How to Create Shipping Burdens for Oracle Cost Prepared by: Doug Volz
How to Create Shipping Burdens for Oracle Cost Management, in Spite of Subledger Accounting! Session ID#: 13944 Prepared by: Doug Volz Douglas Volz Consulting, Inc. REMINDER Check in on the COLLABORATE mobile app Learning Points ■ Learn about the business reasons for earning material overheads at time of shipment and why your COGS and other shipping expenses may be at a different from your inventory costs or value ■ Understand the different approaches to solving this for Release 12 and why this was much easier in Release 11i ■ Learn how to use SLA and other techniques for solving this business requirement ■ Find out which alternative a recent client choose and contrast this with other clients Agenda ■ Shipping Burdens ▪ Definitions and Accounting Principles ▪ Why needed? Why Shipping Burdens? ▪ How does SLA work with Discrete Oracle Cost Management? ▪ Why was Release 11i so Much Easier? ▪ Business Solutions for Shipping Burdens ▪ Recent Client Experiences with Release 12 ▪ Appendix: — Create Material Shipping Burden & SLA Entries — Discrete Cost Management SLA Model — Inventory Transactions Architecture — Create DFFs for Sub-Elements and Material Transactions Doug Volz Helping people use Oracle since 1990 ■ Professional Summary ▪ 30+ years industry, design and consulting experience, specializing in design, implementation and project delivery for Cost Management business solutions ▪ Specific areas of expertise: • • • • ▪ ▪ Profit in inventory Intercompany A/P accruals WIP analysis • • • • Multi‐org inventory reporting Inventory reconciliation Product Line & Margin analysis Cost Rollup and Update Presenter at Collaborate (OAUG) and UKOUG since 1996 Multi-national experience in twelve countries ■ Qualification Summary ▪ Former co-designer for Oracle Cost Management ▪ Lead the OAUG Cost Management Special Interest Group ▪ Cost Management industry experience Helping people using Oracle Applications since 1990 Copyright ©2014 Douglas Volz Consulting, Inc. +1 510 755 7050 [email protected] www.volzconsulting.com Douglas Volz Consulting, Inc. Douglas Volz Consulting started in 2005 to provide: Cost Accounting Business & System Improvements Procure to Pay Business Improvements Project Management and Advisory Services Multi-Org, Global Cost Reporting Solutions Lots of free advice and conference papers: • www.volzconsulting.com/resources.html • www.volzconsulting.com/oaugcostsig.html Sample Project Experience: Helping people using Oracle Applications since 1990 Copyright ©2014 Douglas Volz Consulting, Inc. Solutions You Can Use ─ http://oaug.org/education-events/cpd 2008 OAUG Collaborate & 2007 UKOUG: A/P Accruals How to Setup, Use and Balance Your A/P Accrual Accounts (or How to Manage the Accounts from Hades) 2009, 2013 & 2014: OAUG Collaborate & UKOUG: Cost Management & SLA 2009: Cost Accoun ng As You Want It ─ EBS R12 Cost Accoun ng with SLA 2013: Subledger Accounting for Discrete Cost Accounting: Product Line Accounting Made Easy Through SLA 2014: How to Create Shipping Burdens for Oracle Cost Management, in Spite of Subledger Accounting 2010: OAUG Collaborate: Profit in Inventory Solutions & PJM Solutions Does Rel. 12 Solve Global Inter‐Company Issues for Multiple Ledgers, Profit in Inventory and COGS? Can We Actually Reconcile Project MFG to Inventory, WIP, Projects & G/L? What Was I Thinking? 2011 & 2014: OAUG Collaborate & UKOUG: Inventory Reconciliation 2011: 60 Inventory Orgs? 6 Ledgers? No Worries, Reconcile Your Inventory With Ease! 2014: Reconcile Your Inventory to G/L Balances With Ease, From 1 to 1,000 Inventory Organizations! 2012: OAUG Collaborate: Transaction Interfaces for Period Close Egads! How in the Dickens Do I Handle Those Month‐End Interfaces? (And Why Can’t I Close My Books) Definitions and Accounting Principles Definitions ■ Burdens: Another word for Overheads or Indirect Costs; as a general term Overheads may include expenses related to product procurement, production, warehousing or distribution as well as non-product related expenses such as G&A and selling expenses ■ Cost of Goods Sold (adapted from Wikipedia): ▪ The cost of products or raw materials, including freight or shipping charges; ▪ The cost of storing products the business sells; ▪ Direct labor costs for workers who produce the products; ▪ Factory overhead expenses ▪ Discounts that must be deducted from the costs of purchased inventory including trade discounts and manufacturer’s rebates Definitions ■ Direct Product Costs: Directly traceable product expenses such as direct material (purchase cost), direct labor and other direct production costs ■ General & Administrative Expenses (G&A): General operating expenses and taxes that are related to the overall operation of the company ■ Handling Costs: US GAAP – FAS605: “Costs incurred to store, move, and prepare the products for shipment. Generally, handling costs are incurred from the point the product is removed from finished goods inventory to the point the product is provided to the shipper and often include an allocation of internal overhead.” Definitions ■ Inventoriable Costs: Acquisition and production costs included in the inventory value, such as direct materials, direct labor, indirect manufacturing overheads and indirect material handling costs US GAAP – FAS 151: “Inventories are presumed to be stated at cost. The definition of cost as applied to inventories is understood to mean acquisition and production cost …” IFRS – IAS2: “The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.” Definitions ■ Non-Inventoriable Costs: General and administrative (G&A) and selling expenses or any cost which is not related to the acquisition or production product cost US GAAP – FAS 151: “general and administrative expenses should be included as period charges, except for the portion of such expenses that may be clearly related to production and thus constitute a part of inventory costs (product charges). Selling expenses constitute no part of inventory costs.” IFRS – IAS2: “Certain costs are not included in the valuation of inventories. These costs are recognized as expense when they occur. Following are some of the common examples of these costs: ▪ Abnormal wastage of materials, labor and other production costs ▪ Storage costs if they are not essential for the production process ▪ Selling and distribution costs ▪ Administrative costs that are not involved in bringing the inventory to its present condition and location” Definitions ■ Selling Expenses: Costs incurred to market products such as advertising, sales commissions, sales salaries, sales offices and other selling expenses ■ Shipping Costs: US GAAP – FAS605: “Costs incurred to physically move the product from the seller’s place of business to the buyer’s designated location.” Accounting Principles ■ Accrual Matching Principle & Revenue Recognition: Must recognize appropriate costs when revenue is booked or recognized. IFRS – IAS2: “When inventories are sold and revenue is recognised, the carrying amount of those inventories is recognised as an expense (often called cost-of-goods-sold).” Why Needed? Why Shipping Burdens? Why Want Shipping Burdens? ■ Costs of shipping are significant but not part of inventory value ■ May want to recognize some MFG G&A costs at time of shipping ■ Suppliers may offer discounts based on shipping volumes or based on the customer for that shipment ■ Trying to avoid “sales staff giving away the product” Release 11i COGS Example: Original Entries Shipping Burdens R11i COGS Entries Sales Order Issue DR COGS Account CR Inventory Debit / Credit Acct Line Type 100 100 Account Inventory Valuation Shipping Burden 10 DR COGS Account CR Matl Overhead Absorption 10 Account Ovhd Absorption Release 12 COGS Example: Original Entries Shipping Burdens R12 COGS Entries Debit / Credit Acct Line Type Sales Order Issue DR Deferred COGS CR Inventory 100 100 Deferred COGS Inventory Valuation 100 COGS Deferred COGS COGS Recognition DR COGS Account CR Deferred COGS 100 Shipping Burden 10 DR COGS Account CR Matl Overhead Absorption COGS 10 Ovhd Absorption Why Was Release 11i So Much Easier for Adding Shipping Burdens? R10 – R11i Transaction Flow for Cost Mgmt Enter Transaction(s) Accounting Processor Receiving Material WIP Transaction Accounting Tables Inventory Period Close Transfer to G/L GL_ INTERFACE G/L Tables GL_SETS_OF_BOOKS Journal Import GL_JE_BATCHES GL_JE_HEADERS GL_JE_LINES Release 11i Solution ■ Enter Material Overhead Sub-Element(s) for Shipping Burdens ■ Enter and store the Shipping Burden rates in an unimplemented cost type, a MFG Lookup Code or in a custom table ■ Create a custom program to insert additional rows into the material accounting distributions: Shipping Burden Example DR COGS Account (from existing transaction) Debit / Credit Acct Line Type 10 CR Material Overhead Absorption 10 (from shipping burden sub-element) COGS Ovhd Absorption ■ All other processing is unchanged (except tweaks to Margin Reporting) How Does SLA Work with Oracle Cost Management? Supply Chain Transaction Processing ■ Release 12 has two transaction models ▪ RCV, INV, WIP Transactions ▪ SLA transactions – “Mirror image” of the original transactions SLA PO Receipts SO Shipmts Inventory LSPs, Others RCV INV WIP RCV COST Txn Sources Supply Chain INV WIP WIP G/L Key Concepts for SLA Transaction Types Event Model: A set of subledger transaction types with common characteristics ▪ Entity : Denotes the transaction source ▪ Event Class: Classifies transaction types by accounting rule ▪ Event Type: for each transaction type, defines possible actions with accounting significance EVENT MODEL ENTITY Material, Receiving or WIP or Write Off Transaction EVENT CLASS Grouping of transaction events which have similar kind of accounting EVENT TYPE The most granular level of business event which has accounting impact R12 Transaction Flow for Cost Management Enter Transaction(s) Accounting Processor Transaction Accounting Tables Receiving Material WIP Create Accounting Module Specific Transaction Accounting Tables One Common Accounting Subledger Table SLA Accounting Tables G/L Tables XLA_EVENTS GL_LEDGERS XLA_AE_HEADERS GL_ INTERFACE GL_JE_BATCHES XLA_AE_LINES GL_JE_HEADERS XLA_DISTRIBUTION _LINKS GL_JE_LINES Setup and Process ADR SETUPS Define or Identify ADR Sources PROCESS Enter Transaction(s) JOURNAL ENTRY SETUPS Define/copy and modify Define/copy and modify journal line types account derivation rules Define/copy and modify Define/copy and modify descriptions journal line types Define/copy and modify descriptions ASSIGNMENT Assign to SLAM and Ledger Cost Manager Create Accounting* Transfer Journal Entries to GL *Run ‘Create Accounting – Cost Management’ concurrent request for accounting all transactions from the Cost Management – SLA responsibility. Receiving Accounting can also be generated in the Purchasing responsibilities using the ‘Create Accounting – Receiving’ concurrent request. These requests have an option to transfer the entries created to General Ledger as well as post at the same time. Cost Management and SLA Processing Steps ■ The Cost Manager creates the accounting entries for material accounting distributions and calls a special program (CST_XLA_PVT(CSTVXLAB.pls) to create the initial information for Create Accounting (SLA) MTL MTL_MATERIAL_TRANSACTIONS SLA COST MANAGER MTL_TRANSACTION_ACCOUNTS XLA_EVENTS XLA_TRANSACTION_ENTITIES Cost Management and SLA Processing Steps ■ Create Accounting picks up the entries found in XLA_EVENTS and XLA_TRANSACTION_ENTITIES and completes the creation of the SLA accounting entries XLA_EVENTS CREATE ACCOUNTING XLA_DISTRIBUTION_LINKS XLA_AE_HEADERS XLA_AE_LINES Issues with SLA ■ Create Accounting never writes a processed status to either MTL_TRANSACTION_ACCOUNTS or XLA_DISTRIBUTION_LINKS ■ Create Accounting only knows the processing status for the entire material transaction (XLA_EVENTS), but not for each transaction accounting entry ▪ Process status by TRANSACTION_ID or EVENT_ID ▪ But not by each DR or CR or INV_SUB_LEDGER_ID ■ See next slide for desired transaction flow diagram Desired Transaction Processing – Create Accounting and SLA Material Transactions Cost Processor Material Accounting Entries 1. Cost Processor creates the material accounting entries 2. Shipping Burdens are then created with a custom program 3. The custom program also calls the CSTVXLAB.pls package to create the initial SLA information 4. There are now two SLA events for the same material transaction, one created by the Cost Processor and one by the custom program 5. Create Accounting processes the old and new entries and creates the SLA journal entries with no duplication Standard Program Custom Program Create New Matl Acct’g Entries Create Accounting SLA Journal Entries Actual Transaction Processing – Create Accounting and SLA Material Transactions Cost Processor Material Accounting Entries 1. Cost Processor creates the material accounting entries 2. Create Accounting runs before the Shipping Burdens are created and processes the existing SLA event and material accounting entries 3. Shipping Burdens are created with the custom program 4. The custom program also calls the CSTVXLAB.pls package to create the initial SLA information and a second SLA event for the same material transaction 5. Create Accounting processes the new entries, reprocesses the old entries and by doing so, doubles up the SLA journal entries Standard Program Custom Program Create Accounting Create New Matl Entries Create Accounting SLA Journal Entries Business Solutions for Shipping Burdens Potential Solutions 1. Do this adjustment in a management reporting system only 2. Include the Shipping Burdens in the Frozen Costs (inventory value) and back it out at month-end 3. Create the Shipping Burdens in the original distribution tables (mtl_transaction_accounts) and as SLA accounting entries 4. Only create the Shipping Burdens in the SLA accounting entries (using the same SLA events for material transactions) 5. Interface manual SLA entries for Shipping Burden entries 6. Only create the entries into the G/L Desired Solution Requirements 1. Want good visibility for Cost Accountants using standard material distribution inquiries and reports 2. Follow the Oracle architecture for material distributions & SLA Custom material distribution reporting (which combines the original material distributions and SLA information) must work the same way for Oracle and custom accounting distributions 3. As needed use SLA setups and processes 4. Minimize or avoid creation of custom tables 5. Limit the amount of custom code Pros and Cons 1. Do this adjustment in a management reporting system only ▪ Not as easily accessed by all concerned parties ▪ Custom solution, all inputs, outputs, inquiries and reports ▪ Creates a condition where “source of truth” is in multiple places ▪ Not included in Margin Analysis Load and Report programs 2. Include the Shipping Burdens in the Frozen Costs (inventory value) and back it out at month-end ▪ Source of truth in one location ▪ But requires month-end manual adjustment for US GAAP and IFRS ▪ Requires custom reporting (to back it out) ▪ May be best choice depending on complexity of number of interfaces and customizations ▪ Margin Analysis Load and Report programs work with no changes Pros and Cons 3. Create the Shipping Burdens in the original distribution tables (mtl_transaction_accounts) and as SLA accounting entries ▪ Able to see these new entries in the original reports and inquiries ▪ But have to prevent Create Accounting from doubling-up entries ▪ SLA setups can be quite extensive and requires SLA expertise ▪ May need to modify Margin Analysis Load and Report programs 4. Only create the Shipping Burdens in SLA accounting entries (using the same SLA events/material transactions) ▪ Will not show up in any original report or inquiry ▪ Needs lots of custom programming, SLA setups and development ▪ Needs custom reporting; different from normal Cost Mgmt entries ▪ Need to modify Margin Analysis Load and Report programs Pros and Cons 5. Interface manual SLA entries for Shipping Burden entries ▪ One of the easiest solutions (open interface) ▪ Lack of visibility, needs custom reporting, not easily accessed ▪ Not directly tied to the actual COGS entries ▪ Cannot easily use this information for margin and performance reporting 6. Only create the entries into the G/L ▪ Not in a subledger ▪ Lack of visibility, needs custom reporting, not easily accessed ▪ Not directly tied to the actual COGS entries ▪ Cannot easily use this information for margin and performance reporting Recent Client Experiences with Release 12 Release 12 Client Experiences ■ Tried third solution, new material distributions and SLA entries ▪ Client had too many customizations, both with the material transactions and as post-processing customizations ▪ Even needed to change stored transaction cost information (in mtl_material_transactions) in addition to changing three major custom interfaces ▪ At the time could not prevent SLA from doubling-up entries ■ Second solution ended up being easier, put into Frozen costs ▪ As new sub-element, put burdens into the Frozen costs ▪ Designed month-end inventory value reports to back out these costs at month-end ▪ Designed monthly material account summary reports for visibility Summary Summary ■ Life with SLA can be very useful: ▪ Configure transactions to use new accounts ▪ Multiple representations for the same transactions (by chart of accounts) ▪ Better mapping capabilities, can do outside of consolidations ▪ Can even create new sources, even integrate entirely new nonOracle modules and transactions (with FIN Hub) ■ But SLA can be devilishly complex, you have to weigh the pros and cons ■ Make the best choice for your situation, there is not one “right” answer Appendix A) Create Material Shipping Burden & SLA Entries B) Discrete Cost Management SLA Model C) Inventory Transactions Architecture D) Creating DFFs for Material Transactions and Sub-Elements Appendix A) Create Material Shipping Burden & SLA Entries B) Discrete Cost Management SLA Model C) Inventory Transactions Architecture D) Creating DFFs for Material Transactions and Sub-Elements A) Create Material Shipping Burden & SLA Entries ■ Required Steps 1. Enter Material Overhead Sub-Elements for Shipping Burdens 2. Identify which transactions to apply shipping burdens 3. Enter and store the Shipping Burdens 4. Create custom program to insert additional rows into the material accounting distributions, using the same material transaction 5. Configure SLA to process additional material accounting entries Add Journal Lines as needed Add logic to prevent double-processing ■ Caveat: This Solution is a Prototype, Requires Testing 1) Enter Material Overhead Sub-Elements for Shipping Burdens Added a DFF to avoid hard‐ coding the Sub‐Element name Choose Material Txn Types for Burdens Click here 2) Identify Which Transactions to Apply Shipping Burdens ■ Use the Appendix Section “Discrete Cost Management SLA Model” ▪ Identify which SLA Event Class Names: Sales Order Issue ▪ Identify which Event Type Name — COGS Recognition — RMA Receipt — RMA Issue ▪ Identify which SLA Journal Line Types to change: — Cost of Goods Sold, Deferred COGS, Cost Update Adjustment Identify Which Transactions to Apply Shipping Burdens (Cont’d) ■ Have to Correlate SLA Events With “Real” Material Transactions Material Transaction Definition Material Transactions • COGS Recognition RMA Receipt RMA Return SLA Event Class Name SLA Event Definition Sales Order Issue • COGS Recognition RMA Receipt RMA Return Accounting Line Type Cost of Goods Sold Deferred COGS Overhead Absorption (New) Journal Line Type Cost of Goods Sold Deferred COGS Overhead Absorption (New) Î The Oracle EBS Supply Chain transactions loosely correlate to the SLA events and journal lines. Can be confusing. Release 12 COGS Example: Don’t Want to Mess With Deferred COGS Original Entries Shipping Burdens R12 COGS Material Transaction Entries Debit / Credit Acct Line Type Sales Order Issue Txn DR Deferred COGS CR Inventory 100 100 Deferred COGS Inventory 100 COGS Deferred COGS COGS Recognition Txn DR COGS Account CR Deferred COGS 100 Shipping Burden (added to COGS Recognition Txn) 10 DR COGS Account CR Matl Overhead Absorption COGS 10 Ovhd Absorption 3) Enter and Store the Shipping Burden Rates ■ Enter the Rates in a Non-Implemented Cost Type ■ Store by Item in Only One Inventory Organization Uncheck Multi‐Org Enter and Store the Shipping Burden Rates (Cont’d) ■ Enter the rate by cost type by item (for this example) ■ You could also use a MFG Lookup Code, custom table … Example Values From CST_ITEM_COST_DETAILS CST_ITEM_COST_DETAILS INVENTORY_ITEM_ID EXAMPLE VALUE 11923 MTL_TRANSACTION _ACCOUNTS COMMENTS INVENTORY_ITEM_ID MTL_SYSTEM_ITEMS_B ORGANIZATION_ID 207 ORGANIZATION_ID MTL_PARAMETERS COST_TYPE_ID 1207 N/A CST_COST_TYPES 1 N/A This Level RESOURCE_ID Sub‐Element Identifier RATE_OR_AMOUNT USAGE_RATE_OR_AMOUNT X Original COGS BASE_TRANSACTION_VALUE LEVEL_TYPE RESOURCE_ID USAGE_RATE_OR_AMOUNT 78542 0.1 BASIS_TYPE 5 BASIS_TYPE Percent of Total Value COST_ELEMENT_ID 2 COST_ELEMENT_ID Material Overhead ROLLUP_SOURCE_TYPE 1 N/A User Defined 4) Create Custom Program to Insert Additional Accounting Entries INSERT INTO mtl_transaction_accounts ■ Use existing material transactions ■ Adding new material accounting entries using the same material TRANSACTION_ID ■ On the material transaction update ATTRIBUTE15 to indicate Shipping Burdens have been recorded ■ BASE_TRANSACTION_AMOUNT = the item’s RATE_OR_AMOUNT X original COGS amount VALUES (transaction_id, (v_trx_id, reference_account, v_adjust_account, last_update_date, SYSDATE, last_updated_by, fnd_profile.VALUE('USER_ID'), creation_date, SYSDATE, created_by, fnd_profile.VALUE('USER_ID'), last_update_login, fnd_profile.VALUE('USER_ID'), inventory_item_id, v_mtl.inventory_item_id, organization_id, v_mtl.organization_id, transaction_date, v_mtl.transaction_date, transaction_source_id, v_mtl.transaction_source_id, transaction_source_type_id, v_mtl.transaction_source_type_id, transaction_value, v_trx_val, primary_quantity, v_trx_qty, gl_batch_id, -1, accounting_line_type, 3, -- Material Overhead Absorption base_transaction_value, v_trx_val, contra_set_id, v_mtl.contra_set_id, rate_or_amount, v_trx_rate, basis_type, v_basis_type, resource_id, v_resource_id, cost_element_id, 2, activity_id, NULL, currency_code, v_mtl.currency_code, currency_conversion_date, v_mtl.currency_conversion_date, currency_conversion_type, v_mtl.currency_conversion_type, currency_conversion_rate, v_mtl.currency_conversion_rate, request_id, v_request_id, program_application_id, fnd_profile.VALUE('PROGRAM_APPLICATION_ID'), program_id, fnd_profile.VALUE('PROGRAM_ID'), program_update_date, SYSDATE, encumbrance_type_id, v_mtl.encumbrance_type_id, repetitive_schedule_id, v_mtl.repetitive_schedule_id, gl_sl_link_id) ''); Values for MTL_TRANSACTION_ACCOUNTS MTL_TRANSACTION_ACCOUNTS SOURCE COMMENTS TRANSACTION_ID MTL_TRANSACTION_ACCOUNTS Same as COGS entry REFERENCE_ACCOUNT ABSORPTION_ACCOUNT From BOM_RESOURCES INVENTORY_ITEM_ID MTL_TRANSACTION_ACCOUNTS Same as COGS entry ORGANIZATION_ID MTL_TRANSACTION_ACCOUNTS Same as COGS entry TRANSACTION_DATE MTL_TRANSACTION_ACCOUNTS Same as COGS entry TRANSACTION_SOURCE_ID MTL_TRANSACTION_ACCOUNTS Same as COGS entry TRANSACTION_SOURCE_TYPE_ID MTL_TRANSACTION_ACCOUNTS Same as COGS entry TRANSACTION_VALUE MTL_TRANSACTION_ACCOUNTS NULL for COGS PRIMARY_QUANTITY MTL_TRANSACTION_ACCOUNTS Same as COGS entry GL_BATCH_ID MTL_TRANSACTION_ACCOUNTS NULL ACCOUNTING_LINE_TYPE CST_ACCOUNTING_LINE_TYPE 3 – overhead absorption 35 – cost of goods sold BASE_TRANSACTION_VALUE USAGE_RATE_OR_AMOUNT X For Basis Type “Percent of Total Value” COGS BASE_TRANSACTION_VALUE X SIGN(PRIMARY_QUANTITY) Values for MTL_TRANSACTION_ACCOUNTS MTL_TRANSACTION_ACCOUNTS SOURCE COMMENTS CONTRA_SET_ID MTL_TRANSACTION_ACCOUNTS Same as COGS entry RATE_OR_AMOUNT USAGE_RATE_OR_AMOUNT From the item cost BASIS_TYPE CST_BASIS_TYPES Lookup Code 5 for “% of Total Value” RESOURCE_ID BOM_RESOURCES.RESOURCE_ID Sub‐Element Identifier COST_ELEMENT_ID BOM_RESOURCES. COST_ELEMENT_ID Usually a value of 2 (Material Overhead) CURRENCY_CODE MTL_TRANSACTION_ACCOUNTS Same as COGS entry CURRENCY_CONVERSION_DATE MTL_TRANSACTION_ACCOUNTS Same as COGS entry CURRENCY_CONVERSION_TYPE MTL_TRANSACTION_ACCOUNTS Same as COGS entry CURRENCY_CONVERSION_RATE MTL_TRANSACTION_ACCOUNTS Same as COGS entry GL_SL_LINK_ID Leave NULL Create Accounting / GL INV_SUB_LEDGER_ID Leave NULL From CSTVXLAB.pls 5) Steps to Configure SLA Create custom PL/SQL function Define custom sources Can skip this step Create account derivation rules (ADRs) Create journal line types (JLTs) Create journal line definitions (JLDs) Create an application accounting definition (AAD) Create a subledger accounting method (SLAM) Assign it to a Ledger Desired Material Transaction Flow Material Transactions Cost Processor No Material Accounting Entries Don’t Process the Journal Line Shipping Burdens Exist? A Yes Standard Program Custom Program New SLA Conditions Do Process the Journal Line Create Accounting A Create New Material Accounting Entries Create Accounting SLA Journal Entries A Create Custom PL/SQL Function Create custom PL/SQL function Define custom sources Create account derivation rules (ADRs) Create journal line types (JLTs) Create journal line definitions (JLDs) Create an application accounting definition (AAD) Create a subledger accounting method (SLAM) Assign it to a Ledger Create Custom PL/SQL Function ■ Will determine if SLA can process the journal line CREATE OR REPLACE FUNCTION XXX_CST_CNTRL_CREATE_ACCTG (p_transaction_id IN NUMBER) RETURN VARCHAR2 is l_yes_no varchar2(2); BEGIN SELECT FROM WHERE ; nvl((select DISTINCT('Y') from inv.mtl_material_transactions mmt, inv.mtl_transaction_types mtt, inv.mtl_transaction_accounts mta where mmt.transaction_id = p_transaction_id and mmt.transaction_type_id = mtt.transaction_type_id and mmt.transaction_id = mta.transaction_id and ((nvl(mtt.attribute1,'N') = 'Y' -- indicates this transaction is for Shipping Burdens and nvl(mmt.attribute15,'N') = 'Y' -- indicates shipping burden exist ) OR (nvl(mtt.attribute1, 'N') = 'N' -- indicates not for Shipping Burdens ) ) ), 'N' ) into l_yes_no inv.mtl_material_transactions mmt mmt.transaction_id = p_transaction_id RETURN l_yes_no; END XXX_CST_CNTRL_CREATE_ACCTG; / Define Custom Sources Menu path: Cost Management SLA => Setup => Accounting Methods Builder => Sources => Custom Sources ■ Need to use the correct parameters for your PL/SQL inputs Create Journal Line Types and Definitions Create custom PL/SQL function Define custom sources Create account derivation rules (ADRs) Create journal line types (JLTs) Create journal line definitions (JLDs) Create an application accounting definition (AAD) Create a subledger accounting method (SLAM) Assign it to a Ledger Determine Which Journal Lines to Change Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Methods and Definitions => Journal Lines Definitions ■ Query the Event Class / Sales Order Issue Need User-Defined Journal Lines Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Methods and Definitions => Journal Lines Definitions ■ Sales Order Issue Event Class - Two Material Txn Types ▪ Sale Order Issue (Shipment) — Deferred COGS (DR) — Inventory Valuation (CR) ▪ COGS Recognition — Cost of Goods Sold (DR) — Deferred COGS (CR) — Overhead absorption (CR) ▪ RMAs with Cost Changes — Cost Update Adjustment Need New User-Defined Journal Lines Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Methods and Definitions => Journal Lines Definitions ■ Copy and Change These Journal Lines for COGS Recognition ▪ Cost of Goods Sold ▪ Deferred COGS ▪ Cost Update Adjustment (for RMAs) ■ Create New Journal Line for Material Overhead Absorption as this is not in the SLA transaction model for Sales Orders Create User-Defined Journal Line Types Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Query Up Each Journal Line and Copy the Oracle Journal ■ Choose the Event Class Sales Order Issue Copy Journal Line Types Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Copy the Oracle Journal Line Type – Cost of Goods Sold 2) Enter Line Type Code, Name and Description 3) Click Done 1) Click Copy Definition Copy Journal Line Types Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Add New Conditions to the Journal Line Type Click Conditions Copy Journal Line Types Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Add New Conditions to the Journal Line Type (Cont’d) Indicates if the journal line y p is ready to be processed Ensures that COGS is only charged for the COGS Recognition Transaction Type Copy Journal Line Types Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Copy the Oracle Journal Line Type – Deferred COGS 2) Enter Line Type Code, Name and Description 3) Click Done 1) Click Copy Definition Copy Journal Line Types Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Add New Conditions to the Journal Line Type Click Conditions Copy Journal Line Types Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Add New Conditions to the Journal Line Type (Cont’d) Indicates if the journal line y p is ready to be processed Ensures that Deferred COGS is only charged g yp for the COGS Recognition Transaction Type Copy Journal Line Types Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Copy the Oracle Journal Line Type – Cost Update Adjustment 2) Enter Line Type Code, Name and Description 3) Click Done 1) Click Copy Definition Copy Journal Line Types Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Add New Conditions to the Journal Line Type (Cont’d) Indicates if the journal line y p is ready to be processed Ensures that RMA Cost Updates are only changed g yp for the COGS Recognition Transaction Type New Journal Line Type for Overhead Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Create the New Journal Line Type New Journal Line Types Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Add Conditions to the Journal Line Type Click Conditions New Journal Line Types Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Add Conditions to the Journal Line Type (Cont’d) Overhead absorption accounting line type Indicates if the journal line y p is ready to be processed Ensures that Overhead Absorption is only charged g yp for the COGS Recognition Transaction Type Create Journal Line Types and Definitions Create custom PL/SQL function Define custom sources Create account derivation rules (ADRs) Create journal line types (JLTs) Create journal line definitions (JLDs) Create an application accounting definition (AAD) Create a subledger accounting method (SLAM) Assign it to a Ledger Create Journal Line Definition Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Methods and Definitions => Journal Line Definitions ■ Copy the Oracle Journal Line Definition 2) Enter Definition Code, Name and Description 3) Click Done 1) Click Copy Definition Create Journal Line Definition Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Replace the Oracle Journal Line Types with User Defined Use default ADR for Cost g Mgmt Create Journal Line Definition Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Delete Oracle Journal Line Type and Replace with User JL Type Use default ADR for Cost g Mgmt Create Journal Line Definition Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Delete Oracle Journal Line Type and Replace with User JL Type Use default ADR for Cost g Mgmt Create Journal Line Definition Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Delete Oracle Journal Line Type and Replace with User JL Type Use default ADR for Cost g Mgmt Create Journal Line Definition Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Delete Oracle Journal Line Type and Replace with User JL Type Use default ADR for Cost g Mgmt Create Journal Line Definition Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Journal Entry Setups => Journal Line Types ■ Cost Variance and Inventory Valuation Journal Types Cost Variance and Inventory Valuation is unchanged Create Application Accounting Definition Create custom PL/SQL function Define custom sources Create account derivation rules (ADRs) Create journal line types (JLTs) Create journal line definitions (JLDs) Create an application accounting definition (AAD) Create a subledger accounting method (SLAM) Assign it to a Ledger Create Application Accounting Definition Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Methods and Definitions => Application Accounting Definitions ■ Copy the standard Oracle Application Accounting Definition 2) Enter Definition Code, Name and Description This limits it to only one COA Structure 3) Click Done 1) Click Copy Definition Create Application Accounting Definition Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Methods and Definitions => Application Accounting Definitions ■ Validate the Copied Application Accounting Definition Validate initial copy Create Application Accounting Definition ■ Now assign new Journal Lines Definition to your Application Accounting Definition: ■ COGS Sale Order Event Accounting Examples: Sales Order Issue => XXX Sales Order Issue ■ Note: there are other COGS-related Event Classes: ▪ Logical Transactions ▪ Sender-side Intransit Interorg Shipment for FOB Receipt ▪ Sender-side Intransit Interorg Receipt for FOB Receipt Create Application Accounting Definition Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Methods and Definitions => Application Accounting Definitions Choose the Event Class to change Then delete the existing row Create Application Accounting Definition Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Methods and Definitions => Application Accounting Definitions To catch errors should validate one‐ by‐one y Replace with new assignment Create Application Accounting Definition Menu path: Cost Management SLA => Requests => Submit a New Request => Validate Application Accounting Definitions ■ Another way to Validate Application Accounting Definitions Create Application Accounting Definition Menu path: Cost Management SLA => Requests => Submit a New Request => Validate Application Accounting Definitions These should all have a Valid status Create Subledger Accounting Method (SLAM) Create custom PL/SQL function Define custom sources Create account derivation rules (ADRs) Create journal line types (JLTs) Create journal line definitions (JLDs) Create an application accounting definition (AAD) Create a subledger accounting method (SLAM) Assign it to a Ledger Create Subledger Accounting Method Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Methods and Definitions => Subledger Accounting Methods 2) Enter Definition Code, Name and Description 3) Click Done 1) Click Copy Definition Assign SLAM to a Ledger Create custom PL/SQL function Define custom sources Create account derivation rules (ADRs) Create journal line types (JLTs) Create journal line definitions (JLDs) Create an application accounting definition (AAD) Create a subledger accounting method (SLAM) Assign it to a Ledger Create User-Defined SLAM Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Methods and Definitions => Subledger Accounting Methods 2) Enter Method Code, Name and Description 3) Click Done 1) Click Copy Definition Assign Ledger to SLAM Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Methods and Definitions => Subledger Accounting Methods => Accounting Setups Assign Ledger to SLAM Menu path: Cost Management SLA => Accounting Setup => Accounting Methods Builder => Methods and Definitions => Subledger Accounting Methods => Accounting Setups Click on the “pencil” to update the ledger Assign Ledger to SLAM Click on the “pencil” to update the ledger Assign Ledger to SLAM Select the new SLAM Select the new SLAM Testing Your SLA Setups ■ If You AAD Validation Fails ▪ Check the Output File Check Output Testing Your SLA Setups – Validation Output ■ Valuable Clues Review error text Testing Your SLA Setups ■ Diagnostic Reports to SLA test inputs and outputs ▪ Enable profile option “SLA: Enable Diagnostics” ▪ Run “Create Accounting” ▪ Disable profile option “SLA: Enable Diagnostics” ▪ Run “Transaction Objects Diagnostics” report ▪ Run “Purge Transaction Objects Diagnostics” Appendix A) Create Material Shipping Burden & SLA Entries B) Discrete Cost Management SLA Model C) Inventory Transactions Architecture D) Creating DFFs for Material Transactions and Sub-Elements B) Discrete Cost Management SLA Model Discrete Cost Management SLA Model Discrete Cost Management SLA Model Discrete Cost Management SLA Model Discrete Cost Management SLA Model Discrete Cost Management SLA Model Discrete Cost Management SLA Model Discrete Cost Management SLA Model Appendix A) Create Material Shipping Burden & SLA Entries B) Discrete Cost Management SLA Model C) Inventory Transactions Architecture D) Creating DFFs for Material Transactions and Sub-Elements C) Inventory Transactions Architecture ■ Inventory allows you to define new transaction types Sources + Actions = Transaction Types ▪ As a result, material transactions are more complex ▪ You can query material transactions by Source or Transaction Type ▪ Sources are a group of transactions based on a common origin ▪ Actions indicate the behavior for the transaction (decrease or increase onhand quantities for example) ▪ Transaction types are the individual kinds of entries for each transaction source ▪ Material transactions are defined in MTL_TRANSACTION_TYPES Inventory Transactions Architecture Defined By: Sources and Actions Define Over 90 Material Transaction Types Sources Account Account Alias Cycle Count Internal Order Internal Requisition Inventory Job or Schedule Move Order Physical Inventory Purchase Order RMA Sales Orders Standard Cost Update Sample List of Actions Assembly completion Assembly return COGS recognition Cost update Cycle count adjustment Delivery adjustments Direct organization xfer Intransit receipt Intransit shipment Issue from stores Logical Intransit Receipt Logical Intransit Shipment Logical Delivery Adjustment Logical Expense Requisition Receipt Logical Intercompany Receipt Logical Intercompany Receipt Return Logical Intercompany Sales Logical Intercompany Sales Return Logical Issue Logical Receipt Negative Component Issue Negative Component Return Ownership Transfer Physical Inventory Adjustment Receipt into Stores Retroactive Price Update Staging Transfer Subinventory Transfer WIP Scrap Transaction So Why Care About Inventory Txn Architecture? Menu path: Cost Management – SLA => View Transactions => Material Transactions ■ Use Transaction Sources and Transaction Types for Online Queries So Why Care About Inventory Txn Architecture? Menu path: Cost Management – SLA => View Transactions => Material Transactions ■ Use Transaction Sources and Transaction Types for Online Queries List of Sources and Transaction Types List of Sources and Transaction Types (cont’d) Accounting Line Types Define the Purpose for the Accounting Entry Use these values to understand the accounting entry Example: COGS Recognition Transaction Menu path: Cost Management – SLA => View Transactions => Material Distributions List of R12 Accounting Line Types Appendix A) Create Material Shipping Burden & SLA Entries B) Discrete Cost Management SLA Model C) Inventory Transactions Architecture D) Creating DFFs for Material Transactions and Sub-Elements Sub-Elements: Enable DFF to Indicate a Shipping Burden Sub-Elements: Enable DFF to Indicate a Shipping Burden (Cont’d) Unclick here Sub-Elements: Enable DFF to Indicate a Shipping Burden (Cont’d) Use an existing value set Sub-Elements: Enable DFF to Indicate a Shipping Burden (Cont’d) Unclick here Change this Change these values values Sub-Elements: Enable DFF to Indicate a Shipping Burden (Cont’d) Sub-Elements: Enable DFF to Indicate a Shipping Burden (Cont’d) Click here to refreeze Enable DFF for Material Transaction Types Unclick here Enable DFF for Material Txn Types (Cont’d) Change this Change these values values Enable DFF for Material Txn Types (Cont’d) Click here to refreeze Acknowledgements ■ Mohan Iyer and John Peters – Paper review and support of shared Vision environment ■ Ashish Pathak and Anup Jha – Oracle Cost Development – Workarounds with SLA and Create Accounting limitations Any Questions? Doug Volz [email protected] www. volzconsulting.com +1 510 755‐7050 Please complete the session evaluation We appreciate your feedback and insight You may complete the session evaluation either on paper or online via the mobile app
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