oracle ebs opm refernce guide for gulf oil

Oracle Application

Configuration Guide

Oracle Process Manufacturing

Thirubalamurugan (Functional Consultant)

Oracle Process Manufacturing Configuration Revised 12/31/13

BAPCO LUBRICANTS BUSINESSS UNIT

2

TABLE OF CONTENTS

Business Flow – Lubricants Business Unit.............................................................................................................................................................................. 3

Enterprise Organization Structure – Lubricants Business Unit ............................................................................................................................................... 4

Configuration Requirement – Stock Transfer from Dubai Blending Plant to Bahrain Distribution Centre ............................................................................... 5

Preliminary Setup Overview ................................................................................................................................................................................................. 6

Business assumptions made in Configuring OPM for Lubricant Business Unit ....................................................................................................................... 7

Application Setup Control Sheet – Oracle Process Manufacturing ......................................................................................................................................... 8

Application Profile Options ................................................................................................................................................................................................... 9

Application Setup Sheet ......................................................................................................................................................................................................11

Glossary ..............................................................................................................................................................................................................................43



3

Business Flow – Lubricants Business Unit

The Business Outline for the Lubricants is illustrated given below

DUBAI

BAPCO-LBU Business Flow Outline (Manufacturing)

Sales

Order

OFF-LINE MFG

DUBAI

Release

Production

Schedule

Purchase

Order Work

Order

Receive Raw

Materials

Step 1

Blending

Step 2

Filling & Packing

Shipment -OLWS

Raw Material Store

Customers(B2B, B2C)

B2B

1. Automotive

2. Industrial

B2C

1. Retail

Forecast

Shipment

W/House

BAHRAIN

W/House

DUBAI

Heading

B.P Vendor -I1. Base Oil2. AdditiveVendors -II3. Packing

Product

Formulation -

LAB

Product

Formulation -

LBU

Product

CostingBlending Fee

R/M Cost

Product Information

Demand

Cost

Supply

Export-Sea Freight

Domestic

Actual time to manufacture

finished goods

FG Store

Staging

Defective



4

Enterprise Organization Structure – Lubricants Business Unit

The ERP Structure Modelled for the Lubricants is illustrated given below

Lab org

HR Business

Group

Legal

Entity

Primary

Ledger

MO:

Operating

Unit

LBU

ORACLE EBS LINE OF BUSINESS – LUBRICANT BUSINESS UNIT (BAPCO)

ORGANIZATION MODEL

W/House

BAHRAIN

OFF-LINE

MFG

DUBAI

Ledger

BAPCO

BAPCO

BAPCO LBU- BAHRAIN

(Location)

BAPCO LBU - DUBAI

(Location)

BAPCO - BG

BAPCO - LEDGER

- Chart of Accounts

- Currency (USD)

- Calendar (Jan-Dec)

- Standard Accrual

BAPCO – LE

BAPCO - Lubricant Business Unit

INVENTORY

ORGANIZATION

- Dubai Plant

- Dubai Warehouse

- Bahrain Warehouse

SUBINVENTORY

FG RM FG

BAHRAIN

PROPOSED

EXISTING

Effective From CRP III

W/House

DUBAI

FG

Out of

System



5

Configuration Requirement – Stock Transfer from Dubai Blending Plant to Bahrain Distribution Centre

The Stock Transfer between the Process Organizations for the Lubricants is illustrated given below

DUBAI – WAREHOUSE

[ DISTRIBUTION ORG ]

BAHRAIN WAREHOUSE

[DISTRIBUTION ORG]DUBAI –

MANUFACTURING

[ MFG ORG ]

Distribution

Organization

LOGISTICS SERVICE

(L.S)

[BAHRAIN]

Distribution Organization

[Ware House]

WAREHOUSE

[BAHRAIN]

FIN.GOOD -FG

(LUB OIL)

SUBINV

STAGING -FG

(LUB OIL)

SUBINV

Indicates Material Movement from Blending Plant Organization [Dubai] to Bahrain Warehouse

WAREHOUSE

[DUBAI]

FIN.GOOD -FG

(LUB OIL)

SUBINV

Blending Process

Plant [B.P]

BLENDING PLANT

[B.P]

FIN.GOOD -FG

(LUB OIL)

SUBINV

RAW MATERIALS

(BASEOIL &

ADDITIVES)

STAGING -FG

(LUB OIL)

SUBINV

Oracle Inventory allows two types of material transfers between two inventory organizations:

• Direct: Materials are considered to have been transferred immediately, and the quantities are decremented and incremented in the source and destination

Organization respectively at the same time.

• In-Transit: There is a time lag between when the material leaves the source organization, and when it is received at the destination organization.



6

Preliminary Setup Overview

The Preliminary Setup requirement for the Lubricants is illustrated given below



7

Business assumptions made in Configuring OPM for Lubricant Business Unit Product Development formulation will be done in the Dubai Lubricants Blending Plant Organization (defined as Plant) for which the formulation parameters such as filling temperature (29.5’c), Blend density are assumed. Formulation and Packaging components are separately defined in the Custom Formula BOM and integrated as a single level Bills of Material into the Oracle Formulator using Formula Class.

Process Execution batch creation and completion follows lot based production, (Blending reference refers to Lot contains multiple work orders) which is an offline manufacturing. Batch production orders are created in the system for the completed work orders. Batch Material Variances are reported for the components periodically.

OPM Financials considers Actual Costing is used to calculate and set the product cost for BAPCO Lubricants. Periodic Moving Average Cost (PMAC) Type is used to calculate Raw Material Cost and Product Calculation Cost. Costing is reported at Legal Entity Level.

OPM Financials considers Cost Component Class (element) used are Material (Base oil, additives, Packaging) and Overhead (Blend cost) the two elements used. Cost

Category is used to associate the Items to the Cost component class.

OPM Financials considers Outside production, set up Overheads to reflect the amount of resources other than the production or ingredients used in the product; you can then include overhead costs in the cost of producing the product. For BAPCO Lubricants, Blend Cost incurred at Blending Plant is assumed as Overhead cost component class and is included in product cost.

OPM Inventory considers, for Stock Transfer between Dubai Lubricants Blending Plant and Bahrain Lubricants Distribution Centre. “Within Same Legal entity, transfer

between process organizations “.Actual Cost will consider the inventory transfers between process inventory organizations within the same Legal Entity at the source organization cost.

Configuration Aspects Source Organization (From) Destination Organization (To)

(1)

Organizations Dubai Lubricants Blending Plant Dubai Lubricants Distribution Centre

Shipping Network – Type of Transfer Inter – Org Transfer Inter- Org Transfer

Shipping Network – Receipt Routing Direct Direct

Shipping Network - FOB At Receipt At Receipt

Shipping Network - Transfer Price Not Required Not Required

Shipping Network - Transfer Charges Not Applicable Not Applicable

Shipping Network - Document Reference No Supporting Documents No Supporting Documents

(2)

Organizations Dubai Lubricants Distribution Centre Bahrain Lubricants Distribution Centre

Shipping Network – Type of Transfer Internal Order Internal Order

Shipping Network – Receipt Routing In transit In transit

Shipping Network - FOB At Receipt At Receipt

Shipping Network - Transfer Price Required Required

Shipping Network - Transfer Charges Applicable Applicable

Shipping Network - Document Reference Supporting Documents Supporting Documents



8

Application Setup Control Sheet – Oracle Process Manufacturing

Setup Application Responsibility

Profile Values Common System Administrator

Item Cost Category Flex field Structure Inventory System Administrator

Define Inventory Organization Parameter (OPM Specific) Inventory LUBE Inventory Super User

Define Item Templates (OPM) Inventory LUBE Inventory Super User

Cost Category Inventory LUBE Inventory Super User

Assign Item to Item Cost Category Inventory LUBE Inventory Super User

Product Development Security Parameters Oracle Process Manufacturing LUBE Product Development Security Manager

Process Execution Parameters Oracle Process Manufacturing LUBE Production Supervisor

Setup Formula Class Oracle Process Manufacturing LUBE Formulator

Cost Analysis Code Oracle Process Manufacturing LUBE OPM Financials

Cost Types Oracle Process Manufacturing LUBE OPM Financials

Cost Calendars Oracle Process Manufacturing LUBE OPM Financials

Cost Calendar to Legal Entity Oracle Process Manufacturing LUBE OPM Financials

Cost Calendar Period Status Oracle Process Manufacturing LUBE OPM Financials

Cost Component Class Oracle Process Manufacturing LUBE OPM Financials

Material Cost Component Class Oracle Process Manufacturing LUBE OPM Financials

Define Cost Factors Oracle Process Manufacturing LUBE OPM Financials

Fiscal Policies Oracle Process Manufacturing LUBE OPM Financials

Event Fiscal Policies Oracle Process Manufacturing LUBE OPM Financials

Assigning Ledgers Oracle Process Manufacturing LUBE OPM Financials

Define Blending Plant Resource Oracle Process Manufacturing LUBE Process Engineer

Resource Costs Oracle Process Manufacturing LUBE OPM Financials

Fixed Overheads Oracle Process Manufacturing LUBE OPM Financials



9

Application Profile Options

Profile Option Name Profile Level Profile Level Value Profile Value

GL Ledger Name Responsibility LUBE-Cost Management - SLA Bapco

HR: Security Profile Responsibility LUBE-Cost Management - SLA Bapco

HR:Business Group Responsibility LUBE-Cost Management - SLA Bapco

HR:User Type Responsibility LUBE-Cost Management - SLA HR User

MO: Default Operating Unit Responsibility LUBE-Cost Management - SLA Lubricants Business Unit

MO: Operating Unit Responsibility LUBE-Cost Management - SLA Lubricants Business Unit

GL Ledger Name Responsibility LUBE-Formulator Bapco

HR: Security Profile Responsibility LUBE-Formulator Bapco

HR:Business Group Responsibility LUBE-Formulator Bapco

HR:User Type Responsibility LUBE-Formulator HR User

MO: Default Operating Unit Responsibility LUBE-Formulator Lubricants Business Unit

MO: Operating Unit Responsibility LUBE-Formulator Lubricants Business Unit

GL Ledger Name Responsibility LUBE-OPM Financials Bapco

HR: Security Profile Responsibility LUBE-OPM Financials Bapco

HR:Business Group Responsibility LUBE-OPM Financials Bapco

HR:User Type Responsibility LUBE-OPM Financials HR User

MO: Default Operating Unit Responsibility LUBE-OPM Financials Lubricants Business Unit

MO: Operating Unit Responsibility LUBE-OPM Financials Lubricants Business Unit

GL Ledger Name Responsibility LUBE-OPM Product Development Bapco

HR: Security Profile Responsibility LUBE-OPM Product Development Bapco

HR:Business Group Responsibility LUBE-OPM Product Development Bapco

HR:User Type Responsibility LUBE-OPM Product Development HR User



10

MO: Default Operating Unit Responsibility LUBE-OPM Product Development Lubricants Business Unit

MO: Operating Unit Responsibility LUBE-OPM Product Development Lubricants Business Unit

BOM: Hour UOM Site Site PCS

GMF: Cost Allocation Factor Calculation Site Site Dynamic

GMF: Landed Cost Adjustments Transfer Method to Inventory In Actual Costing Site Site Apply LC Adjustment based on the Period Opening Balance



11

Application Setup Sheet

Step Navigation Path

Setup Tasks Setup Explanation

OPM-01 LUBE Product

development Security

Manager >

Organization

Parameter

Setup Procedure

1. Navigate to the Product Development Parameters window.

2. Enter Organization as the context inventory organization

(T03- Dubai Plant)

3. Organization Type is: (Plant- Enabled)

4. Formula (T) > Default Consumption Type (Automatic)

5. Formula (T) > Enter Yield UOM as: (Process)

6. Formula (T) > Automatic Product Quantity Calculation:

(No)

7. Formula (T) > Enter Byproduct Active as: (No)

8. Formula (T) > Default Formula Status as: (Approved for

General Use)

9. Formula (T) > Version Control as: (Optional)

10. Formula (T) > Mass UOM as: (Process)

11. Formula (T) > Volume UOM as: (Process)

12. Formula (T) > Volume UOM as: (Process)

13. Operation (T) > Default Operation Status as: (Approved

for General Use)

14. Operation (T) > Default Operation Status as: (Optional)

15. Routing (T) > Default Routing Status as: (Approved for

General Use)

16. Routing (T) > Default Routing Status as: (Optional)

17. Recipe (T) > Default Recipe Status as:

(Approved for General Use)

18. Recipe (T) > Default Validity Rule Status as:

(Approved for General Use)

19. Recipe (T) > Default Recipe Type as:

(General)

20. Recipe (T) > Default Version Control as:

Define Product development Security Parameter :

Pre-requisites:

1. Inventory > Setup Inventory Organizations (OPM

Enabled- T03-Dubai Lubricants Blending Plant.

2. Inventory > Setup > Sub inventory

3. Inventory > Setup Unit of Measures (Mass UOM,

Volume UOM)

Product Parameters

Set up Oracle Process Manufacturing (OPM) Product

Development parameters in the Product Development Security

Manager responsibility.

You can set up parameters for new organizations, or query and

modify parameters for existing organizations.

Parameter values can vary by organization. These parameters

control various functions in the Product Development

application.

For example, if version control for formulas is enabled for

organization ORG1, then at the point of saving a formula, the

application checks the formula organization to determine

whether or not to apply version control rules. Organization

ORG2 can have a different setting for formula version control

Organization defined as “Plant” (Blending Plant)

The Inventory Organization defined as OPM enabled will be

available to the product development. This organization may be

process manufacturing plant or laboratory (R&D) organization.

Note: For BAPCO, Blending Plant(Dubai) is defined as “Plant”



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Organization Parameter > Formula (T)

Organization Parameter > Operation (T)

organization which will do the Manufacturing of lubricants.

Laboratory is in-applicable which is out of scope for the BAPCO

Consumption Type:

Default Material Consumption Type as “Automatic” refers to the

Automatic issue of Blending batch materials such as additives,

base oils, packaging from the supply sub inventory RMS.

By Product Active :

By Product Active disables this function while creating formulas

and batch work orders in the OPM Application.

Note: By products are In-applicable for BAPCO Lubricants

Formula Status :

Setting up a default status “Approved for General Use” approves

automatically for all formulas created in the OPM Formulator

and it sets the status to Approved for General Use.

Note: The default status is used for integrating the Create

formula and BOM Custom Application with the Oracle OPM

formulator application.

Mass UOM, Yield UOM , Volume UOM:

MASS to specify use of the mass unit of measure type when item

quantities are converted to a common unit of measure for

scaling, theoretical yield, and total

output quantity.

VOL to specify use of the volume unit of measure type when

item quantities are converted to a common unit of measure for

scaling, theoretical yield, and

total output quantity.



13



Organization Parameter > Routing (T)

Organization Parameter > Recipe (T)

Organization Parameter > Substitution (T) - N/A

Organization Parameter > Laboratory (T) – N/A

Operation and Routing

Routing is Inapplicable for BAPCO Lubricants since it is an

Off-Line Manufacturing practiced currently. Hence it is not

configured.

Version Control

For BAPCO Lubricants, Version Control is set as Optional one

for all Formulas created in the OPM Application.



14



OPM-02 LUBE Formulator >

Setup Formula Class

Setup Procedure

1. Define Formula in the Custom Application “Create

Formula” with a Formulation Code, Approve it.

2. Query in the Oracle formulator, against the formula class

for the list of formulation code integrated from the custom

application (Setup > Formula Class)

3. Assign the Formula Class to the Oracle Formula (Formula >

Formula Class)

Define Formula Class

Formula Class is defined in the custom application “Create

Formula” for the blending plant organization and the formula is

defined. This will get integrated with the Oracle Formulator

while approving the Create formula in the custom application.

(Automatic Integration).

Pre-requisites:

1. Change Organization > Dubai Blending Plant (T03)

2. Create Formula > Setup Formulation Code

Formula Class

Formula code identifies formula with similar characteristics

such as having a fixed percentage by weight for its components

base oil and additives. Thus they are grouped and given a unique

name as formulation code. This way formula creation is

simplified and makes it easier for use.

Note:-

Class – Should be alphanumeric with a Maximum length of 8

Characters only.

Description – Should not include any special characters such as

*, x and scientific symbols in its description. Example Pack Size

24 x 7 should not use Multiplication operator.



15



OPM-03 LUBE Production

Supervisor > Setup >

Parameters

Setup Procedure

1. Enter the Name of the organization

(Dubai Lubricants Blending Plant)

2. Enable the Plant to for the Organization (Plant-Enabled)

3. Batch Setup (T) > Display Unconsumed/Un yielded

Materials (Enabled)

4. Batch Setup (T) > Allow Material deletion (Pending)

5. Batch Setup (T) > Validate Plan Dates (Validate planned

Start dates only)

6. Create Batch (T) > Create Shortages (Enabled)

7. Create Batch (T) > Copy Formula Text (Enabled)

8. Create Batch (T) > Create Routing Text (Enabled)

9. Batch Steps (T) > Default Actual Resource Usage

(Enabled)

10. Batch Steps (T) > Display Non Working Days (Enabled)

11. Document Numbering (T) > Batch Numbering

(Automatic)

12. Document Numbering (T) > Batch Last assigned (00)

13. Inventory Transactions (T) > Auto Consume from Supply

Sub inventory Only (Enabled)

14. Inventory Transactions (T) > Auto Consume from Supply

Sub inventory Only (Enabled)

15. Inventory Transactions (T) > Supply Sub inventory (RMS)

16. Inventory Transactions (T) > Yield Sub inventory (FGS)

Setup Process Execution Parameters

Pre-requisites:

1. Set up organizations in the Oracle Inventory

application.

2. Complete setting up in OPM Product Development.

3. Change Organization > Dubai Blending Plant (T03)

Parameter

The Oracle Process Manufacturing (OPM) Process Execution

parameters are defined at the organization level. The OPM

Product Development and Oracle Inventory Organization

Parameters must be defined to set up OPM Process Execution

parameters.

This is setup to create batches in the Oracle Process

Manufacturing application.



16



Parameters > Batch Setup (T)

Parameters > Batch Setup (T)

Material Shortage Check:

Select Check Shortages to check inventory shortages during

batch creation. The shortages are checked at the inventory

organization level



17



Parameters > Batch Steps (T)

Parameters > Document Numbering (T)

Batch Steps inapplicable for BAPCO Lubricants

since it is an offline manufacturing. (Not required)

Document Numbering:

Set Batch Numbering as: Automatic to generate the batch

numbers automatically. Manual to enter a batch number

manually.



18



Parameters > Inventory Transactions (T)

Inventory Transactions:

Setup Defaulting sources of sub inventory for batch material

consumptions since the automatic consumption is setup for the

batch material consumption.

Supply Sub inventory : RM Raw Materials

Yield Sub inventory : FG Products



19



OPM-04 LUBE OPM

Financials > Setup >

Analysis Codes

Setup Procedure

1. Enter Analysis Code (DIR)

2. Enter Description (Direct Cost)

Define Cost Analysis Code

Pre-requisite :- NIL

Cost Analysis Code

An individual component cost identified by a particular cost

component class can be further broken down using cost analysis

codes for more granular tracking of costs.

The cost analysis codes are used to group component costs from

multiple cost component class types to provide an alternate

view of the total cost. For example, you can define direct or

indirect analysis codes for each cost component.

Component Analysis Value ($)

MATERIAL DIR 18.76595

PACKAGING DIR 5.76598

EQUIPMENT IND 13.5024

Total Item Cost 38.03433



20



OPM-05 LUBE OPM


Cost Types

Setup Procedure

1. Enter Cost Type (PMAC)

2. Enter Description (PMAC)

3. Choose Cost Method (Actual Cost)

4. Choose Raw Material Calculation Type (Periodic Moving

Average Cost)

5. Choose Product Calculation Type (Periodic Moving

Average Cost)

Actual Costing Method Raw Materials Finished

Products

Period Moving Average Cost (PMAC) Yes Yes

Period Weighted Average Cost (PWAC) x x

Perpetual Weighted Average (PPAC) x x

Last Transaction (LSTT) x x

Last Invoice (LSTI) x x

Define Cost Type

Pre-requisite :-

1. Setup Legal Entity

2. Setup Cost Calendar

Cost Type: (Periodic Moving Average with Cost Method

Actual Costing)

Cost Method

Actual Costs of items are developed using the actual business

transactions. The product costs are not based on the formula,

routing and recipe details but rather based on actual

consumptions of materials and resource usage recorded in the

production batches.

The costs are calculated using one of several weighted average

or last cost methods by aggregating transactions recorded over a

cost period.

The cost calculation method selected for raw materials need not

have to be the same as the one selected for products. You can

mix and match various methods and decide on a

Combination that best suits your needs.

With actual costing, items for which there are no transactions in

a calendar period will have cost components moved and carried

over from the previous period to the current period. This insures

that all cost items have an actual cost within the period

processed

Note: For BAPCO Lubricants, Actual Cost method is preferred

since Blend Material (base oil) Raw material price is a dynamic

and fluctuating one.



21



Periodic Moving Average Cost (PMAC):

OPM calculates the average cost for the period while moving

PREVIOUS PERIOD'S COST with LAST PERIOD'S inventory balance and

cost:

PMAC is calculated by DIVIDING the result of -- the quantity of the

PRIOR PERIOD inventory balance MULTIPLIED by the prior period

cost, plus the SUM of the transaction quantity MULTIPLIED by price --

by the prior period inventory balance PLUS the SUM of transaction

quantity, as shown in the following illustration.

Where:

Prior Period Inv Balance - This is the prior period inventory

balance captured from the inventory period ending balances.

Prior Period Cost - The prior period actual cost component

from the cost component details table.

Trans Qty - Receipt Transaction Quantities or AP Interfaced

Quantities within the costing period.

Price - Receipt estimated prices or AP invoice final prices

within the costing period.

Cost Calculations

You can use three different time frames to develop actual Cost

averages:

• Current period data only

• Current period data with the beginning inventory balance

• Current period data averaged with actual cost data from the

beginning of the cost calendar.

Raw Materials

(a) Purchase Order Receipts: The raw material estimate price

established on a PO is used as the price for receipts

(b)Invoices Recorded in Accounts Payable:

The estimated price on a PO can be different from the actual

amount paid to the Supplier when an invoice is received. OPM

captures the actual, final prices paid for raw materials on the

invoices and the price on the invoice overrides the price recorded

on the receipt.

Note: For BAPCO Lubricants,

All Raw Materials (Base Oil and Additives) are procured from

the external supplier and received into the Dubai Blending

Plant. The PO Receipt is considered for Raw material cost

calculations.

Finished Goods

(c) Production Batches

OPM calculates the actual cost for a finished product based on

actual ingredient consumption and resource usages recorded in

production batches.

The product material costs are based on the actual raw material

usages in batches and the cost calculated for the raw materials.


Product Cost



22



Example : Item Cost (Calculated by PMAC)

Raw Materials (Blendable)

Raw Materials (Non-Blendable)

= Cost of Raw Materials (Base Oil, Additives, Packaging )

+ Cost of Blending Fee

Batch unit cost is calculated by DIVIDING -- the SUM of

ingredient quantity, MULTIPLIED by the ingredient actual cost,

PLUS the SUM of resource use MULTIPLIED resource rate – by the

batch item quantity, as shown in the following illustration:

Period Product Unit Cost is calculated by DIVIDING -- the SUM

of the period batch quantity MULTIPLIED by batch unit cost, PLUS

the SUM of allocations MULTIPLIED by the SUM of adjustments --

by the SUM of all period batch quantity, as shown in the

following illustration

(d) Overheads

You can assign and apply overhead costs to either raw materials

or finished goods.


Blending Cost (offline manufacturing) is defined as Overhead.

For Raw Materials (Non-Blendable) Items landed cost overhead

is considered.

Overhead Unit Cost is calculated by DIVIDING the Item

Quantity into the SUM of Overhead Usage, MULTIPLIED by

Overhead Quantity, MULTIPLIED by Resource Cost, as shown

in the following illustration.



23



FG Products

Overhead Cost displays the calculated overhead cost. The cost

equals the resource cost MULTIPLIED by the quantity of the

resource used for this overhead, DIVIDED by the item quantity.

Note:

Outside production, set up overheads to reflect the amount of

resources other than the production or ingredients used in the

product; you can then include overhead costs in the cost of

producing the product.

(e) Inventory Transfers

Inventory can be transferred from one organization to another

using a simple Inter-Organization Transfer or using Internal

Orders where necessary supporting Documents are required.

* Actual Cost will consider the inventory transfers between

process inventory organizations within the same Legal Entity at

the source organization cost.

(Case is taken for BAPCO Lubricants)

For transfers that go across Legal Entities, transfer price is used.

For transfers that originate from a discrete inventory

organization to a process inventory organization, transfer price

is used regardless of whether the transfer is within or across

Legal Entities.

In the Cost Component Class, Product Cost Calculation

indicator lets you flag those component costs to be excluded



24



from the Cost Rollup process. Certain identifiable costs (for

example, transfer costs) are for specific ingredient items, and

are not required to be rolled up into the products.

In the Fiscal Policies, internal orders consider PPV during its

item transfers.

Note: For BAPCO Lubricants, it is assumed Stock Transfer

happens “within Same Legal entity, transfer between process

organization “

Example:

T01 – Bahrain Lubricants Distribution Centre

(OPM Enabled)

T02 – Dubai Lubricants Distribution Centre

(OPM Enabled)

T03 – Dubai Lubricants Blending Plant

(OPM Enabled)

Shipping network is established between T03 (Source) to T02

(Destination) as Inter Org Transfer with a direct receipt.

Shipping network is established between T02 (Source) to T01

(Destination) as Inter Org Transfer or Internal Order with a

receipt type as In transit.

Note:

If you are using the Period Moving Average Cost, then use the

same start and end dates for the period as the fiscal financial

calendar defined for your Legal Entity's Primary Ledger in GL



25



OPM-06 LUBE OPM


Cost Calendars

Setup Procedure

1. Enter Calendar (LUBECAL)

2. Enter Description (Lubricants Process Calendar)

3. Choose Start Date (01-JAN-2013)

4. Enter the Period ( 1-2013)

5. Enter the Description (January 2013)

6. Choose the Start Date ( 01-JAN-2013)

7. Choose the End Date (31-JAN-2013)

8. Repeat the Steps 4 to Steps 7 for adding more records and

Save

9. Navigate to the Assignments , Enter Legal Entity

(Lubricants business unit)

10. Navigate to the Assignments , Enter Cost Type (PMAC)

11. Navigate to the Assignments, Period Status, set the period

status open for the current period. (Open)

Define Cost Calendars

Pre-requisites

1. Legal Entity

2. Cost Types

Cost Calendar

You maintain costs by defining the costing calendars.

A cost calendar can be shared across multiple cost types and

legal entities.

A cost calendar can span multiple years.

For each costing calendar, you can define an unlimited number

of costing periods.



26



Cost Calendars > Assign Cost Calendar

Cost Calendars > Assign Cost Calendar > Period Status > Open

Cost Calendar to Legal Entity

You cannot assign two calendars to the same legal entity and

cost type combination for the same time period

Cost Calendars support multiple legal entities and cost type.

Period Status

Each period is assigned a period status to indicate costing

activity that is permitted.

• Never Opened - the period was never opened. You cannot

establish costs or run any cost processes in a never opened

period.

• Open - all activity is allowed.

• Frozen - no updates can be made for existing items (however,

new item costs can be entered or calculated and their costs

updated).

• Closed - no activity is performed in a closed period. Periods

cannot be reopened for costing activity once they are closed.

The costing calendar is completely separate from the fiscal

calendar and the periods therein.



27



Note: (Do’s and Don’ts)

If you are using the Period Moving Average Cost, then use the same

start and end dates for the period as the fiscal financial calendar

defined for your Legal Entity's Primary Ledger in GL.

You cannot assign two calendars to the same legal entity and cost

type combination for the same time period

Cost Calendars support multiple legal entities and cost type.



28



OPM-07 LUBE OPM

Financials >

Setup > Cost

Component Class

Setup Procedure

1. Enter Component Class (ADDDITIVES)

2. Enter Description (ADDITIVES)

3. Enter Primary Component Class (ADDITIVES) Defaulted

4. Choose Usage (Material/Overhead)

5. Enter Sort Sequence (1,2,3..)

6. Choose Product Cost Calculation (Include in Product Cost

Calculation)

7. Choose Purchase Price Variance Calculation ( Include in

Purchase Price Variance Calculation)

8. Choose Valuation Options (will not be used for Inventory

Valuation)

Define Cost Component Class

Pre-requisites:- NIL

Cost Component Class

The unit cost of an item is usually broken down into several

buckets that can be attributed to the various sources that form

the basis of the cost, for detailed tracking and analysis

purposes.

Cost Component Classes are used to identify the individual

buckets or component costs that make up the total cost,

for example, direct material costs, freight costs, labor costs, and

production or conversion costs and so on.

Any number of cost component classes can be defined and used

to break down the item costs.



29



Cost

Component

Class

Sort

Sequence

Usage Include

Product

Cost

Inventory

Valuation

PPV

BASEOIL 1 Material Yes Yes Yes

ADDITIVE 2 Material Yes Yes Yes

PACKAGING 3 Material Yes Yes Yes

BLENDINGFEE 4 Overhead Yes No No

Usage

The cost component classes are classified into 5 different

elements or usages:

Material - Used

Resource - Not Used

Overhead - Used

Expense Allocation – Not Used

Standard Cost Adjustment types Costs – Not Used from several

ingredients, routings, overheads, and allocations can be

summarized into one or more component classes.



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Cost Component class displayed in Item Costs

Do’s and Don’ts

Once you set the usage indicator for a component class, it cannot be

changed after costs have been defined using this component class.

Once costs have been created or calculated using a component class,

the usage cannot be changed.

Sort Sequence

Enter the Sort Sequence for the component class. It indicates the

order in which component classes displays on forms and reports.

1 is the first or top line and 2 indicate the second line, and so

on. A zero (0) lets the application to determine the sort order


1-BASEOIL,2-ADDITIVES,3-PACKAGING,4-BLENDCOST

Product Cost Calculation

Product Cost Calculation indicator lets you flag those component

costs to be excluded from the Cost Rollup process. Certain

identifiable costs (for example, transfer costs) are for specific

ingredient items, and are not required to be rolled up

into the products.

Select Exclude From Product Cost Calculation if this is a non-

product cost component class.

The default, Include in Product Cost Calculation, applies if the

component class must be included. This flag is not applicable for

Lot Cost.



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Inventory Valuation

Cost component Class must be used in inventory valuation or not

will be defined in this setup.

Select the Include in Purchase Price Variance Calculation option

(default), if the cost for this component class is used in

calculating the inventory valuation for purchase price variance

(PPV). Select the Exclude from Purchase Price Variance

Calculation option, if the component class must not be used in

PPV calculations.



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OPM-08 LUBE OPM


Fiscal Policies

Setup Procedure

1. Choose Legal Entity (Lubricants Business Unit)

2. Choose Ledger (BAPCO)

3. Choose Base Currency (USD)

4. Choose Valuation Method (PMAC)

5. In the Default Material Component, Choose Component

Class (BASEOIL)

6. In the Default Material Component, Choose Analysis Code

(DIR)

7. In the Default Overhead Component, Choose Component

Class (BLENDCOST)

8. In the Default Overhead Component, Choose Analysis Code

(IND)

9. In the Event Fiscal Policy, for the purchase price variance-

purchase orders, choose Book INV at receipt price (No

PPV)

10. In the Event Fiscal Policy, for the purchase price variance-

Internal Orders, choose Book INV at Item Cost (PPV)

11. In the Event Fiscal Policy, for the landed cost charges,

choose Accrued to Item A/P Account

12. In the Assign Valuation Methods, Choose the Ledger

(Bapco) and Cost Type (PMAC)

Define Fiscal Policies

Pre-requisites:

1- Setup Ledger

2- Setup Legal Entity

3- Setup Cost Calendar

4- Setup Cost Type

5- Setup Cost Component Class

6- Setup Cost Analysis Code

Fiscal Policies

The Fiscal Policy options define the Legal Entity-wide

parameters that determine the cost type that will be used for

inventory valuation, the default material and overhead

cost components and analysis codes for actual cost processing,

additional cost types used for costing simulations.

Cost Basis (Create SLA Distributions, Actual Costing)

On the OPM Fiscal Policy window, you can use an option to

specify by legal entity whether the current period or prior

period's cost must be used for creating Distributions. By default

this option creates distributions using the current period's cost.

However, if you are using Actual Costing you can choose to use

the prior period's cost for building journal entries. Since this

option is set at the legal entity level, all of the transactions in

that legal entity use the same cost basis.



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Fiscal Policies defined for the Legal Entity

Setup Event Fiscal Policies

PPV Recognitions

Indicate whether purchase price variance is to be recognized for

booking inventory at standard cost or at the PO Unit Price in

Purchase Price Variance.

For Actual Costing, it is recommended that you set the option to

Book at Receipt Price for easier reconciliation at month end.

Freight and Special Charges

Freight and Special Charges indicate whether freight and

special charges accrue to the item's AP account or if it has its

own accrual account. The valid options are:

• Accrued to Item A/P Account

• Accrued to Accrual Account



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Assign Valuation Methods



35



OPM-09 LUBE Process

Engineer > Setup >

Generic Resources

Setup Process Engineer

1. Enter Resource (BLENDCOST)

2. Enter Description (BLENDCOST)

3. Choose Usage UOM (USD)

4. Choose Cost Component Class (BLENDCOST)

Define Generic Resource

Pre-requisites:-

1. Setup Inventory Organization (OPM Enabled)

2. Setup Unit of Measures

3. Setup Cost Component Class

Define Blending Plant as Generic Resource

Resources are the assets you use to produce batches, including

production equipment and employee labor. Enter a Usage UOM

(usually in hours) by which you measure the amount of time

used for processing this resource. For planning and scheduling,

you must define the UOM to be type Time

Costing

For each resource, you must assign a component classification

code for costing purposes.

Note: For BAPCO Lubricants, Blending Plant is a Offline

Manufacturing, hence this resources are used only for costing

but not for scheduling.

There are 2 resources defined for BAPCO Lubricants

1. Blend cost – Blendable Manufacturing definition

2. Pack cost – Non-blendable manufacturing definition



36



OPM-10

LUBE OPM

Financials >

Resource Costs

Setup Procedure

1. Enter Legal Entity (Bapco)

2. Choose Organization (T03 Dubai Lubricants Blending

Plant)

3. Choose Resource (BLENDCOST)

4. Choose Calendar (LUBECAL)

5. Choose Period (1-2013)

6. Choose Component Class (BLENDCOST)

7. Choose Base Currency (USD)

8. In the Cost Details, Choose the Cost Type (PMAC)

9. In the Cost Details, Enter the Cost (1.000)

10. In the Cost Details, Choose the UOM (USD)

11. Repeat Steps 1 to Steps 10 to add more records for different

Periods (Step 5)

Defining Resource Costs

Pre-requisites

1. Define Resources


3. Setup Cost Type


5. Setup Cost Analysis Codes

Resource Costs

Define your resources with appropriate units of measure,

component classes, and cost analysis codes.

To reflect resource costs incurred during production in the

product cost, set up routings and define the amount or number of

resources used.

Outside production, set up overheads to reflect the amount of

resources other than the production or ingredients used in the

product; you can then include overhead costs in the cost of

producing the product.

In either case, you must first define nominal usage costs

associated with the resources.

You define resource costs for a legal entity and calendar and

period basis. The cost component class assigned to the resource,

and the currency associated with the Organization, are displayed

on this window.

Prior to defining resource costs, define the resource code

identifying the resource.



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Overheads


or finished goods.

Note: For BAPCO Lubricants, Blending Cost (offline

manufacturing) is defined as Overhead. For Raw Materials

(Non-Blendable) Items landed cost overhead is considered.










38



OPM-11 LUBE OPM

Financials > Fixed

Overheads

Setup Procedures

1. Enter Item (LF.QUM00001)

2. Enter Calendar (LUBECAL)

3. Enter Period (1-2013)

4. Choose Cost Type (PMAC)

5. Enter Base Currency (USD)

6. In the Overhead details, Enter Resource (BLENDCOST)

7. In the Overhead details, Enter Component Class Code

(BLENDCOST)

8. Choose Analysis Code (IND)

9. Enter Resource Count (1)

10. Enter Resource Usage (2.208000000)

11. Enter Resource Usage UOM (USD)

12. Enter Item Qty (1)

13. Enter Item UOM (CTN)

14. Repeat the Steps 1 to Steps 13 to add more records for

different items and periods.

Calculate Overhead Unit Cost

Define Fixed Overheads

Pre-Requisites:

1. Set up Organizations (OPM Enabled)

2. Define Items

3. Setup Resources


5. Setup Cost Type


Fixed Overheads

A overhead is a cost associated with a resource other than the

resource usage assigned in the routing.

Overheads


or finished goods.

Note: For BAPCO Lubricants, Blending Cost (offline

manufacturing) is defined as Overhead. For Raw Materials

(Non-Blendable) Items landed cost overhead is considered







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Resource Usage (1.77504 USD) x Resource Count (1) x Resource Cost (1USD)

Item Quantity (1 CTN)

= 1. 77504 USD/CTN




Resource Count

Enter the number of this resource used in the production of the

item in Resource Count. This number is multiplied by the

Resource Usage to calculate the Total resource usage.

For BAPCO Lubricants, Only 1 Blending Plant is used. Hence

count is assumed as 1.

Resource Usage

Enter the amount of the resource used for this overhead in

Resource Usage. Enter the unit of measure in which this

resource is yielded in Resource UOM.



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For BAPCO Lubricants, Resource Usage (Blend Cost USD) is

calculated for the pack sizes as given below for 6 x 4 Pack Size

of 24 Litres

Qty/ Pack

Size Litres

Eq Mass

(Kg)

Eq Mass

(MT)

6 24 20.64 0.0206

1 0.86000 0.0009

Qty/ Pack

Size

Pack

Type Min (Lit)

Max

(Lit)

Blending

Rate

(USD/MT)

Blend Cost

(USD)

Bottle 0.25 1 92

Bottle 4 5 86 1.7716

Pail 20 25 76

Drum 205 210 60

Resource Usage

= Blending Rate (USD/MT) x Eq. Mass (MetricTonnes MT)

= 86 (USD/MT) x 0.0206 (MT)

= 1.7716 USD

Item Quantity

Enter the amount of the item yielded in this production process.

It is assumed that charges are calculated for 1 Unit of Product.



41



OPM-12 LUBE OPM


Cost Factors

Setup Procedures

1. Enter Code (CUSTOMS DUTY)

2. Enter the Cost Factor Name (CUSTOMS DUTY)

3. Enter Description (Customs Duty)

4. Choose the Status (Active)

5. Choose the Pricing Basis (Per-Unit)

6. In the Cost Management, Choose the Allocation Basis

(Value)

7. In the Cost Management, Choose the Cost Component Class

(CUSTOMSDUTY)

8. In the Cost Management, Choose the Cost Analysis Code

(DIR)

9. In the Cost Management, Choose the Acquisition Cost

Indicator (Inventory)

10. In the Billing, Choose the Invoice Line Type (Freight)

11. Repeat Step 1 to Step 10 to define additional types

Define Cost Factors for Freight and Special Charges

Pre-requisites

1. Cost Component Class

2. Cost Analysis Code

This is used to Setup Landed Cost management application in

Oracle Purchasing.

For BAPCO Lubricants, Non-Blendable Item cost calculation

use this functionality to incur costs on freight and special

charges.



42



OPM-13 LUBE OPM

Financials > Set up >

Actual Costs >

Material Cost

Component Class

Setup Procedures

1. Enter Legal Entity (Bapco)

2. Choose Organization (T03 Dubai Blending Plant)

3. Choose the Item Cost Category (LP)

4. In the Material Components, Choose the Cost Component

class code (PACKAGING)

5. In the Material Components, Choose the Cost Analysis code

(DIR)

6. In the Material Components, Choose the Start Date (Date)

7. In the Material Components, Choose the End Date (Date)

8. Repeat the Steps 1 to Steps 7 to add more records for

different Item Cost Category assignments

Define Material Cost Component Class (Actual Costing)

Pre-Requisites

1. Setup Item Cost Category


If you want to track the entire batch from the individual raw

material to intermediary and end product, then setup a unique

component class and analysis code for the raw material and

ingredient calculation.

Item costs are defined using the component classes and analysis

codes.

You setup the component class and analysis code while

calculating raw material cost for purchases and transfers.

For BAPCO Lubricants, following association is done

Cost Component Class Cost Category

ADDITIVES LA

BASEOIL LB

PACKAGING LP

NONBLENDABLES LN



43

Glossary

oracle ebs opm refernce guide for gulf oil

Software