Oracle Inventory Fundamentals and Setup

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Why do we need Oracle Inventory?

Oracle Inventory meets the following business needs of an organization:

Building the enterprise structure

Creating item numbers

Monitoring inventory on an ongoing basis

Maintaining accurate on-hand balances

Planning material replenishments

Forecating demand

Building the Enterprise Structure

Before you use Oracle Inventory, you need to setup one or more organizations. Organizations represent distinct entities in your company and can include separate manufacturing facilities, warehouses, distribution centers, and branch offices.

How the blocks come together in 11i

In Release 11i, an organization structure would essentially consist of the following building blocks:

Set of Books

This entity is defined in Oracle General Ledger. The Set of Books is defined by the three Cs – Currency, Calendar and Chart of Accounts.

Legal Entity

This is defined as an organization of type GRE/Legal Entity using the Inventory Responsibility. This is a legal company for which you prepare fiscal or tax reports.

The Legal Entity has to be assigned a pre-defined Location. It must then be associated to an existing Set of Books. So the Set of Books has to be defined before a Legal Entity.

Operating Unit

This is defined as an organization of type Operating Unit using the Inventory Responsibility. The Operating Unit is an organization that uses Oracle, Cash Management, Order Management and Shipping Execution, Oracle Payables, Oracle Purchasing and Oracle Receivables.

The operating unit may be a sales office, a division or a department. The Operating Unit has to be assigned to a Legal Entity and a Set of Books.

Inventory Organization

This is defined as an organization of type Inventory Organization using the Inventory Responsibility. An inventory organization can be a physical entity like a warehouse where inventory is stored and transacted or it can be an organization that manufactures and distributes products or both. An inventory organization can also be a logical entity like an item master organization which only holds items with no transactions.

The Inventory Organization has a costing method, a workday calendar, and a list of items. It stores information from Oracle Inventory, Bills of Material, Work in Process, Supply Chain Planning and Purchasing receiving functions.

The Inventory Organization has to be assigned to an Operating Unit, a Legal Entity and a Set of Books. The inventory organization would have subinventories and locations defined underneath it.

Surprises in Release 12

There is no Set of Books!

Instead there are Ledgers and Ledger Sets. Discussions on these are beyond the scope of Inventory. However, an understanding of how Ledgers relate to Legal Entities and Operating Units would definitely help. Because, as an upcoming Inventory module expert you would want to know how the building blocks in the organization structure come together! So, let’s look it up in...