IC Solution

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Presentation Transcript

Intercompany Solution For ABC Inc: 

Intercompany Solution For ABC Inc Vinod Menon ERPSOFT LLC

1. Overview of Intercompany Challenges for ABC Inc. 2. Issues on Oracle IC solution 3.Solution and Approach 5. Test Scenario and results 6. Setting Up the Solution 7. Next Steps : 

1. Overview of Intercompany Challenges for ABC Inc. 2. Issues on Oracle IC solution 3.Solution and Approach 5. Test Scenario and results 6. Setting Up the Solution 7. Next Steps Overview

ABC Inc - Requirements for IC: 

ABC Inc - Requirements for IC Supplying Org standard cost + inter-org transfer charge MUST equal supplying OU Internal P-L Commercial invoice reflects only std cost of supplying org (US) Bookings and backlog are understated Shipments (invoices) will not tie to booking/backlog decrease Internal req (DE) will be understated to std cost in purchasing org; PPV forward will ALWAYS be favorable Legal / statutory risk with Commercial Invoice not equal to AR Invoice? VAT calculation for DE customer order could be overstated

Issues on Oracle IC Solution: 

Oracle solution default the shipping organization cost to the Internal Requisition and covert into the functional currency. Oracle default the price list from the internal customer setup ( Customer level or Bill to) and the cost of the shipping org is defaulted as the price. Oracle does not allow you to change this price or price list since the ISO/IPR are not allowed to change. Oracle AR inter-company Invoice program will not read the Internal Sales Order price and it will call the Pricing engine to search and find the appropriate price. This may result is different price from ISO price if the items are in multiple price list (depending on the precedence of the item in the price lists ). Thus the AR and AP will not match. Also standard functionality does not support or consider markup cost during the IPR/ISO or AR inter-company solution. Issues on Oracle IC Solution

Slide5: 

Internal Fulfillment Model Entity A “Selling Entity” INV-Org A INV-Org B PO: Internal Requisition (Price = Cost from Org B + Transfer Cost) PO: Create Internal Order OM: Import Internal Sales Order (Price = Cost from Org B + Transfer Cost ) OM: Create WIP Jobs WIP: Complete WIP Jobs OM: Pick Release, Ship-Confirm, Inv Interface, Costing AR: Create IC Invoice To Entity A AP: Create IC AP Invoice from Entity B Shipment and IC Invoicing Entity B Shipping Entity

Slide6: 

Solution and Approach The solution is based on Oracle’s Advanced Pricing formula/Modifier and using custom PL/SQL function. Internal Requisition Price is calculated as “Cost from the Shipping Organization + Inter-Org Transfer Charge setup between Shipping Org and Requesting Org”. This Price is converted into the functional currency using daily rate setup for ‘Corporate’. Internal Sales Order Price is calculated as “Cost from the Shipping Organization + Inter-Org Transfer Charge setup between Shipping Org and Requesting Org”. A DFF is setup at Shipping Network Screen to setup Inter-Org Transfer Charge so that each org can have a different transfer charge. Advanced Pricing has been setup for Inter-company so that advanced pricing formula will be called while AR Inter-company invoice Program calls Pricing Engine. ( It is a C Program !!!) 5. Internal Sales Order standard functionality of Calculate Price as “Freeze Calculate” has been modified as “Calculate Price” so that advanced pricing formula will be applied to the ISO.

Slide7: 

Testing: Process Steps Rec. Org: Internal Requisition Ship Org: Import Sales Order Ship Org: Build the Product Ship Org: Pick and Ship Ship Org: Intercompany AR Rec. Org: Intercompany AP Invoices

Slide8: 

Detail Process Steps Receiving org - Internal Requisition: Enter Requisition, Approve: Will show cost of shipping org + Transfer Cost as informational price of requisition, not the std cost which Oracle default Receiving org – Create Internal Orders (request) Shipping Org: Import Sales Order – parameter by requisition (menu option) – price is calculated as cost + Transfer cost using the modifier ( Standard functionality “ informational only, not IC price”). - Complete the WIP Job. Pick release (after other required steps) Ship-Confirm (add freight if needed) Run Costing Manager Shipping Org: Create intercompany AR Invoices (request) Run Auto-Invoice (request – source: internal) Receiving Org: Create intercompany AP Invoices (request) Payables Invoice Import (Expense Report Import request)

Slide9: 

The Scenario: Internal Requisition from DE OU GERMANY(EUR) to US OU United States (USD)

Setup Transfer Cost % at Shipping Network: 

Setup Transfer Cost % at Shipping Network DFF to store Transfer cost %

Setup Inter-company Price List: 

Setup Inter-company Price List Remember that for Internal Sales Order , Price List is dummy. That Means Pricing engine just validate the item is in the Price List. The price Is defaulted from Cost. Make sure that the price is setup as formula And precedence is setup as ‘1’. This Will ensure that the AR inter-company Invoice program uses this price list and calculate the price as cost + transfer cost using the formula Also make sure that this price list is added at Bill-to site of Internal customer and Transaction Type used for Internal Sales Order Note: The same price list can be used for all ‘USD’ orgs. If you setup multi currency pricing the same price list can be used for all the OU’s.

Slide12: 

Receiving OU: Internal Requisition – enter and Before Saving Cost defaulted from R05

Slide13: 

Internal Requisition –Save and Approve Using our function: Cost +2% which is Transfer Cost %

Slide14: 

Internal Requisition: Create Internal Orders, Reports, Run

Slide15: 

Shipping OU: Import Sales Orders Menu path: OM, Order Management, Orders/Return, Import Orders, Import Request Select Source: Internal; Requisition No. can be entered in “Order Reference”. Otherwise all internal sources will be imported

Slide16: 

Shipping OU: Verify the Order and Release to WIP Transfer % - 2 Cost - 214.88 Selling Price - 219.18

Slide17: 

Verify WIP Job and Release

Slide18: 

Complete WIP Job

Slide19: 

Pick Release Sales Order

Slide20: 

Ship-Confirm Sales Order

Slide21: 

Create Intercompany AR Invoices Menu path: INV, Reports, Inter-company Invoices, ”Create Intercompany AR Invoices”, View Log

Review the Log to verify: 

Review the Log to verify

Slide23: 

The IC AR Invoice After Run Master Auto-Invoice Program: Invoice is created

Slide24: 

The IC AR Invoice Header

IC AR invoice Line: 

IC AR invoice Line

Slide26: 

Create Intercompany AP invoices Inventory, Reports, Inter-company invoices, Create AP Inter-company Invoices

Slide27: 

Run Payables Import ( Expense Report Import)

Verify IC AP Invoice: 

Verify IC AP Invoice

Slide29: 

Verify IC AP Invoice ( See Functional currency) Functional currency amount EUR = Internal Req amount

Questions & Answers: 

Questions & Answers Vinod Menon – Oracle ERP Specialist, Erpsoft LLC Phone : (214) 912 7012 Email : vinod@erp-soft.net