03 August 2007

Basic Concepts in Oracle Inventory - Part1

Manufacturing Concepts (1)

As we are dealing with inventory and purchasing we will go through the basic manufacturing concepts.

Any manufacturing unit will have a basic flow of materials. That will include right from the raw material processing to finished goods.

Flow of any manufacturing company:

  1. Raw material flow into manufacturing company.

  1. Raw material gets processed according to requirement.

  1. Finally finished goods are distributed to end consumers through physical distribution system.

For this different companies use different manufacturing strategies, according to their business need and their requirement and they are,

Manufacuturing Strategies

Make- to- stock

In this delivery time is equal to shipment time, generally you will maintain


Make- to- order

In make- to- order delivery time is manufacturing + assembly time +

shipment time.

Assemble- to- order

In this strategy assembly time and shipment time contributes to delivery


Engineer- to- order-

In this special category order processing starts from design, manufacturing, assembly and shipment.

Materials Management

Any strategy company implements, there comes material management, for following benefits

1) For planning and controlling materials flow

2) Maximize use of firm’s resources

3) Provide required level of customer service

For this material management we will control these activities


Production Planning:

The company will plan production according requirement and according to that

the status of inventory is checked.

Implementation of planning & control:

Production planning should be implemented and control through proper

resources, mainly involved purchasing.

Inventory management:

As per planning inventory should be managed, that vary from raw material to

finished goods.


Different modules which are interrelated with Inventory & Purchasing.

    • MPC – Manufacturing Planning & Control

    • MPS – Master Production Schedule

    • MRP – Materials Required Planning

    • BOM – Bill Of Material

Relation with major modules

Production planning is done by keeping long term view, while on that basis master production schedule is created. MRP will take feedback BOM, Engg. & other modules.

Purchasing will work according to MRP for which status will provide by Inventory. So now we can visualize the position of purchasing & inventory in whole manufacturing organization.

Other Manufacturing modules which are inter-related are,

  • Oracle BOM ( bill of material)

  • Oracle Engineering

  • Oracle Product Configurator

  • Oracle MRP

  • WIP( Work In Process)

  • Cost management

  • Oracle quality


In Inventory all major functions are related with items, all functionality is provided by keeping item as center. Now we will discuss various aspects of inventory and flow of Inventory

Inventory consists of, mainly

  1. Raw material

  1. Work In Process Inventory

  1. Finished Goods

Functions of inventory

  1. Maintaining stock

  1. Planning

  1. Forecasting

  1. Physical control of inventory

  1. Receipt

  1. Issues

We will discuss these functions as regards with oracle applications.

Inventory Flexfields

The flexfields which are used in inventory are:

  • Account aliases

  • Item catalogs

  • Item categories

  • Sales orders

  • Stock locators

  • System items

Depending on your setup inventory can use other modules flexfields like Accounting (General Ledger) & Sales tax location & territory from Accounts Receivables

Account Aliases


An account alias is an easily recognized name or label representing a general ledger account number. You can view, report, and reserve against an account alias. During a transaction, you can use the account alias instead of an account number to refer to the account.

Item catalogs



If you make entries for your items in a standard industry catalog or want to group your items according to certain descriptive elements, you need to configure your Item Catalog Group Flexfield.

Even if you do not use item cataloging, you must enable at least one segment and compile this flexfields before you can define items.

These flexfields supports only one structure and dynamic inserts is not allowed.

Item categories


Unique ID Column: CATEGORY_ID

You must define & configure your item categories flexfields before you can start defining items since all items must be assigned to categories. You can define multiple structures fro different category groups. So that you can associate these structures with categories & category sets.

Sales order


Unique ID Column: SALES_ORDER_ID

Through this flexfield inventory will identify sales order transactions of OM with inventory.

This sales order flexfield should be defined as order number, order type and order source so that each transaction will be unique in inventory.

Stock locators



If you keep track of specific locators such as aisle, row, bin indicators for your items, you need to configure your Stock Locators Flexfield and implement locator control in your organization.

You can use stock locators field to capture more information about stock locators in inventory. If you do not have oracle inventory installed any none of items have locator control then it is not necessary to define this flexfield.

And this flexfield supports only one structure.

System items (item flexfield)


And unique id column is INVENTORY_ITEM_ID

You can use item flexfield for recording and reporting your item information, and you must define and configure your item flexfield before you can start defining items.

You must plan how Oracle Inventory represents your company’s inventory sites and business units. This includes defining organizations, locations, subinventories, and locators depending on your company structure.

Inventory is consisting of inventory – subinventory - locators as per your organization setup.

ITEM is defined in inventory that is generally first in master organization, so that later it can be assign to multiple organizations. Also item definition can be uploaded by item upload open interface.

Related Articles to Read

Post a Comment


© 2008 About Oracle Apps - A Complete Guide to Oracle Applications Professionals. | Contact|About us.

All articles are copyrighted to About Oracle Apps.