Oracle Discrete Manufacturing Training Material

Oracle Discrete Manufacturing
Training Material
By: Muhammad Bilal Junaid
For Queries, please contact:
mbilaljunaid@gmail.com
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Table of Contents
1
OVERVIEW ...................................................................................... 4
1.1
1.2
1.3
1.4
1.5
1.6
1.7
2
INTRODUCTION ................................................................................... 4
BENEFITS OF ORACLE MANUFACTURING IMPLEMENTATION ........................... 5
OVERVIEW DIAGRAM ........................................................................... 6
ROUTING AND JOB OPERATIONS ............................................................. 7
PRODUCTION JOBS .............................................................................. 7
MATERIAL TRANSFER TO SHOP FLOOR AND MATERIAL CONSUMPTION ............ 7
JOB COSTING AND ACCOUNTING ............................................................. 7
MASTER DATA - SETUP .................................................................. 10
2.1
2.2
2.3
2.4
2.5
2.6
2.7
3
ITEM MASTER .................................................................................. 10

BILL OF MATERIAL (BOM) .................................................................. 16
DEPARTMENTS ................................................................................. 20
STANDARD OPERATIONS ..................................................................... 21
RESOURCES...................................................................................... 22
ROUTING ........................................................................................ 24
WORK IN PROCESS ACCOUNTING CLASS ................................................. 29
PRODUCTION JOB.......................................................................... 30
3.1
3.2
3.3
3.4
3.5
4
PRODUCTION JOBS DEFINING A NEW JOB ............................................. 31

MATERIAL ISSUE MOVE ORDER ......................................................... 33
JOB OPERATIONS MOVE TRANSACTION ............................................... 33
COMPLETION TRANSACTION ................................................................ 35
CLOSE JOB ....................................................................................... 36
COSTING........................................................................................ 37
4.1
4.2
4.3
4.3.1
4.3.2
4.3.3
4.3.4
4.3.5
COSTING METHOD ............................................................................ 37

COST INFORMATION & ACCUMULATION ................................................. 37
JOURNAL ENTRIES ............................................................................. 38
MATERIAL ISSUANCE/RETURN ON PRODUCTION JOB .................................. 38
CONVERSION COST ............................................................................ 39
COMPLETION TRANSACTION ................................................................ 39
RETURN OF COMPLETION TRANSACTIONS: .............................................. 39
JOB CLOSE TRANSACTION .................................................................... 39
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OUTSIDE PROCESSING - SETUP CHECKLIST AND PROCESS .............. 46
5.1
5.2
5.3
5.4
6
INTRODUCTION ................................................................................. 46
SETUP STEPS .................................................................................... 47
PROCESS ......................................................................................... 50
ACCOUNTING ENTRIES ........................................................................ 54
ORACLE WORK IN PROCESS BACKFLUSH PROCESSING ................ 57
6.1
6.2
6.3
6.3.1
6.3.2
6.3.3
6.3.4
6.3.5
6.4
6.4.1
6.4.2
6.5
6.6
6.6.1
6.6.2
6.6.3
6.6.4
6.6.5
6.6.6
OVERVIEW .......................................................................................
57
WHAT IS BACKFLUSHING? .................................................................... 57
WHEN DO BACKFLUSH TRANSACTIONS OCCUR? ......................................... 57
PROCESS 1 : COMPLETE ASSEMBLIES AT OPERATION - MOVE TXN FORM .......... 59
PROCESS 2 : MOVE & COMPLETE ASSEMBLIES INTO INV ............................... 61
PROCESS 3 : COMPLETING ASSEMBLIES - COMPLETION TXN FORM ................. 63
PROCESS 4 : RECEIVE ASSEMBLIES FROM OSP OPERATION : PURCHASING .......... 64
PROCESS 5 : WORK ORDER-LESS COMPLETIONS WINDOW............................. 66
BACKFLUSHING PROCESSING ................................................................. 67
OPERATION PULL BACKFLUSH TRANSACTIONS ........................................... 67
ASSEMBLY PULL BACKFLUSH TRANSACTIONS : ............................................ 68
BACKFLUSH TRANSACTION RULES ........................................................... 68
GENERAL POINTS FOR ALL BACKFLUSH TRANSACTIONS : ............................... 69
LOT AND SERIAL NUMBER BACKFLUSHING : ............................................... 69
COUNT POINT AND AUTOCHARGE OPERATIONS : ........................................ 70
NEGATIVE REQUIREMENT BACKFLUSHING : .............................................. 70
REPETITIVE PRODUCTION LINE BACKFLUSHING : ......................................... 70
CHARGING OF RESOURCES .................................................................... 70
HOW DO YOU VIEW BACKFLUSH TRANSACTIONS? ....................................... 71
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1 OVERVIEW
1.1
Introduction
Oracle Discrete Manufacturing is a complete production management system. It creates

jobs in discrete batches using standard Bill of Materials and Routing operations at
Inventory Organization level.
The ODM comprises of number of modules;
Oracle Inventory
Oracle Bills of Material
Oracle Work in Process
Oracle Quality
Oracle Cost Management
Oracle Purchasing
Sr. # Module
1
Inventory
Bill of Materials
Work in Process
Quality
Management
Cost
Management
Purchasing
Description
All the inventory transactions are processed in this module. New items are
defined, shop-floors are assigned and Items are BOM-enabled so that
BOMs can be created
Recipes of Finished Goods and outsourcing items will be maintained and
managed in this module in which all the raw materials along with their
standard consumption will be defined against each finished item.
Departments, operations, resources and routing data will also be
maintained in this module.
Production job creation, its shop floor movement and completion will be
managed in work in process module. Work in process module will be used
to create production jobs and to process and maintain production floor
transactions including material issuance to production floor, movement of
material from one operation to another.
Quality data including sample data, inspection results and test results will
be maintained in this module. Oracle Quality is integrated with both Oracle
Purchasing and Oracle work in process to record inspection results of both
raw materials, work in process items and finished items.
Oracle Cost Management will automatically calculate and keep details of
cost of all jobs and inventory items including raw materials, work in
process items and Finished items.
Oracle Purchasing is used to generate Requisitions for Outside Processing
Items and assigning such costs to the respective jobs.
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1.2
Benefits of Oracle Manufacturing Implementation
1. Oracle manufacturing is fully integrated with Inventory, Purchasing, Quality, Cost

management and Order management
2. Oracle Manufacturing provides the functionality to link the Job with Sales Order.
3. Sales order wise procurement through auto create purchase requisition
functionality in the system.
4. Online stock availability of Finished Goods against sales Order
5. Locator transfer functionality will enable the Garments unit to transfer the
procured materials of one sales order to other sales order.
6. System generated material requisition for transfer of materials to Production
Floor.
7. Job Hold functionality will enable the production planner to put all production
floor transactional activities on Hold.
8. Oracle Cost Management provides Real time costing of all Finished, Semifinished and Purchased items.
9. Oracle Manufacturing provides Job wise costing and provides job cost as cost
elements such as Material Cost, Material overhead cost, Overhead cost,
Resource cost and Outside service processing cost
10. Oracle automatically generates accounting entries of all manufacturing
transactions will be performed automatically upon recording of related
manufacturing transactions. Availability of Raw Material, WIP and Finished
Goods valuation in general Ledger Accounts.
11. Oracle Manufacturing will provides on line detail of production quantity from
each production operation. Any rejection or gain in each operation will be
recorded in the system thus giving an online view of production efficiency
12. Oracle Manufacturing will provide on line detail of Input components for each
job along with Consumed quantity, Remaining quantity and On Hand Available
quantity
13. Automatic absorption of overhead costs to Job upon Move Transactions
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1.3
Overview Diagram
Enter Sales
Order
Maintain Item
Master Data
3
Marketing
Department
Maintain BOM
Application
Administrator
BOM
Item Master
PPC
Department
6
Create Job For
Finished Item
MMC and
Commercial
Department
Routing
Materials
Procurement
7
4
Maintain
Routing
Inventory Data
Issue Materials
to Job
Job Data
Marketing
Department
10
8
Enter Process
Confirmation
Automatic
Costing and
Accounting
Production
Personnel
4
Maintain
Resource
Quality
Personnel
Collection Plan Data
9
I.E and
Costing
Department
Finished
Store
Personnel
Enter
Completion
Data
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1.4
Routing and Job Operations
Routing and Job Operations represents the step by step operations that are performed to
manufacture a product. Each routing and job operations can have a number of standard
operations.
Routing form is used to record item wise master data. Once a routing for an item is defined,
system will automatically use this routing in multiple production jobs.
Job Operation form is used to assign standard operations to production job. Assembly items
can be moved in the sequence defined in Job Operations.
1.5
Production Jobs
Oracle Discrete Manufacturing will keep track of each production job created in system.
Materials can only be issued against the production job and resources will be charged to against
production job.
1.6
Material Transfer to Shop Floor and Material Consumption
For material replenishment, manual requisitions are raised by authorized person at the
production floor to respective warehouse. The authorized user in warehouse will use subinventory transfer functionality to transfer materials to production department.
1.7
Job Costing and Accounting
Oracle Work in process and Oracle Cost Management provides a complete costing system to
track and report production costs for all the manufactured items. All inventory items will be cost
on the basis of perpetual average costing system. The system will automatically perform costing
and generate accounting journal entries in the system. Following are the types of transactions
which will affect the value of the manufactured items:
Component Issue and Return Transaction

Resource Charges
Assembly Completion Transaction
Job Close Transaction
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1.8
Variances
Usage and Efficiency Variances

Work in Process reports usage and efficiency variances as you incur them, but do not update the
appropriate variance accounts until you close a job or period. Work in Process updates the
standard cost adjustment variance account at cost update.
Usage and efficiency variances are primarily quantity variances. They identify the difference
between the amount of material, resources, outside processing, and overheads required at
standard, and the actual amounts you use to manufacture an assembly. Efficiency variance can
also include rate variance as well as quantity variance if you charge resources or outside
processing at actual.
Usage and efficiency variances result when the total costs charged to a job or schedule do not
equal the total costs relieved from a job or schedule at standard.
You can view these variances in the Discrete Job Value report, the Repetitive Value report, and
by using the WIP Value Summary window.
Costs Incurred is the cost charged to WIP @ Actual Cost. Charges occur from issues and returns,
resource and overhead charges, and outside processing receipts.
Costs Relieved is the cost relieved from WIP @ Standard Cost, if FINAL Completion is not ticked.
If it is ticked, then Costs Relieved will show the Actual Cost incurred, therefore no variance. Cost
relief occurs from assembly completions, scrap transactions, and close transactions.
Material Issued after WIP Completion is what comes in Costs Incurred and hence variance is
calculated for the differential amount. However, if FINAL Completion is ticked then No Variance
will be calculated as the system will calculate Costs Relieved on the basis of Actual
Consumption.
Material issued before Completion doesnt go to Costs Relieved. If FINAL Completion is selected,
extra Material/Resource is not calculated as Variance.
You can calculate and report usage and efficiency variances based on planned start quantity or
the actual quantity completed.
You can use the planned start quantity to check potential variances during the job or repetitive
schedule.
You can use the actual quantity completed to check the variances before the job or period
close. Your choice of planned start quantity or actual quantity completed determines the
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standard requirements. These standard requirements are compared to the actual material
issues, resource, outside processing, and overhead charges to determine the reported variance.
Work in Process calculates, reports, and recognizes the following quantity variances:
Material Usage Variance
The material usage variance is the difference between the actual material issued and the
standard material required to build a given assembly, calculated as follows:
This variance occurs when you over or under issue components or use an alternate bill.
Resource and Outside Processing Efficiency Variance
The resource and outside processing efficiency variances is the difference between the
resources and outside processing charges incurred and the standard resource and outside
processing charges required to build a given assembly, calculated as follows:
This variance occurs when you use an alternate routing, add new operations to a standard
routing during production, assign costed resources to No - direct charge operations skipped by
shop-floor moves, overcharge or undercharge a resource, or charge a resource at actual.
Move Based Overhead Efficiency Variance
Move based overhead efficiency variance is the difference between overhead charges incurred
for move based overheads (overhead basis of Item or Lot) and standard move based overheads
required to build a given assembly, calculated as follows:
This variance occurs when you use an alternate routing, add operations to a standard routing
during production, or do not complete all the move transactions associated with the assembly
quantity being built.
Resource Based Overhead Efficiency Variance
Resource based overhead efficiency variance is the difference between overhead charges
incurred for resource based overheads (overhead basis of Resource units or Resource value) and
standard resource based overheads required to build a given assembly, calculated as follows:
This variance occurs when you use an alternate routing, add new operations to a standard
routing during production, assign costed resources to No - direct charge operations skipped by
shop floor moves, overcharge or undercharge a resource, or charge a resource at actual.
Standard Cost Adjustment Variance
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Standard cost adjustment variance is the difference between costs at the previous standards
and costs at the new standards created by cost update transactions.
2 MASTER DATA - SETUP

2.1
Item Master
Manufacturing-related Key Item Attributes;

Primary Unit of Measure: The user will select the primary Unit of Measure of the item for
example in case of semi-finished and Finished Garments, unit of measure will be Pieces.
Note: Discrete Manufacturing does not support Dual Unit of Measures
User Item Type: The user will enter the product type e.g. Finished Goods.
Navigation: Inventory> Items > Master Items
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Inventory Item: The user will turn this option on to enable the product attributes like Stockable, BOM Allowed, Transact-able and Build in WIP.
Stock able: The user will turn this option on to stock the product in inventory. This will be
enabled for all finished items.
Lot Control: The user will turn this option on to track inventory balances by lot number. Semifinished and Finished Garments, finished garment and raw materials items will be lot
controlled.
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BOM Allowed: The user will turn this option on so that the system allows creating a BOM for
the product. All finished items will be BOM enabled.
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Costing Enabled: The user will turn this option on to report, value and account for product
costs. All finished items and raw material items will be costing enabled. This option will be
turned off for client supplied materials.
Cost of Goods Sold Account: The user will enter a general ledger account to use as a source for
the Cost of Goods Sold Account. The system will automatically debit this account when the
finished goods will be dispatched.
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Purchased: The user will turn this option on to purchase and receive a product. This option will
be disabled for all semi-finished and Finished Garments item.
Outsourced Processing Item: The user will turn this option on to add the product to an
outsourced processing Purchase Order line. This option will be enabled for all items that can be
outsourced
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Build in WIP: This characteristic allows the user to create discrete jobs for the item. This option
will be enabled for all finished and semi finished items.
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2.2
Bill of Material (BOM)
Bill of Material is the recipe to produce one unit of product

Item: Item code of assemblies will be entered in this field for which Bill of Materials will be
created.
Unit of Measure of item: The Unit of Measure of the item will default from Item Master.
Item Sequence: Item sequence indicates the sequence of the inputs on the BOM. It will only be
used to sort components on reports.
Operation Sequence: Operation Sequence indicates the routing operation in which the item will
be used. The user will select the operation defaulting from item routing.
Component: The item code of the inputs used in the production of respective product will be
entered by the user.
Unit of Measure of component: Primary Unit of Measure of the component (inputs) will default
from the item master of the component.
Usage per Unit: The average quantity of input to be used in the production of product will be
entered in this field.
Size Detail: User will enter the detail of size wise consumption of accessories. User will be
provided a list of values of all sizes and will tick all the sizes for which the input component will
be used.
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Navigation: Bills of Materials> Bills> Bills
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Effective Date: Enter the effective from and to date from which the component is effective for
the BOM.
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Supply Type: Supply type controls how component are supplied to discrete job and how
materials are cost in cost management.
Supply Sub inventory: Supply sub-inventory will default from item master and is updatable. This
sub inventory will be replenished from store or shop floor manually to fulfill Job material
requirements. On operation completion, material will be consumed in work in process from this
sub inventory manually.
Supply Locator: Supply Locator will also default from Item master and is updatable. This locator
will be replenished from store or shop floor manually to fulfill Job material requirements. On
operation completion, material will be consumed in work in process from this default locator
manually.
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2.3
Departments
Navigation: Bills of Materials> Routings> Departments
A department is an area within an organization that consists of one or more people or machines
that can be used for collecting and analyzing various production data and accumulating cost at
department level and dividing it over discrete jobs. Departments can further be broken down
into operations if production data and costing data are required. Each department can have
various operations.
Multiple resources can be assigned to departments and operations within the department.
Following information will be maintained in the system in respect of departments:
Department name;
Department Description
Department Class
Location for the department
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2.4
Standard Operations
Standard Operations may be assigned to Departments in Routing or using Job Operation form.
These standard operations represent various stages of Production process which shall follow in
the sequence defined to get the desired outcome. Resources can be assigned to each standard
operation. Standard Operations are used for Component usage and resource charging on to job
at various production processes.
At the time of defining Operations in routing, Count Point and Auto Charge options decide how
materials and Resources will be charged to job which is explained below;
Navigation: Bills of Materials> Routings> Routings
Count Point Option

Count Point option determines whether moving product quantity in to the operation in the
Routing is mandatory or optional.
Auto Charge Option
Auto Charge option is enabled for operations for which resources are required to be charged
whether product quantity is moved to these operations or not.
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2.5
Resources
Resources are defined as anything of value, except material and cash, required to manufacture
products. Resources include people, tools, machines and labor purchased from a supplier.
Resources are assigned to department operations to allocate resource cost to a product.
The Resource Master Data will include the following:
Resource Name: A unique Resource name will be used to identify Resources.
Resource Description: A unique Resource description will be used to identify Resources
description.
Charge Type: A charge type will be selected and assigned to each Resource which will determine
whether the Resource cost will be charged to Work in Process automatically or manually.
Absorption account: This account will be credited at the time of work in process completion at
the relevant operation/department.
Navigation: Bills of Material> Routings>Resources
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Resource Unit Cost:

Standard resource costs will be defined by costing department.
Navigation: Bills of Material> Routings>Resources>Rates
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2.6
Routing
A routing represents the stepbystep operations that are performed to manufacture a product.
Each routing can have any number of operations. Resources will be assigned to each standard
operation.
Following information will be maintained for each Routing;
Item: The user will select the item code for which the routing is to be defined.
Operations: In this tab the user will select the relevant operation of the routing
Operation sequence: This represents the sequence in which the operations will be performed.
Operation code: The user will select the code of the operation to be performed.
Navigation: Bills of Material> Routings> Routings
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Effective date range: The user will enter the date range for which the operation is effective.
Navigation: Bills of Material> Routings> Routings
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Resource: The resource used in the operation. These can be machines, piece rate labor,
permanent labor, Overheads used in specific routing operation.
Usage: The resource time or frequency consumed by one unit of the garment for its
production.
Navigation: Bills of Material> Routings> Routings> ECO>Operation Resources
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Back flush enabled: Back flush automatically charge components in the supply sub inventory to
work in process at either operation or product completion.
Navigation: Bills of Material> Routings> Routings>
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Completion Sub-inventory: The user will enter the sub-inventory code for the assembly/subassembly in which the production will be received.
Navigation: Bills of Material> Routings> Routings> Routing Details
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2.7
Work in Process Accounting Class
Navigation: Work in Process> Setup>WIP Accounting Classes
Work in Process Accounting class is used to group job costs for the purpose of Inventory
valuation and Variance accounting for Products at Shop Floor.
Valuation and Variance accounts for the following cost elements will be defined for the
Accounting Class:
Material
Material Overhead
Resource
Resource Overhead
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3 PRODUCTION JOB
Forms used
Purpose of form
Discrete Jobs
WIP Material Issue
Move Transaction
Completion
Transaction
Defining a New Job

WIP Material Issue form can be used to record
consumption of Raw Materials or Components.
To record a job operation wise
Completion Transaction is used to inventorize Finished
Good/Assembly.
Following transactions can only be performed if Job is released
Issuance of material to job:

Performing move transactions from one operation to another:
Charging resource to jobs;
Performing job completion transaction
After releasing the Job, authorized person in PPC department will have the option to put
it on Hold if production activities are stopped for some period against the job. Putting
the job in Hold status will ensure that the system will neither allow the user to record
production nor consumption against a discrete job.
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3.1
Production Jobs Defining a New Job
In Oracle, Standard Production Jobs will be created known as Discrete job.

Navigation: Work in Process> Discrete> Discrete Jobs
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Sales Order Number/Sales Order Line will represent currently used work order
number. Sales Order Number/Sales Order Line will be made part of discrete job name.
Production Jobs will be used to tracked shop floor movement, consumption of raw
materials and manage semi-finished and finished inventory. Oracle Discrete
Manufacturing will automatically be performing Job Order Costing against each
production job.
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3.2
3.3
Material Issue Move Order

Manual requisition
Component Pick/Release
Job Operations Move Transaction
Job Operations represents the step by step operation that needs to be performed on
the production job; already created. Resources will be assigned to each operation
assigned to production job.
Navigation: Work in Process> Discrete> Discrete Jobs
Within an operation, system provides following intra operation steps.

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Intra operation Steps

for each Standard
Operation
Queue
Run
To Move
Purpose
Represents that standard operation has not given
any production although production of previous
standard operation has been transferred to it.
Represents that materials are loaded onto machine
but standard operation wise output has not been
given.
Represents completion of production of an
operation.
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3.4
Completion Transaction
A Completion Transaction is performed to inventorize the Finished Good or the Item

being produced. Relevant information relating to item, i.e. sub-inventory, lot number,
quantity being completed is entered.
Navigation: Work in Process> Material Transactions> Completion Transactions
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3.5
Close Job
Closing a Complete job ensures that no material or resource can further be charged
to the job. Discrete Jobs can be closed individually or based on various parameters i.e.
Assembly item, Job start and end dates, job status etc. After job close, Discrete Job
Value report can be generated from the system to check cost element wise valuation of
closed jobs. A job can be re-opened after it has been closed.
Navigation: Work in Process> Discrete> Close Discrete Jobs> Close Discrete Jobs (Form)
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4 COSTING
4.1
Costing Method
Perpetual weighted average cost method of inventory valuation is usually used to value
all inventory items in the system. Under this method, system recalculates the average
cost of the inventory item at each purchase order receipt. The issue of inventory item to
production is recorded at the average price applicable at the time of issue.
The system will automatically generate accounting journal entries in the system.
Following are the types of transactions which will affect the value of the manufactured
items:
Resource Transaction
Assembly Completion Transaction
4.2
Cost Information & Accumulation
Work in Process continually maintains the value of work in process at each Shop Floor, updating
it with each transaction. Cost is accumulated as the WIP Production Job moves through
production operations and is continually accumulated till the completion of the job.
Order cost analysis: Material is charged to the WIP Production Job at the time of issuance and
resources (production overheads) are charged at the time the production operation is
completed, i.e. at the time the move-transaction is recorded in the system. Total cost
accumulated till the completion of the job is allocated evenly to all the units produced in that
job.
Resources (production/manufacturing overheads) will be defined in the system and will be
associated to each production operation at a standard rate of per unit of output, e.g. per Piece
of garment produced
Cost variance analysis: Cost variance analysis can only be prepared for those jobs which have a
defined Bill of Material (BOM). BOM contains the standard recipe of inputs/materials required
for a production job / finished product. The actual materials issued against the job are recorded
in the system and cost comparisons are made between that standard recipe and actual material
consumed.
As the resources will be applied at a standard rate to each production process, the same will be
accumulated in a separate account titled resource overhead absorption account. The actual
cost incurred in respect of these resources will be accumulated in various general ledger
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accounts under respective head of accounts. This actual cost data will be used for comparison
with the applied overhead cost to generate overhead variance analysis, e.g. under/over applied
resources etc.
4.3
Journal Entries
The system will automatically generate accounting journal entries in the system. Following are
the types of transactions which will affect the value of the manufactured items:
Resource Transaction.
Product Completion Transaction
Each type of manufacturing transactions, their accounting journal entry and the rate / basis at
which the system will value that transaction under the Perpetual Average Costing Method has
been explained as follows:
4.3.1 Material issuance/return on Production Job

The components/inputs consumed in a production job will be charged to the Production job in
the system using the Component Issue window. The system will default the quantity of each
component chargeable to job based on the input quantity of the component mentioned in the
BOM and the quantity of production job of the finished/semi-finished item. However, the user
will have the option of issuing a component to a production job in the system even if it is not
part of the standard BOM.
As the authorized user in the Production Department will enter production for a job, system
will automatically generate the following journal entry. The cost of the transaction will be the
average cost of the component/input at the time of transaction:
Account Description
Dr.
Cr.
WIP Material Account
Xxx
Inventory Valuation Account
xxx
If, in case, these components are returned from jobs on shop floor, following accounting entry
will be generated in the system:
Account Description
WIP Material Account
Dr.
Xxx
Cr.
xxx
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4.3.2 Conversion Cost

Standard rates for resources will be maintained in the system (for details of different basis used
for resources, refer to resources section).
As the user processes the operation completion in the system through move transaction
functionality, the system will automatically generate the following accounting journal entry:
Account Description
WIP Resource Valuation Account
Resource Absorption Account
Dr.
xxx
Cr.
xxx
In case of reversal of move transactions, following Conversion cost Accounting entries will be
generated:
Account Description
Resource Absorption Account
Dr.
Xxx
Cr.
xxx
4.3.3 Completion Transaction

In order to record the production of finished and semi finished items, completion transaction
will be processed in the system. The system will automatically generate the following
accounting entry for completion of production job:
Account Description
Dr.
Cr.
Xxx
WIP Material Valuation Account
xxx
xxx
4.3.4 Return of Completion Transactions:

Account Description
Dr.
Xxx
Xxx
Cr.
Xxx
4.3.5 Job Close Transaction

Once the job is complete, it is advisable to change the status of the job to close. Until the job is
closed, the user has the option of charging material, resources and overheads to the job.
As the job is closed, the close process writes off the balances remaining in the WIP elemental
account to the variance account, leaving a zero balance in the closed job. If there is a positive
balance in the job at the time of close, the system will automatically generate the following
accounting entry:
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Account Description
WIP Variance Account
Dr.
Xxx
Cr.
Xxx
Xxx
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4.4
Miscellaneous Costing Points
Labor Charges to WIP

You can charge person-type resources to jobs either at a predefined labor rate or at the actual
labor rate. If you choose to charge labor at the predefined rate, move transactions that
complete an operation automatically charge WIP Move resources associated with that
operation at the resource's rate as defined in the Average Rates cost type.
Resource rates are associated with cost types when you define resources. If you choose to
charge labor at an actual employee rate, you can enter an employee rate as you charge manual
resources. You can charge labor at either an actual or a predefined rate if you choose to import
resource transaction through the Open Resource Cost Interface.
A predetermined number of labor hours can be charged by adding a WIP Move resource to a
routing operation, or you can charge the actual hours to a manual resource by either:
Entering the actual hours as assemblies are moved
Entering the actual hours as part of an independent resource transaction
Importing resource transactions through the WIP Resource Cost Transaction
Interface
See: Charging Resources with Move Transactions, Oracle Work in Process User's Guide,
Charging Resources Manually, Oracle Work in Process User's Guide, and Open Resource
Transaction Interface, Oracle Work in Process User's Guide.
Resource labor transactions are valued at the rate in effect at the time of the transaction no
matter whether the predefined average rate or actual labor rate method is used. As a result,
when the same labor subelement or employee is charged to the same job at different times,
different rates may be in effect.
Material Overhead
For purchase order receipts and transfers between organizations, the material overhead
amount earned is added to the purchase order cost / transfer cost of the item (but held as a
separate cost element) when it is delivered to inventory. For assembly completions, the material
overhead amount earned is added to the cost of the completion in inventory, but is never
charged to the job.
Material Overhead Defaulting
For ease in assigning material overheads to items, you may choose to default them when an
item is first defined rather than manually associating them item by item. This is done in average
costing the same as in standard costing. Defaults may be created to apply at the organization
level or at an item category level. Within either of those, the default may be chosen to apply to
make or buy items only, or to all items.
If more than one rate or amount is defined for the same material overhead subelement, the
order of priority is: category level make or buy items, category level all items, organization level
make or buy items, organization level all items; with the higher priority rate / amount taking
precedence and overriding any other. If you wish to apply more than one material overhead,
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you must use different subelements. When you change material overhead defaults, that change
you make applies only to items defined later; there is no impact to existing items.
Assembly Scrap
The WIP Require Scrap Account parameter determines how assembly scrap is handled. If you
enter a scrap account as you move assemblies into scrap, the transaction is costed by an
algorithm that calculates the cost of each assembly through the operation at which the scrap
occurred; the scrap account is debited and the job elemental accounts are credited. If you do
not enter a scrap account, the cost of scrap remains in the job. If the job is then completed using
the final completion option in the Completion Transactions window, the cost is included in the
finished assembly cost. Otherwise, the cost is written off as a variance when the non-standard
asset and standard discrete jobs are closed and at period close for non-standard expense jobs.
If you enter a scrap account as you move assemblies out of a Scrap intraoperation step, the
above accounting transactions are reversed.
Assembly Completions Out of WIP
When finished assemblies are completed from a job to inventory, they are costed according to
the Completion Cost Source: either User Defined or System Calculated. Set the default for the
Completion Cost Source through the Default Completion Cost Source parameter in the WIP
Parameters window.
These parameters are the defaults in the WIP Accounting Class window as you define standard
and non-standard discrete accounting classes.
If you choose System Calculated, you must then choose a system option, either Use Actual
Resources or Use Pre-defined Resources. The system option determines how the system
calculates costs.
If you chose User Defined, you must choose a cost type.
The Default Completion Cost Source parameter can be overridden, but in the case of
System Calculated, not the system option. If it is necessary to use both system options, you
should set the Default Cost Source parameter to User Defined, override this parameter to
System Calculated and choose a system option for each WIP accounting class.
User defined You must ensure that the item specified cost type rolls up correctly before
completing an assembly item using this method. In other words, all component and this-level
resource and overhead details have been defined. To value the unit(s) being completed using
this method, you must predefine a cost in a user-designated cost type and specify that cost type.
Select this method to use the current average cost of the assembly or a target cost. Then use a
final completion to flush all (positive) unrelieved costs at the end of the job.
System calculated You must select a system option. The options are as follows:
a. Use Actual Resources: The unit cost to be relieved from the job is calculated based on
actual job charges and is charged to inventory as each unit is completed. This algorithm
costs the completions using a prorated amount of actual resources charged to the job
and material usages as defined on the assembly bill, multiplied by the average unit costs
in the job. Note that for completions out of a nonstandard job having no routing, this
algorithm selects the unit cost from the Average cost type. This method works best for
jobs that have resources charged in a timely manner.
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b. Use Pre-defined resources: Resource costs are relieved from the job based on the job
routing resource usages. This option works best for jobs with accurate routings.
No matter which method is used, job assemblies completed in the same transaction have the
same unit cost.
As part of a completion transaction, the unit cost of the assembly in inventory is recalculated
when it is different from the unit cost used in the completion transaction.
Note: You cannot complete assemblies to more than one subinventory in the same transaction.
Predefined Resources
Actual Resources
Final
Completion
Yes
No Variance
No Variance
Final
Completion
No
Variance
No Variance
Manual Resource
Transaction and
then Completed
Completed and
Manual Resource
Transaction
Product Cost
Product Cost
Period Cost
Period Cost
Both the Pre-defined and Actual algorithms use the job Bill of Material (Material
Requirements) to calculate cost related to components.
Figure: Flow diagram for unit cost calculation of completed assemblies in Average
Costing
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Over-completions
If you have over-completed a job, then it is not necessary to change the job quantity.
However, if you have chosen the Use Predefined Resources system option and are overcompleting assemblies associated with lot based resources and overheads, then these resources
and overheads are over-relieved from WIP. You can avoid this problem by selecting the Use
Actual Resources system option.
Final Completion
The Final Completion option check box in the WIP Assembly Completion window allows an
additional costing option for the assemblies currently being completed:
Enabled: Costs these assemblies by taking the current job balances and spreading them evenly
over the assembly units being completed or taking them to variance.
Disabled: Costs these assemblies according the Completion Cost Source method set.
Final completions ensure that no positive or negative residual balances are left in the job after
the current assembly has been completed.
Note: Use of the final completion option is unrelated to whether or not this is the last
completion of the job.
The WIP Auto Compute Final Completion parameter setting determines whether the
Final Completion option check box defaults to checked (enabled) or unchecked (disabled):
Note: When the last assembly in a job is a scrap, a residual balance may remain in the job
regardless of how you have chosen to deal with assembly scrap (see Assembly Scrap paragraph
above), because the above routine for clearing the job balance is not invoked.
Assembly Returns
If you return completed assemblies back to a job, the assemblies being returned are valued at
the average cost of all completions in this job (net of any prior completion reversals), if the
completion cost source is System Calculated. This is true for both the Use Pre-Defined Resources
option and the Use Actual Resources option. If the completion cost source is User-defined, then
the assembly is returned at the User-defined costs.
WIP Job Closures and Cancellations
Variance accounts are defined for each standard and non-standard discrete WIP accounting
class. Any balance remaining in a job after it has been closed is written off elementally to these
accounts.
Just prior to job closure, either all costs in the job have been relieved, leaving a zero balance, or
a balance will be left in the job. If the job was completed, all units required were either
completed or rejected/scrapped, and the Final Completion option was used, the job balance is
zero. The final units completed have absorbed all remaining job costs into their value.
However if the job balance is not zero, it is written off to the elemental variance accounts
defined for the job's WIP accounting class. A residual job balance may remain under the
following conditions:
On the element by level, the job was over-relieved, resulting in a negative net activity for that
element by level in the WIP Value Summary
All assemblies were completed but the final completion was not used
A late transaction was posted after the completions
The job was cancelled and closed short (not all assemblies were completed/rejected)
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The elemental account for the job's WIP accounting class should be different from the Average
Cost Variance account.
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5 OUTSIDE PROCESSING - SETUP CHECKLIST AND PROCESS

5.1
Introduction
The Outside Processing process comes into play in Work in Process whenever all or part of the
labor on a routing is performed by a third party vendor.
More than one step on a routing can be performed by third parties. In Oracle, a link has been
defined between WIP and Oracle Purchasing to automate the process of creating a purchase
order to the vendor who will perform the OSP labor.
Because what is being purchased is LABOR, one requirement to using this process is to define a
resource for each type of labor to be purchased. An item in the Item Master must also be
defined for each type of labor to be purchased, and linked to the resource when it is defined.
The item must be classified as an outside processing item.
Although this "resource" item is purchasable and transact able, it will never be received into or
issued from a sub inventory. Instead, receiving this item from the purchase order will cause a
move transaction to occur on the WIP routing so that the outside operation step is completed
when the items are received back from the vendor. It is important to note that the item must
not only be received, but must also be delivered before the outside operation is deemed
complete by the system.
When a routing operation uses an outside processing resource, movement into that operation
step causes a purchase requisition to be generated for the "labor" resource to be purchased
from the vendor. Note: that you are not purchasing the item (as you would a "buy" item);
instead you are purchasing the vendor's labor as a substitute for using your own in-house
resources to perform the labor. This is a subtle distinction, but it is necessary to understand this
distinction in order to understand the Oracle process.
This purchase requisition is then imported from WIP into Purchasing. At this point, the
requisition is available (if approved, but that is another issue) to be auto created into a purchase
order. Or, if the buyer so chooses, the buyer may set up sourcing rules such that importing an
approved requisition automatically creates a release against a blanket purchase order.
When the vendor returns the item, a receipt must be entered against the PO or release. The
"item" is delivered not to a sub inventory, but back to the shop floor for continued processing
on the routing. If the OSP step is the only step or the last step on the outing, the finished
assembly will be available to be received into inventory using a WIP completion transaction.
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5.2
Setup Steps
Inventory
1. REQUIRED: Define an item representing the outside processing vendor labor for Purchasing
to place on the vendor PO. In the Item Master Purchasing Attributes region, make sure the
following attributes are set correctly:
* Purchased = Yes (required).
* Purchasable = Yes (required).
* Outside Processing Item = Yes (required)
* Outside Processing Unit Type = Assembly or Resource
(Assembly is recommended if a tangible item) If the item has an Outside Processing Unit Type of
Assembly and the outside resource has a basis of Item, you receive one outside processing item
for each assembly you receive. If the outside resource has a basis of
Lot, you receive one
outside processing item for each job or repetitive schedule. If the outside processing item has
an Outside Processing Unit Type of Resource and the outside resource has a basis of Item, you
receive the extended quantity (using the outside resource usage rate or amount) of the outside
processing item for each assembly you receive. For example, if you purchase 3 hours of plating
service for each assembly, (usage rate or amount is 3), then you receive a quantity of 3 hours for
each assembly you receive from the supplier. If the outside resource has a basis of Lot, you
receive 1 OSP item extended by the outside resource usage rate or amount for each job or
repetitive schedule.
* Optionally enter a list price greater than zero - this will be used as a default in the PO (you
could also set up a blanket PO with prices.)
Note: the item with the above attributes must be defined in the org which is the Purchasing
item validation organization as well as the actual production organization.
Check Purchasing > Setup > Organization > Purchasing Options
To determine which org has been defined as the validation organization.
2. OPTIONAL. In the Item Master Lead Times attributes region, enter appropriate lead times.
These will be used to automatically calculate the need by date for the requisition generated for
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the OSP item. (This step is not required, but is nice to have.) The need-by date will be
automatically entered into the requisition generated by this process, and hence into the PO.
Bill of Material Module
1. REQUIRED. Define an Outside Processing Department. Enter the location where the outside
processed item is to be delivered (example: "Shop Floor" or "Assembly") as you define the OSP
Department.
Note: the location must have been previously defined under
Purchasing > Setup > Organizations > Locations.
2. REQUIRED. Define a separate outside processing resource for EACH labor "item". Enter the
item number defined above in the Item Master for the labor "item".
Make sure the variance account defined for the labor resource is the same as the Purchase price
variance account defined in Parameters under Inventory setup. If you check the Costed box and
the Standard Costing box, you can enter a standard value for this resource by clicking on the
Rates button. Any difference between this standard value and the actual purchase price (in a
standard cost organization) will be recorded in the Purchase Price Variance Account. Make sure
that the auto charge attribute is set to PO MOVE, not PO Receipt. If you set this attribute to PO
MOVE, then the PO receipt automatically generates the WIP Move transaction from the outside
processing operation to the next operation on the routing. If you use PO RECEIPT, you must
manually perform the WIP Move transaction. The quantity of outside processing items
you
receive can relate to the assembly quantity on the job or repetitive schedule in several ways
depending on the OSP item's Outside Processing Unit Type and the
outside resource's basis.
In all cases, Purchasing charges the job or repetitive schedule using the extended quantity of the
associated outside resource.
3. REQUIRED. Add the outside processing resource to a step on the routing. If it is added to
the last step, then the item can be received into inventory as soon as the PO receipt is entered
and the transaction managers run.
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Purchasing
1. OPTIONAL. Create a blanket, and be certain to enter the line as an OSP line type. If your
item is not set up correctly, the system will not allow you to complete entry of the PO.
Optionally, in the terms region of the PO, check the Supply Agreement box. In Purchasing-Supply
Base-Auto Source Rules, link the item with the blanket PO document. Or if you are using
enhanced sourcing rules in Release 10.7, use the menu path Supplier Scheduling-Supply BaseApproved Supplier List" to link the approved supplier for the item with the blanket PO in the
Attributes region. (Note: Enhanced Sourcing Rules in 10.7 is controlled production and you may
not have been approved for using it.)
2. OPTIONAL BUT HIGHLY RECOMMENDED. In the PO line, set the over receipt tolerance for
the item to zero so that no one can receive a quantity greater than on the PO. If a quantity
greater than that in the work order is received, it will cause problems with the WIP move
transaction to the next operation. THIS IS VERY IMPORTANT. There will be problems if more is
received than is on the work order OSP operation step. This is another reason to use a blanket
PO.
3. If you are using Supply Chain Planning, there is another little gotcha. Your item could have
been set up with a 'make' sourcing rule or bill of distribution in the default assignment set. You
can create another assignment set with a 'buy' sourcing rule for the outside processing items
and link it to the responsibility of the person who will do the requisition import.
4. REQUIRED. The person who initiates the move transaction in WIP must be defined as an
employee (in Purchasing or HR, depending on whether or not the HR Module is fully installed)
and linked to the person's user logon in the System Administration module. WIP includes an
employee name on the requisition it creates through this process, and the employee name is
linked to the move transactions that initiated the requisition. Hence the name of the person
who initiated the move transaction will become the name of the "requestor for the purchased
vendor service.
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5.3
Process
1. REQUIRED. Create a discrete job for the assembly. If the outside processing step is on the
first step on the routing, releasing the job will trigger creation of the requisition. If the outside
processing step is NOT the first step, then a move transaction must be performed using the
Move Transaction window. Move the quantity to be processed by the outside vendor into the
Queue step of the outside processing operation step. This triggers creation of the requisition.
2. REQUIRED. Run the Requisition Import process
(Purchasing > Reports > Run > Requisition Import).
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3. REQUIRED. Create a purchase order from the routing. Or, if using blanket POs, run the
Create Release process
(Purchasing > Reports > Run > Create Releases)
4. REQUIRED. Receive the purchase order (note: it must be DELIVERED as well as received.
Until the item has been delivered the next step will not happen.) You might want to consider
setting the receipt routing to "Direct Delivery" for such items in the Purchasing section of the
Item Master unless you require inspection of the item from the vendor first.
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5. Once the PO has been received and delivered, and the Move transaction manager has run,
you can see that the discrete job has been updated and the item is now in the "To Move"
interoperation step of the outside processing operation step.
WIP > Job/Schedule Details > Operations
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And select the Quantity alternative region. You should see the received quantity in the To Move
interoperation step of the OSP operation step. If the Move transaction has failed or has not yet
run, you will see it in
WIP > Move Transactions > Pending Move Transactions.
6. If the step is the last step on the routing, do a WIP completion transaction into inventory.
Otherwise, continue with the routing steps until complete.
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5.4
Accounting Entries
A) RECEIVING transaction
Receiving Inventory Account Debit (DR )
Accrual account
Credit ( CR )
B) DELIVER transaction
Absorption Account
Credit (CR)
Outside processing Account Debit (DR)
To offset the Receiving Inventory Account , both the accounts should be same, else
there will be a balance in Receiving Inventory Account.
Setups for accounts:
A. Steps to set Receiving Inspection a/c
Purchasing Responsibility -> Setup -> Organizations -> Receiving Options
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B. Steps to set Absorption Account

Bill of materials Responsibility -> Routing -> Resources -> set the account
Note : For OSP item Absorption Account should be equal to Receiving Inspection a/c
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C. Steps to set Outside processing a/c (charge account)

WIP Responsibility -> Setup -> WIP accounting classes -> Outside processing a/c
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6 ORACLE WORK IN PROCESS BACKFLUSH PROCESSING

6.1
OVERVIEW
The objectives of this white paper are to consolidate and clarify information about backflushing
and related issues. There is no existing document which collates all the relevant topics together.
This white paper will aim to fulfill this need and discuss the following in detail:
To explain what backflush transactions do
To explain how backflushing works in Move and Completion transactions
To explain the differences between Online processing and Background processing
and relate these to backflush transactions
To understand any differences in the behaviour of backflush transactions in
different application releases. This will also discuss any key patches that are
required.
To explain what happens when backflush transactions fail and discuss how to
correct them
6.2
WHAT IS BACKFLUSHING?
In the Bills of Material module, when a bill is created for an assembly, sub-assembly or a finished
good, the component supply type for each component in the bill has to be defined. These supply
types are push, operation pull, assembly pull, Bulk, Supplier and phantom. This Bill of Material is
used in Work in Process module for manufacturing the assembly/sub-assembly/finished good.
If the supply type of a component is Push, the components have to be manually issued to the
shop floor for the manufacturing process.
Assembly Pull and Operation Pull components are supplied in a different way. When a particular
operation or an assembly is completed during manufacturing, i.e. during move transactions or
completion transactions, the system automatically BACKFLUSHES components from the supply
subinventory and locator. No manual issuing of components is required.
The term backflushes in this case refers to the process of automatically REDUCING the
component quantity from the subinventory-locator on hand quantity when any assembly or an
operation is completed in the WIP module manufacturing process. At the same time as reducing
the inventory for the component, the system will issue the component to the work order .
6.3
WHEN DO BACKFLUSH TRANSACTIONS OCCUR?
Backflush transactions 'pull' components with Operation Pull and Assembly Pull supply types
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from inventory onto jobs and repetitive schedules. Backflush transactions can be launched by
the following six different processes :
1.
2.
3.
4.
Completing assemblies at operations using the Move Transactions window

Moving and completing assemblies into inventory using the Move Transactions window
Completing assemblies into inventory using the Completion Transactions window
Receiving assemblies from an outside processing operation using the Oracle Purchasing,
Enter Receipts window.
5. Move transactions imported through the Open Move Transaction Interface can also
create backflush transactions
6. Transactions imported through the Oracle Inventory, Inventory Transactions Interface
can also create backflush transactions.
Each of the above six processes will be discussed in detail.
It is possible to reverse backflush transactions and automatically return backflushed
components back to inventory. For example, pull components that are backflushed as
you move assemblies to the next intraoperation step in a routing are automatically
returned to inventory if you move assemblies to a previous step in the routing or if you
return completed assemblies back from inventory to the job.
We will now discuss the different processes that lead to backflush transactions.
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6.3.1 PROCESS 1 : COMPLETE ASSEMBLIES AT OPERATION - MOVE TXN FORM

Navigation : Work in Process>Move Transactions>Move Transactions
When move transactions are performed from the Move Transaction Form to COMPLETE
assemblies at an operation, then operation pull backflush transactions automatically take place
for all components with a supply type of Operation Pull that are defined at that operation. This
means that that the inventory for the components is pulled into that operation.
The assemblies are completed at the OPERATION stage in the Move Transaction Form when:
The move transaction type is MOVE
Moving assemblies from the Queue or Run intraoperation step of an operation to the To
Move, Scrap or Reject intraoperation steps of the same operation
Moving assemblies from the Queue or Run intraoperation steps of an operation to the
To Move, Scrap or Reject intraoperation steps of a subsequent operation
Assemblies are not completed at Operations by:
Moving assemblies between the To Move, Scrap, and Reject intraoperation steps of the
same operation
Moving assemblies from the To Move, Scrap, or Reject intraoperation steps of the one
operation to the Queue or Run intraoperation step of a subsequent operation
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So what happens when an assembly is completed at the operation stage as above?

Backflush of components takes place (using operation pull backflush transactions) and
resources are charged. See the following sections for a detailed explanation :
Backflushing Process (section 11 : operation pull backflush transactions see below)
Charging of Resources (section 11: see below)
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6.3.2 PROCESS 2 : MOVE & COMPLETE ASSEMBLIES INTO INV

Navigation : Work in Process>Move Transactions>Move Transactions
Backflush transactions also take place when an ASSEMBLY MOVE COMPLETION TRANSACTION
takes place.
This is a transaction performed from the Move Transaction Form. Assembly move completion
transactions MOVE assemblies from the current operation to the To Move intraoperation step
of the last operation then COMPLETE them into inventory. Assemblies are completed into the
default completion subinventory and locator specified for the discrete job or repetitive
line/assembly.
The transaction type used for this is Complete.
When completing assemblies, information from the last operation of the job or schedule is
automatically defaulted into the operation To fields - Sequence, Code, and Department - and the
To Move intraoperation step is defaulted for the To Step.
The other inputs required are: UOM, quantity, date , From Operation Sequence and From
Intraoperation Step.
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So what happens when an assembly is completed into inventory as above? Backflush of

components takes place and resources are charged. See the following sections for a detailed
explanation :
Backflushing Process (section 11:see below) . It should be noted that in this case TWO
different types of backflush transaction take place. Firstly, when the assembly is moved
to the To Move step of the last operation this initiates the backflush of any
components with the supply type of Operation Pull . Then when the assembly is
completed into inventory, the backflush of all Assembly Pull components takes place.
Charging of Resources
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6.3.3 PROCESS 3 : COMPLETING ASSEMBLIES - COMPLETION TXN FORM

Navigation : Work in Process>Material Transactions>Completion Transactions
The next place where Backflush Transactions originate from is the Completion Transaction Form.
Backflushing takes place when you complete assemblies into inventory from the Completion
Transaction Form.
The transaction type required is WIP Assembly Completion
This form allows the user to specify the subinventory and locator into which the completed
assemblies will be placed in inventory. These fields are defaulted from the wip parameters but
can be overwritten.
So what happens when an assembly is completed into inventory as above? Backflush of
components takes place and resources are charged. See the following sections for a detailed
explanation :
Backflushing Process (section 11: see below). If you are completing assemblies that have
Assembly Pull components, the system pulls (backflushes) these components from the
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supply subinventory/locator assigned to the component requirement. (or uses system

defaults for subiventory/locator)
Charging of Resources
6.3.4 PROCESS 4 : RECEIVE ASSEMBLIES FROM OSP OPERATION : PURCHASING

Backflush transactions are also initiated when assemblies are received from a supplier for an
outside processing operation using the Enter Receipts window.
Navigation: Purchasing Super User> Receiving> Receipts
The receipt of the assembly for the outside processing operation will only initiate a backflush
transaction if the following conditions are met :
Pull.
The receipt transaction must be linked to an OSP resource.

The OSP resource must have an Autocharge type of PO Move.
The outside processing operation has components of supply type Operation
Note the following points about the activities that are initiated by the receipt of the assemblies:
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Since the Autocharge type for the OSP resource is PO Move, the system will
automatically perform a Move Transaction to complete the assemblies at the OSP
Operation. (by placing a record in the Open Move Transaction table for processing).
The move transaction completes the assemblies at the OSP operation by moving
assemblies from the Queue or Run intraoperation step of an operation to the To Move,
Scrap or Reject intraoperation steps of the same operation or a subsequent operation.
This will then trigger the backflush of the Operation Pull components defined for the
OSP Operation.
If the OSP Operation is the last operation on the job, then a completion transaction will
also be automatically performed. This means that the assemblies would be completed
into inventory. This therefore means that any Assembly Pull components defined for
the assembly would be backflushed at this stage.
For more details of the actual Backflush transactions, see the section below on Backflush
Processing (section 11).
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6.3.5 PROCESS 5 : WORK ORDER-LESS COMPLETIONS WINDOW

Navigation : Work in Process> Material Transactions>Work Order-less completion
The following actions can be performed from this form all these actions initiate
backflushing of components :
Assemblies can be completed in this window without having the need for a job or a
repetitive schedule.
Used to complete assemblies for Flow Schedules from Flow Manufacturing.
Used to complete assemblies for Flow Schedules which are created to replenish Production
Kanbans.
Used to complete scheduled and unscheduled assemblies
When assemblies are completed into inventory using this form, components are
backflushed.
In this case, (and only in this case) - the following supply types are backflushed :
Assembly Pull
Operation Pull
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PUSH
Phantom Components (the bills for phantoms are exploded and the phantoms
then backflushed)
The supply types of Bulk and Supplier are NOT backflushed.
The backflush window displays for component information for supply type Push and for
Pull components requiring additional information, such as lot or serial number. You can
change the transaction quantity when the Work in Process parameter, Allow Quantity
Changes During Backflush, is enabled.
6.4
BACKFLUSHING PROCESSING
Backflush transactions 'pull' components with Operation Pull and Assembly Pull supply types
from inventory onto jobs and repetitive schedules. There are two types of Backflush
Transaction :
Operation Pull Backflush Transactions
Assembly Pull Backflush Transactions
6.4.1 OPERATION PULL BACKFLUSH TRANSACTIONS

If there are Operation Pull components at the operation AND the operation is defined as a
backflush operation, the components are automatically pulled (backflushed) from inventory.
Any components for non-backflush operations between the current operation and the last
completed backflush operation are also pulled. Components for non-backflush operations
are only pulled at the appropriate backflush operation. The last operation in the routing
should always be defined as a backflush operation to ensure that all Operation Pull
components are backflushed by the end of the routing.
If you have the TP:WIP:Move Transaction profile option set to Online processing, you cannot
move more assemblies than exist in an operation step. If this option is set to Background
processing, however, you can move any number of assemblies, but the quantity is validated
in the background.
The system automatically backflushes pull components NOT under lot or serial number
control or lot+serial control.
Pull components under lot control can also be automatically backflushed if the Work in
Process parameter Lot Selection Method is set to one of the automatic methods, and
there is sufficient inventory.
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6.4.2 ASSEMBLY PULL BACKFLUSH TRANSACTIONS :

When you complete an assembly that has Assembly Pull components, these
components are automatically pulled (backflushed) from their assigned supply
subinventories/locators. If no supply subinventory/locator is assigned to the component, the
system pulls components from the default supply
subinventory/locator specified by the WIP Supply Subinventory
and Supply Locator Parameters.
If the components being backflushed are under manual lot control, serial control, or lot and
serial control, you must enter lot and/or serial numbers. If the job is tied to one or more
sales orders, the system automatically completes the assembly for those orders.
Note: Purchasing transactions initiate backflushes only if they are tied
to outside processing resources with an autocharge type of PO Move
and only if requirements with a supply type of Operation Pull exist at the outside processing
operation.
6.5
BACKFLUSH TRANSACTION RULES

The following rules are enforced when performing backflush transactions:
An enabled default supply subinventory must be defined for the component. Also, a locator
must be defined if required by the subinventory. These will be used to supply the backflush
components. Supply subinventories and locators can be defined at the item or bill of
material component level. If they are not defined, the system uses the supply subinventory
and locator specified by the WIP Backflush Supply Subinventory and Locator Parameters
when components are backflushed.
Routing references must be specified for non-standard discrete jobs. On the Discrete
Job>Routing tab, select the routing Reference when defining a non-standard job. Routing
references can be used to create routings (operations and resource requirements) for nonstandard discrete jobs, but are not required. You can optionally define non-standard jobs
without routings, then customize them by adding only those operations that are required.
However, the routing reference must exist for backflush transactions to occur.
The component item must be defined as transactable. This refers to the inventory item
parameter.
The Subinventory you you are backflushing from must be an asset subinventory if the
Allow Expense to Asset Transfer profile option is set to No.
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Backflush quantities in decimal values must be no more than five decimal places in order to
create the backflush transaction.
Yield calculations are based on exact requirements, rather than rounded values.
For component items under revision control, the system always defaults the revision based
on the items current revision as of the date of the transaction. Backflushing will therefore
always issue the current revision of the component. To issue older revisions of a component
would require changing the supply type to Push.
6.6
GENERAL POINTS FOR ALL BACKFLUSH TRANSACTIONS :
Backflushing of components does NOT take place if:

1. The operation that assemblies are being completed at is not a backflush operation
2. The components are under serial number control and the processing mode is set to
background.
3. The components are under lot control and the lot cannot be derived whilst the
processing mode is set to background.
4. The components are lot controlled and the Work in Process parameter Lot Selection
Method is set to Manual whilst the processing mode is background.
5. There is insufficient inventory in the supply sub inventory.
6.6.1 LOT AND SERIAL NUMBER BACKFLUSHING :

Assembly and Operation Pull components under lot, serial, or lot and serial number control
can be backflushed using the backflush window. The Backflush window provides efficient
entry for large numbers of lot and serial controlled items when creating assembly move
transactionsincluding scrap, reject, and assembly completion. Work in Process parameters
determine how lot numbers are assigned and verified during backflush transactions.
The Backflush Window appears when you perform a move, scrap, reject, or assembly
completion. The Backflush window automatically appears only if you are backflushing lot or
serial controlled pull components.
It is possible to reverse backflush transactions and automatically return backflushed
components back to inventory. For example, pull components that are backflushed as you
move assemblies to the next intraoperation step in a routing are automatically returned to
inventory if you move assemblies to a previous step in the routing. These are simply the
opposite of backflush transactions.
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6.6.2 COUNT POINT AND AUTOCHARGE OPERATIONS :

When you define operations in Oracle Bills of Material, you can specify whether an
operation is a count point and whether resources at that operation should be automatically
charged during a move transaction. You can update this information in Work in Process
using the Operations window. Operations that are non-count point/autocharge operations
must be defined as backflush operations. If you issue components with a supply type of
Operation pull to an assembly at a Count Point off / Autocharge off count point operation,
Work in Process backflushes these components when you move out of the Count Point off /
Autocharge off count point operation into a count point operation that allows backflushing.
Work in Process never pulls components with a supply type of Assembly pull from Count
Point off/ Autocharge off count point operations. However, you must turn Backflush on for
Count Point off / Autocharge off count point operations. The Backflush field should always
be turned on for the last operation in a routing.
6.6.3 NEGATIVE REQUIREMENT BACKFLUSHING :

When Operation Pull components that have negative requirement quantities are
backflushed, they are returned to inventory (i.e. they are NOT supplied from inventory as for
a normal backflush).
6.6.4 REPETITIVE PRODUCTION LINE BACKFLUSHING :

For repetitive manufacturing, all backflush assemblies are automatically allocated to the
correct repetitive schedule using a FIFO algorithm. The algorithm is based on a first unit start
date, and on the assemblies moved or completed in the transaction that initiated the
backflush.
6.6.5 CHARGING OF RESOURCES

If there are WIP Move resources at the operation being completed, the system
automatically charges these resources at their standard rate.
If there are Manual resources at the operation being completed, the system notifies you
that Manual resources exist at the operation so that you can manually charge them.
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6.6.6 HOW DO YOU VIEW BACKFLUSH TRANSACTIONS?

The purpose of this section is to understand how to view backflush transactions using the
applications and also to recognize which tables the transactions are stored in.
Backflush transactions from all sources can be seen from the View Material Transactions
form.
The backflush transactions are held in the MMT table.

Move transactions are held in the WIP_MOVE_TRANSACTIONS table.
Completion transactions are held in the MMT table.
The following sequence of screenshots clarifies how to view backflush transactions:
a. Before we view the material transactions, lets have a look at the BOM that we will use
in the examples. The next screen shows a BOM and shows that the components have a
supply type of Operation Pull.
b. The next 2 screens shows the screen shots of 2 move transactions for the assembly.
c. They are taken from WIP>Move Transactions>View Move Transactions.
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The purpose of the second screen is to highlight the move transaction ids. It is important to
note the following :
There is one move transaction for : From Op 20 Queue> To Op 20 To Move. This
completes the assemblies at this operation and will result in the backflush of components of
operation pull at this operation (components pc and pb)
There is one move transaction for : From Op 10 Queue> To Op 20 Queue. This assumes
that operation 10 has been completed. Therefore any operation pull components at
operation 10 will be backflushed. (component re)
d. The navigation for the form shown below is WIP>Material Transactions>View Material
Transactions. The search criteria used were transaction type (wip component issue) and
job name. It shows the backflush of the components initiated by the Move Transaction in b)
above. The following screens will highlight this in more detail. They are from the same form.
e. The next screenshot is from the same form, showing the reason, reference tab. The key
thing to note is that the source code of WIP Backflush indicates that the transaction was a
backflush transaction. The quantity backflushed is also shown. The last column is the
TRANSACTION_ID which will be used later to query the MTL_MATERIAL_TRANSACTIONS
table.
f. The tab below shows the originating Move Transaction Id for the move transaction
which resulted in the backflush of the components. If the backflush was originated by a
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completion transaction, that would be shown in Completion transaction Id. Note that the
two move transactions in step b) are both shown compare the move transaction id with
that in step b.
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Oracle Discrete Manufacturing

ITEM MASTER .................................................................................. 10

PRODUCTION JOBS DEFINING A NEW JOB ............................................. 31

COSTING METHOD ............................................................................ 37

A. F. FERGUSON & CO.

OUTSIDE PROCESSING - SETUP CHECKLIST AND PROCESS .............. 46

Oracle Discrete Manufacturing is a complete production management system. It creates

Benefits of Oracle Manufacturing Implementation

1. Oracle manufacturing is fully integrated with Inventory, Purchasing, Quality, Cost

Collection Plan Data

Routing and Job Operations

Material Transfer to Shop Floor and Material Consumption

Job Costing and Accounting

Component Issue and Return Transaction

Usage and Efficiency Variances

2 MASTER DATA - SETUP

Manufacturing-related Key Item Attributes;

Bill of Material (BOM)

Bill of Material is the recipe to produce one unit of product

Navigation: Bills of Materials> Bills> Bills

Navigation: Bills of Materials> Routings> Departments

Count Point Option

Resource Unit Cost:

Work in Process Accounting Class

Navigation: Work in Process> Setup>WIP Accounting Classes

Defining a New Job

Following transactions can only be performed if Job is released

Issuance of material to job:

Production Jobs Defining a New Job

In Oracle, Standard Production Jobs will be created known as Discrete job.

Material Issue Move Order

Job Operations Move Transaction

Within an operation, system provides following intra operation steps.

Intra operation Steps

A Completion Transaction is performed to inventorize the Finished Good or the Item

Cost Information & Accumulation

4.3.1 Material issuance/return on Production Job

4.3.2 Conversion Cost

4.3.3 Completion Transaction

4.3.4 Return of Completion Transactions:

4.3.5 Job Close Transaction

Miscellaneous Costing Points

Labor Charges to WIP

5 OUTSIDE PROCESSING - SETUP CHECKLIST AND PROCESS

B. Steps to set Absorption Account

C. Steps to set Outside processing a/c (charge account)

6 ORACLE WORK IN PROCESS BACKFLUSH PROCESSING

WHEN DO BACKFLUSH TRANSACTIONS OCCUR?

Completing assemblies at operations using the Move Transactions window

6.3.1 PROCESS 1 : COMPLETE ASSEMBLIES AT OPERATION - MOVE TXN FORM

So what happens when an assembly is completed at the operation stage as above?

6.3.2 PROCESS 2 : MOVE & COMPLETE ASSEMBLIES INTO INV

So what happens when an assembly is completed into inventory as above? Backflush of

6.3.3 PROCESS 3 : COMPLETING ASSEMBLIES - COMPLETION TXN FORM

supply subinventory/locator assigned to the component requirement. (or uses system

6.3.4 PROCESS 4 : RECEIVE ASSEMBLIES FROM OSP OPERATION : PURCHASING

The receipt transaction must be linked to an OSP resource.

6.3.5 PROCESS 5 : WORK ORDER-LESS COMPLETIONS WINDOW

Operation Pull Backflush Transactions

Assembly Pull Backflush Transactions

6.4.1 OPERATION PULL BACKFLUSH TRANSACTIONS

6.4.2 ASSEMBLY PULL BACKFLUSH TRANSACTIONS :