Creating Outside Processing Purchase Orders
You must create a purchase order line for each of the outside processing items you are buying. You can modify purchase order lines to reference jobs or repetitive schedules other than those referenced in the requisition. You can also add a purchase order line and reference a job or repetitive schedule. You can even charge multiple jobs or repetitive schedules for a single purchase order line.
Automatically Generating Purchase Orders from Requisitions
Use the AutoCreate Documents window to generate purchase orders from approved requisitions. You can specify search criteria to locate the requisition lines you want to include on a purchase order, and you can choose whether to create a new purchase order or add to an existing purchase order. See: Autocreate Purchase Order Options.
You can optionally combine multiple requisition lines onto a single purchase order line. In this case, Purchasing takes the lowest price of all the requisition lines for the purchase order line, but you can edit this price after you complete the autocreation process.
Manually Creating Purchase Orders and Lines
You can manually define a purchase order which includes one or more outside processing items. For each purchase order line, you must specify a job or repetitive schedule to charge. You can charge any resource on a job or repetitive schedule which has an autocharge type of PO Move or PO Receipt. You can even charge multiple jobs or repetitive schedules by including several distributions for a purchase order line. See: Entering Purchase Order Distributions.
Approving Purchase Orders
You must approve a purchase order before you can send it to a supplier to authorize work and before you can receive against it. See: Submitting a Document for Approval.
Viewing Purchase Orders
You can view purchase order information including which jobs and/or repetitive schedules you are charging in the Purchase Orders window. You can view all purchase orders linked to a job or repetitive schedule by submitting the WIP Outside Processing report. See: WIP Outside Processing Report.
Foreign Currency Purchases
You can manually requisition and purchase outside processing items in foreign currencies. When you receive against purchase order shipments, Purchasing automatically enters the purchase price in the foreign currency with an exchange rate, and Work in Process converts this and charges the job or repetitive schedule in the functional currency of the work in process organization.
Receiving Outside Processing Items
You receive outside processing items using the receiving functions in Purchasing. From a physical flow point of view, you receive the outside processed assemblies and move them to the next manufacturing operation or into inventory. From a transaction point of view, you actually receive the outside processing items against purchase order lines. The receipt transaction relieves the purchase order, creates the appropriate payables accrual, charges the job or repetitive schedule for the outside resource, and optionally moves the outside processed assembly to the next operation. See: Receiving Transactions.
Direct vs. Standard Receipts
When you receive outside processing items from suppliers, you can optionally receive them directly into work in process or into a receiving/inspection location before delivering them to work in process. If you inspect your assemblies in work in process, for example, you can enter a direct receipt in the Receipts window to immediately charge a job or repetitive schedule for the outside processing. A direct receipt also moves the assemblies to the next operation in work in process if the outside processing item you are receiving is linked to a PO Move resource.
Note: The move transactions are processed only if the Move Transaction Manager is running. See: Transaction Managers and Launching Transaction Managers, Oracle Inventory User's Guide.
If you enter a standard receipt in the Receipts window, you must specify a ship to location. You then use the Receiving Transactions window to deliver the outside processing items to work in process. In this case, you do not charge and move assemblies in work in process until you enter the delivery transaction in the Receiving Transactions window. See: Receiving Transactions.
Receiving Partial vs. Full Quantities
When you receive outside processing items you can receive full or partial quantities against a particular purchase order shipment. If you want to receive a complete shipment, you can use the express option on either the Receipts or Receiving Transactions windows. If not, you can enter the quantity you want to receive. Purchasing charges work in process only for the quantity you receive. For items linked to PO Move resources, Purchasing moves an assembly quantity equal to the quantity you receive.
For partial receipts of purchase order shipments linked to multiple jobs or repetitive schedules, you must specify the quantity to receive against each job or repetitive schedule. Purchasing does not automatically allocate receipt quantities for you.
Receiving Assembly vs. Resource Outside Processing Unit Type Items
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 outside processing item's Outside Processing Unit Type and the outside resource's basis.
If the outside processing 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 outside processing item extended by the outside resource usage rate or amount for each job or repetitive schedule.
In all cases, Purchasing charges the job or repetitive schedule using the extended quantity of the associated outside resource.
Work in Process Resource and Move Transactions
When you receive an outside processing item linked to an outside resource, Purchasing charges the job or repetitive schedule associated with the resource at either the standard cost of the resource or the actual purchase order line price.
If you charge an outside resource at standard, any variance between the resource standard cost and the actual purchase price is written to the variance account associated with the outside resource. If you charge at actual, any variance is charged to the outside processing variance account for the accounting class associated with the job or repetitive schedule. This outside processing variance is recognized at job or period close.
When you receive an outside processing item linked to a resource with an autocharge of PO Move, Purchasing enters a move transaction for the assembly on the job or repetitive schedule you charge. Purchasing enters a move for the assembly quantity you are receiving. As such, you should use outside processing items with Assembly unit types and PO move resources with a basis of Item. It moves the assemblies to Queue of the next operation or to To Move if the resource is in the final operation. You can have only one PO Move resource per operation on a routing.
When Purchasing moves assemblies it is completing the outside operation for the quantity it moves. These operation completions automatically backflush any material associated with the outside operation that has an Operation Pull supply type and charges any WIP Move resources associated with the outside operation. See: Overview of Material Control.
You cannot backflush any serial controlled components at an outside operation with a PO Move resource since the Receipts window does not allow entry of component serial numbers. You can, however, backflush lot controlled components as long as you set your Backflush Lot Entry setup option to one of the automatic FIFO options in the Parameters window in Work in Process. You must enter move transactions on-line using the Move Transactions window in Work in Process if you want to manually record serial and lot numbers for components you backflush. See: Defining WIP Parameters and Performing Move Transactions.
If you receive outside processing items linked to a job or repetitive schedule with an untransactable status, such as On Hold or Cancelled, Work in Process gives these transactions an error status. You can use the Pending Move Transactions window in Work in Process to view the errors and resubmit the transactions. See: Processing Pending Move Transactions.
Managing Returns and Corrections
Oracle Manufacturing gives you the tools necessary to correct over-receipts and to return to suppliers outside processed assemblies that fail your inspection processes.
Correcting Errors in Receiving
If you receive an outside processing item and enter an incorrect quantity, you can easily adjust the receipt using the Corrections window in Purchasing. Purchasing automatically reverses the charges made to a job or repetitive schedule based on the corrected quantity you enter. Purchasing enters a reversing move transaction if you enter a correction for an outside processing item linked to a PO Move resource. Before correcting a receipt for a PO Move resource, you should make sure that a sufficient quantity of assemblies exists in Queue of the operation immediately following the outside operation. See: Corrections.
In general, you may want to prevent the possibility of incorrect receipts by defining a 0% tolerance on outside processing purchase order lines.
Returning Assemblies to Suppliers
If you want to return to a supplier outside processed assemblies that fail your internal inspection, you can enter a return to supplier transaction in the Returns window in Purchasing. Purchasing automatically reverses the outside resource charges made to a job or repetitive schedule based on the return quantity you enter. Purchasing enters a reversing move transaction if you enter a return quantity for an outside processing item linked to a PO Move resource. Before entering a return quantity for a PO Move resource, you should make sure that a sufficient quantity of assemblies exists in Queue of the operation immediately following the outside operation. See: Returns.
