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An Introduction: Oracle SubcontractingSrikanta NanjundaswamyOracle Senior Software Engineer


The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decision. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

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An Introduction: Oracle SubcontractingSrikanta NanjundaswamyOracle Senior Software Engineer

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AGENDA

• Introduction to Subcontracting• Types of Subcontracting • Subcontracting in Oracle• Features of Oracle subcontracting• Basic setups in Subcontracting• Upcoming Trainings• Demo• Q&A

© 2010 Oracle Corporation – Proprietary and Confidential

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Introduction to Subcontracting

Subcontracting is a common business practice wherea brand-owner or an Original Equipment Manufacturer (OEM) outsources its entire manufacturing operations or a portion of itby entering into a contractual agreement with an external manufacturing service provider commonly known as a Manufacturing Partner (MP).

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Types of Subcontracting

• Extent of Outsourcing:Enterprises can opt to outsource the entire manufacturing process or a portion of itby collaborating with a MP.• Nature of Component Supply:Enterprises can either own and manage the components for consumption at theMP's facility, or engage a supplier to either own and consign inventory, or dropship the components at the MP's facility. In other situations, the OEM may chargethe MP by registering a sale of the components resulting in a complete transfer ofOwnership• Shipment of Finished Goods:Enterprises can decide to either supply finished goods directly to the customer orenter into a contractual agreement with the MP to drop ship the finished goods tothe customer's facility.

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Subcontracting In Oracle

Oracle supports the following types of subcontracting business practices that involvecomplete outsourcing of assemblies and most importantly, component sale by an OEM to a MP:• Chargeable SubcontractingChargeable Subcontracting is a practice where the OEM completely outsources themanufacturing of an assembly to an MP and makes a provisional sale of components byinvoicing the MP• Buy/Sell SubcontractingBuy/Sell Subcontracting is a business practice where an Original EquipmentManufacturer (OEM) completely outsources the manufacturing of an assembly to aManufacturing Partner (MP) by buying the assembly from the MP and mostimportantly, selling the components to the MP that are consumed in the manufacturingof the assembly at the MP's premises. The ownership of the components is transferredto the MP immediately after the OEM ships the components to the MP unlikeChargeable Subcontracting where the OEM retains the ownership of the componentsthroughout the subcontracting process.

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Features of Oracle subcontracting

> Modeling of OEM and MP as inventory organizations to facilitate tracking andsimulation of subcontracting processes.> Chargeable Subcontracting support is only for Standard Costing Orgs and canbe deployed in Japan, Taiwan, and Korea.> Buy/Sell Subcontracting support is for Standard, Average, FIFO and LIFOcosting methods and can be deployed in any country.>Separate tracking of accounting transactions and variances associated withsubcontracting component sales in the OEM Org by setting up different accountsfor Subcontracting COGS, Subcontracting Revenue, and SubcontractingReceivables.(only for chargeable subcontracting)>Integrated planning (using ASCP) and subcontracting execution in discrete andproject manufacturing environments to manage and control processes throughoutthe extended supply chain>Support for different types of component supplies both Pre-positioned andSynchronized,

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Features of Oracle subcontracting

> Automatic creation of discrete jobs, replenishment sales order and purchase orders by running interlock manager>Dedicated Subcontracting Workbench and Reports providing better tracking andincreased visibility throughout the subcontracting life cycle.

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Basic setups in Subcontracting• Setting Profile Options• Defining Original Equipment Manufacturer (OEM) Organizations• Defining Manufacturing Partner Organizations• Defining WIP Parameters• Defining Customers and Suppliers• Associating Customers and Suppliers• Setting Up Item Definitions• Setting Up Bills of Material for Outsourced Assemblies• Setting Up Subcontracting Accounting• Defining Receivables Transaction Types• Defining Transaction Sources• Setting Up Order Management Transaction Types• Setting Up Standard Costs of Components and Assemblies• Defining Price Lists for Subcontracting Components• Setting up Purchase Price of an Outsourced Assembly• Setting Up Shipping Network/Shipping lead times• Defining Sourcing Rules• Defining Netting Agreements.

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Demo Setups – Profile set up

The above two profiles should be enabled to use subcontracting

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Demo Setups – Defining OEM and MP orgs

OEM org is defined and OEM org location is attached from Inventory responsibility

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MP3 org is defined and MP org location is attached from Inventory responsibility

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Define OEM org Organization parameters from Inventory responsibility

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Define MP org Organization parameters from Inventory responsibility

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Demo Setups – Modelling Customer and Suppliers

Model OEM org as a supplier and MP org as customer and supplier

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Demo Setups – Associating Customer and Supplier to OEM and MP orgs

Associate Supplier modelled from OEM org as supplier in OEM org parameters

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Demo Setups – Associating Customer and Supplier to OEM and MP orgs

Associate Supplier and customer modelled from MP org as supplier and customer in MP org parameters

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Demo Setups – Defining WIP parameters

Define WIP paramters for MP org

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Demo Setups – Receivables Transaction Types

Define the Recevables Transaction types

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Demo Setups – Defining Transaction Sources

Define the Recevables Transaction typesTransaction sources from Order Management

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Demo Setups – Defining Order Management Transaction Types

Define the Transaction types in Order management which is used while creating sales order

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Demo Setups – Defining Order Management Transaction Types

Define the Transaction types in Order management which is used while creating sales order

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Demo Setups – Defining Shipping Networks

Define shipping networks between OEM and MP org from Inventory

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Define shipping networks between OEM and MP org from Inventory and make sure Default order type for Internal orders are assigned

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Define shipping networks between OEM and MP org from Inventory and assign a default shipping method

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Demo Setups – Defining Items In MP and OEM orgs

Define Items from Inventory

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Define Items from Inventory , ensure you have checked outsourced assembly flag for Outsourced assembly

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Define Items from Inventory and ensure for the assembly you have set as Do not release for Release time fence so that planning does not release the assembly order to MP org

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Define Subcon assembly component from Inventory

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Demo Setups – Defining BOM In MP and OEM orgs

Define BOM in OEM org

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Demo Setups – Defining BOM In MP and OEM orgs

Define BOM in MP org

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Demo – Creation Of PO

Create a PO for the Subcontracted assembly in OEM org OU

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Demo – Launching Interlock Manager

Launch Interlock manager from Subcontrating super user responsibility.Make sure the paramters are correct and it refrences the correct OU

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Demo – Viewing results in Subcontracting Workbench

Navigate to Subcontracting workbench from Suncontracting super user responsibility

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Query in the subcontracting workbench with the OEM and MP org and you can view the subcontracted assembly purchase orders

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Also you can view components used for the subcontracting order and also the quantity required for each component and quantity allocated

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Also you can view components used for the subcontracting order and also the replenishment order for the components

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Demo – Workorder and sales order creation after Interlock

Also you can view subcontracting workoprder created in the WIP for the outsourced PO by interlock manager

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Demo – Workorder and sales order creation after Interlock

Also you can view the replenishment sales order created for the component in Order management

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UpComing Training

A Complete Subcontracting process Demo

Integration of Subcontracting with ASCP

Subcontracting and ECO


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