setting determines the Accounting entries to be processed at the time of shipment &
receipt.

- Shipment: The destination organization owns the shipment when the from-organization ships it
(and while the shipment is in transit).
The following Accounting entries will be processed when the FOB is set to Shipment:

Transaction Source Org Destination Organization

Dr. Cost of Goods Sold (COGS) @ Dr. In-transit Inventory @

Internal Order Shipment Current Average Cost Transfer Price
Cr. Inventory Cr. Accrual

Dr. Inventory @ Current

Internal Order Receipt Average Cost
Cr. In-transit Inventory

We can see that the In-transit is debited at Transfer Price (defined in price list) but credited at
Current Average Cost of the Destination Organization. So the In-transit does not get knocked off.
This issue is currently logged in an enhancement request as mentioned in the following Note:
‘Intercompany Issues Internal Order Receipt cost not equal to Internal Order Shipment. (Doc ID
1459686.1)’

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SETUP & SCENARIOS

- Receipt: The shipping organization owns the shipment until the destination organization receives
it. The following Accounting entries will be processed when the FOB is set to Receipt:

Transaction Source Org Destination Organization

Dr. In-transit Inventory @ Current

Internal Order Shipment Average Cost
Cr. Inventory

Dr. Cost of Goods Sold (COGS) @

Dr. Inventory @ Transfer Price
Internal Order Receipt Current Average Cost
Cr. Accrual
Cr. In-transit Inventory

Note: Both the Accounting entries shown above are applicable when the Profile option ‘CST: Transfer
Pricing Option’ is set to ‘Yes, Price As Incoming Cost’. The application of these accounting entries is
shown in the scenario covered under section 2.2.

If the profile option is set to ‘No’, the accounting for the transfer of stock will simply be at Unit Cost as
shown in the scenario covered under section 2.1.

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SETUP & SCENARIOS

The price list mentioned at the shipping network is used to determine the Transfer price of the
shipment. This unit selling price defined in this price list will be the unit value at which the shipment
will be received in the Destination inventory Organization. (only if when the Profile option ‘CST:
Transfer Pricing Option’ is set to ‘Yes, Price As Incoming Cost’)

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1.1.9 Define Inter-Company Transaction Flow

This flow identifies the relationship between the Internal Customer and the Internal Supplier for the
purpose of InterCompany Invoicing.

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1.1.10 Define Profile Options
Profile Option
INV: Intercompany Invoice for
Internal Orders
INV: Intercompany Currency
Conversion
INV: Intercompany Transfer Price
Date
INV: Advanced Pricing for
Intercompany Invoice
CST: Transfer Pricing Option
IR-ISO
SETUP & SCENARIOS
Value Purpose
Yes This profile option is used to
enable creation of Intercompany
Invoices for Internal Orders.
Corporate Indicates the currency
conversion for intercompany
invoices using different
currencies.
Order date This profile option determines
the order date as the sales order
line pricing date for Shipping
flow, and purchase order date
for Procurement flow for Static
Pricing and Advance Pricing.
No If the profile is set to ‘No’ then
the transfer price is picked up
from the price list associated in
‘Bill To’ relationship in Internal
Customer defined in the
Intercompany Relations.
If the profile is set to ‘Yes’ then
the transfer price is ‘Formula’
Based price which is set up in
Advance Pricing.
For scenario in Section 2.1: This profile option is used to
No enable transfer price
functionality for intercompany
For scenario in Section 2.2: accounting. Options are:
Yes, Price As Incoming Cost - No: Transfer price costing is
disabled. This is the default
value.
- Yes, Price Not As Incoming
Cost: The incoming cost to the
receiving organization is the
shipping organization's inventory
cost.
- Yes, Price As Incoming Cost:
The incoming cost to the
receiving organization is based
on the transfer price.
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SETUP & SCENARIOS

2 Scenarios

2.1 Inter-Organization Stock Transfer

The following scenario shows how a Material transfer between two inventory organizations at average
cost will be catered through the IR-ISO Setup. Since the two Inventory Organizations in this scenario
belong to the same legal entity, the transfer of Inventory will be at the unit cost of the item in the
Source Inventory Organization. To achieve this result, the Profile Option ‘CST: Transfer Pricing Option’
is set at No. Depending on the business scenario, this setup may be used as an alternate to the ‘Inter-
Organization Transfer’ Functionality.

Destination Details:
Operating Unit: FTMM-Corrugation Operating Unit
Inventory Organization: PackSol Inventory Organization (FCR)
Internal Location: PackSol Factory

Source Details:
Operating Unit: TCL Lahore Operating Unit
Inventory Organization: TCL Lahore Inventory Organization (TLH)
Customer Name: FTMM – PackSol

2.1.1 Raise Internal Requisition

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SETUP & SCENARIOS

Note: The price will be populated on the Internal requisition AFTER the source inventory Organization
is selected on the form. The Price will be the unit cost of the line Item in the Source Inventory
Organization.

This behavior is acceptable in this scenario of an Intra-Company Stock Transfer. But in the scenario of
an Inter-Company Stock Transfer, the price populated on the IR should be the Selling Price (defined in
the Pricelist) of the Source Operating Unit. Oracle provides a Patch to Achieve this requirement in the
scenario of an Inter-Company Transfer in the following Note:

 Add Custom Hook To Fetch Unit Price Of Item In Internal Requisition Across Operating Units
(Doc ID 749452.1)

Forward the PR for Approval.

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2.1.2 Run ‘Create Internal Orders’ Concurrent Request

Run the ‘Create Internal Orders’ Concurrent Request in the Destination Operating Unit.

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2.1.3 Run ‘Order Import’ Concurrent Request

Run the ‘Order Import’ Concurrent Request in the Source Operating Unit.

Enter the Internal Requisition Number in the Order Reference Parameter.

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View the output of the ‘Order Import Child Req1 (Order Import)’ Concurrent request.

2.1.4 View Imported Internal Sale Order

Query the Imported Internal Sale Order in the Source Operating Unit.

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The Internal Sale Order has been imported into the source operating unit with the Internal Customer
defined in the section 1.1.5.

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The ISO has been imported at the same price as the Internal Requisition, i.e. the unit cost of the Item
in the Source Inventory Organization, regardless of the price defined in the Price List attached to the
customer.

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2.1.5 Release Sale Order

Process the release of the ISO.

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2.1.6 Allocate/Transact Move Order

Navigate to Inventory and Allocate & Transact the ISO through the move order Function.

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Allocate and Transact the Move Order.

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2.1.7 View Internal Order Pick

View the material transactions of the Source Inventory Organization to confirm the ‘Internal Order
Pick’ of the Internal Sale Order has been processed. This step will confirm the transfer of the Stock to
the Staging Sub-Inventory.

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The ‘Internal Order Pick’ has been successfully processed.

2.1.8 Auto-Create Delivery and Ship Confirm

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The Delivery Number is assigned to the ISO.

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2.1.9 Run ‘Interface Trip Stop - SRS’

Run the ‘Interface Trip Stop – SRS’ Transaction from the Source operating Unit. (This step is only
performed if the ‘Defer Interface’ Trip Option was checked at the time of Ship Confirmation.)

Enter the Delivery number assigned to the ISO in the Delivery parameter.

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2.1.10 View Internal Order Shipment

Navigate to Inventory to view the material transactions of the Source Inventory Organization to
confirm the ‘Internal Order Shipment’ of the Internal Sale Order has been processed and also confirm
the issue of Stock from the Source Inventory Organization.

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The shipment against the Internal Order has been successfully processed.

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2.1.11 View Costing and Accounting of the Shipment

The Item is transferred at its average Unit cost in Inventory. The following Accounting Entry is
processed.

Accounting Entry
Account Dr Cr
Material In-Transit Account 5,000
Inventory Valuation Account 5,000

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2.1.12 Receipt at the Destination

Navigate to the Destination Inventory Organization and enter the receipt against the Internal
Requisition.

The Shipment number is the same as the Delivery number assigned to the Internal Sale Order.

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Navigate to the Receiving Transaction form to process the Delivery of the shipment into Inventory.

View the Receiving Transaction Summary of the Receipt.

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2.1.13 View Costing and Accounting of the Receipt

Navigate to the Material Transactions of the Destination Inventory Organization and query the
Transaction.

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The Item is received at the average Unit cost that it was transferred in, from the Source Inventory
Organization. The following Accounting Entries are processed.

Accounting Entry (Source Org CCID)

Account Dr Cr
In-Org Receivable Account 5,000
Material In-Transit Account 5,000

Accounting Entry (Destination Org CCID)

Account Dr Cr
Inventory Valuation Account 5,000
In-Org Payable Account 5,000

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2.2 Inter-Company Sale / Purchase

In the Scenario of Stock Transfer as a result of Intercompany Sale & Purchase, the data entry flow of
the transfer of Stock between the two Inventory Organizations of the Destination (Buying) Operating
Unit & Source (Selling) Operating Unit and will be the same as mentioned in section 2.1.1 to section
2.1.13. Since the two Inventory Organizations in this scenario belong to the different legal entities, the
transfer of Inventory will be at the Selling (transfer) price of the item defined in the Global Price List.
To achieve this result, the Profile Option ‘CST: Transfer Pricing Option’ is set at ‘Yes, Price as incoming
Cost’.

The following details apply in the scenario of Inter-Company Sale/Purchase that involves stock
transfer:

Destination (Buying) Details:

Operating Unit: FTMM-Corrugation Operating Unit
Inventory Organization: PackSol Inventory Organization (FCR)
Internal Location: PackSol Factory
Supplier: TCL – Lahore
Internal Requisition Number: 119

Source (Selling) Details:

Operating Unit: TCL Lahore Operating Unit
Inventory Organization: TCL Lahore Inventory Organization (TLH)
Customer Name: FTMM – PackSol
Sale Order Number: 2015030293
Delivery No.: 38016

Item Name Unit Cost (TLH) Unit Selling Price (Price List) Unit Cost (FCR)
SHEAFFER PEN 400 600 550

2.2.1 Imported Internal Sale Order

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The ISO has been imported at the unit cost of the Item in the Source Organization. Regardless of the
unit cost of the item in the source organization, the Transfer of material will be processed at the price
defined in the Price List defined in the setup. This functionality is controlled by the Profile Option ‘CST:
Transfer Pricing Option’.

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2.2.2 View Shipment Costing & Accounting

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Accounting Entry (Source Org CCID)

Account Dr Cr
Material In-Transit Account 8,000
Inventory Valuation Account 8,000

Inventory is issued from the Source Inventory Organization at the unit cost of the Item in the source
Inventory Organization.

Note: As marked above, the accounts CCID charged in the Accounting Entry above belong to the
Ledger of the Source Operating Unit.

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2.2.3 View Receipt Costing & Accounting

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Accounting Entry (Destination Org CCID)

Account Dr Cr
Inventory Valuation Account 12,000
Inventory AP Accrual Account 12,000

The amount Debited to the Inventory Valuation Account was calculated from the Selling (transfer)
price per unit defined in the Price List setup and defined in the Internal Sale Order and Shipping
Network.

Note: The accounts CCID charged in the Accounting Entry above belong to the Ledger of the
Destination Operating Unit.

Accounting Entry (Source Org CCID)

Account Dr Cr
Cost of Goods Sold Account 8,000
Material In-Transit Account 8,000

The amount Debited to the Cost of Goods Sold Account was calculated from the Unit Cost of the Item
in the Source Organization.

Note: The accounts CCID charged in the Accounting Entry above belong to the Ledger of the Source
Operating Unit.

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2.2.4 Run ‘Create Intercompany AR Invoices’ Request

The Sale Order will not be available in the Auto Invoice Master program for invoicing until this
concurrent request is run.

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2.2.5 Run ‘Autoinvoice Master’ Program

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2.2.6 View Imported AR Invoice

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The Unit price on the Imported Invoice is from the Intercompany Price List attached to the customer.

Accounting Entry (Selling Org CCID)

Account Dr Cr
Inter-Company Receivable 14,064
Sales Tax 2,064
Sales Revenue Account 12,000

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2.2.7 Run ‘Create Intercompany AP Invoice’ Request

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2.2.8 Run ‘Payables Open Interface Import’ Request

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2.2.9 View Imported AP Invoice

The AP invoice number is the concatenation of the Receivables ‘Invoice Number’ and the Operating
Unit’s ‘Organization ID’ of the AR Invoice.

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Accounting Entry (Buying Org CCID)

Account Dr Cr
Inventory AP Accrual Account 12,000
Sales Tax 2,064
Inter-Company Payable 14,064

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