Upgrade to R12 Now - Improvements in Cost Management. Presented by: Douglas Volz

Upgrade to R12 Now - Improvements in Cost Management Presented by: Douglas Volz

Upgrade to R12 Now OAUG elearning Sessions Presenta(on Date Presenter Company Upgrade to R12 Now A Financials Overview Upgrade to R12 Now A Deep Dive into General Ledger Upgrade to R12 Now The InternaRonal and MulR- NaRonal Arena Upgrade to R12 Now Improvements in Cost Management Upgrade to R12 Now Manufacturing and Order Processing Upgrade to R12 Now Realizing Enterprise Value with Projects R12 Upgrade to R12 Now Round Table Discussion Jul 19, 2012 Jul 26, 2012 Aug 2, 2012 Aug 9, 2012 Aug 15, 2012 Aug 23, 2012 Aug 30, 2012 Lee Briggs Mohan Iyer Marsha Edgell/ Thomas Simkiss Douglas Volz Bob Bullman Mike Lennon Thomas Simkiss 2

Douglas Volz Professional Summary Helping people use Oracle since 1990 for Cost AccounRng and related Financials, Manufacturing and EAM modules. 30+ years industry, design and consulrng experience, specializing in the design, implementaron and project delivery for Cost Management business solurons Specific areas of experrse include profit in inventory, inter- company, A/P accruals, mulr- org inventory reporrng, WIP analysis, inventory reconciliaron and margin analysis Presenter at Collaborate (OAUG) and UKOUG since 1996 MulR- naronal experience in twelve countries QualificaRon Summary Former co- designer for Oracle Cost Management Lead the OAUG Cost Management Special Interest Group Prior AccounRng and Cost Management industry experience Sample Project Experience: +1 510 755 7050 doug@volzconsulting.com www.volzconsulting.com Slide 3

Contact InformaRon Thomas Simkiss, JD, CPA Tsimkiss@BizTech.com Lee Briggs Lbriggs@BizTech.com Bob Bullman Bbullman@BizTech.com Mike Lennon Mlennon@BizTech.com Mohan Iyer mohan@fscpsolurons.com Marsha Edgell Medgell@BizTech.com Douglas Volz doug@volzconsulrng.com 4

p R12 Cost Management Related Features Agenda MOAC MulR- Org Access Control Subledger AccounRng OPM & Discrete CosRng Re- Designed A/P Accruals COGS RecogniRon Cost- Related BOM Features Period Close Drilldown As- of Dates for Inventory ValuaRon ReconciliaRon Challenges Cost Rollup Changes Summary Slide 5

R12 MulR- Org Access Control Mostly affects operarng unit level funcrons Allows you to access informaron across mulrple operarng units without changing responsibilires Set up a security profile lisrng the operarng units to access Run Security List Maintenance concurrent program Assign the security profile using the MO: Security Profile Slide 6

R12 MulR- Org Access Control Slide 7

SLA: Primary and Secondary Ledgers p Primary and Secondary Ledgers In Release 12 Subledger AccounRng replaced Global AX Primary to secondary ledger mapping is much beker Corporate Consolidated Ledger Corporate Consolidated Ledger (USD) Secondary Ledger Switzerland (CHE) European LSP s LSP s SLs Korea (KRW) Asia-Pac LEs Swiss PL (USD) European PL (USD) USA PL (USD) Slide 8

Oracle Discrete CosRng and SLA p Flexible variance account recogniron for: Invoice price and purchase variances Average cost adjustment Standard cost adjustment Manufacturing variances Account aliases Freight charges Most other inventory, manufacturing and related account entries Slide 9

Oracle Process CosRng and SLA p Converged inventory model (started in Release 11i) p Inventory OrganizaRons that are Process will use Process CosRng p Process users are denied access to Discrete CosRng forms Process Enabled organizarons can not setup costs in the Discrete CosRng applicaron p Sub Ledger Architecture (SLA) replaces OPM MAC Slide 10

OPM MAC TransiRons to SLA 11i OPM GMI (OPM Inventory) Purchasing Order Management GMD, GME Cost Setup Calculate Cost Store Costs MAC Oracle GL Slide 11

OPM MAC TransiRons to SLA R12 OPM Oracle Inventory Purchasing Order Management GMD, GME Cost Setup Calculate Cost Store Costs SLA Oracle GL Slide 12

OPM MAC TransiRons to SLA OPM MAC Completed material and/or resource transactions SLA Completed material and/or resource transactions OPM Costing Engine generates costs OPM Costing Engine generates costs Cost Pre-processor will create accounting Events OPM Subledger process processes these transactions to create Journal entries SLA accounting program processes the events to create the journal entries Slide 13

OPM MAC Transitions to SLA p Most of the steps are automated using migration scripts p All the Account Definitions are migrated as ADRs p Manual Steps to be completed include: Assign Account Derivation Rules to Journal Line Definitions Validate Application Accounting Definition Assign User Subledger Accounting Method to Ledger Slide 14

OPM MAC TransiRons to SLA p Historical OPM Subledger distribution data not migrated to SLA Data refers to OPM Inventory p Historical data available in query mode Slide 15

OPM MAC TransiRons to SLA Update the Account Derivation Rule conditions. Ex: Add Item/Item Class/Organizations Validate the Application Accounting Definition Run OPM Accounting Pre-Processor Run OPM Accounting Pre-Processor Run Create Accounting in Draft mode Check Create Accounting report and Journal Entries report Run Create Accounting in Final mode to create GL accounting entries Slide 16

OPM MAC TransiRons to SLA p NO LOSS of funcronality by moving to SLA model p New menus created under OPM Financials for new SLA forms p Fiscal Policy and Event Fiscal Policy screens retained with minor modificarons. Most of the fields will be read- only. p OPM Event model mapped to SLA event model Slide 17

SLA Process Overview p Subledger accounrng is an intermediate step between subledger products and the Oracle General Ledger p Each transacron that requires accounrng is represented by a complete and balanced subledger journal entry, stored in a common data model. Slide 18

SLA Setup and Process Overview JOURNAL ENTRY SETUPS PROCESS Define/copy and modify account deriva(on rules Enter Transac(on(s) Cost Manager Define/copy and modify journal line types Create Accoun(ng* Transfer Journal Entries to GL Define/copy and modify descrip(ons *Run Create Accoun(ng Cost Management concurrent request for accoun(ng all transac(ons from the Cost Management SLA responsibility. Receiving Accoun(ng can be generated in the Purchasing and Cos(ng responsibili(es using the Create Accoun(ng Receiving concurrent request. These requests have an op(on to transfer the entries into General Ledger, as either unposted or posted. A separate G/L process is also available. Slide 19

Subledger AccounRng p SLA TransacRon Process Flow Transac(ons Accoun(ng Configura(ons Subledger Journal Entries Accoun(ng Program GL Journal Entries and Balances Accoun(ng Events Subledger Balances Journal Entry Setup Cost Management SLA Slide 20

Subledger AccounRng p SLA Basic Architecture Enter Transac(on(s) OPM and Discrete Cost Managers Same Cost Transac(on Accoun(ng Tables as in R11i One Common Accoun(ng Subledger Table Transac(on Accoun(ng Tables SLA Accoun(ng Tables XLA_EVENTS G/L Tables GL_LEDGERS Create Accoun(ng XLA_AE_HEADERS GL_ INTERFACE GL_JE_BATCHES XLA_AE_LINES GL_JE_HEADERS XLA_DISTRIBUTION_LIN KS GL_JE_LINES Slide 21

R12 Cost AccounRng and Inquiries (Discrete CosRng Example) Even if you use Standard CosRng in R12 you must record accounrng entries by cost element Slide 22

Subledger AccounRng and Inquiries (Discrete CosRng View AccounRng Example) Slide 23

New SLA Reports: Journal Entries & Account Analysis Reports Menu path: System Administrator => Security => Responsibility => Request Use System Administrator to put this on your custom menu and custom Request Group There are two G/L SLA reports to try. You may prefer the Account Analysis Report as it has the account range parameters already displayed (XLAAARPT) Slide 24

New SLA Reports: Subledger ReporRng Across All Modules Custom Menu Path: General Ledger, Vision OperaRons (USA) => Reports => Request => Standard => Account Analysis Report Slide 25

New SLA Reports: Subledger ReporRng Across All Modules Custom Menu path: Cost Management => Report => TransacRons => Account Analysis Report Tailor this report in BI Publisher to add or remove available columns. Slide 26

New SLA Reports: Subledger ReporRng Across All Modules Custom Menu Path: General Ledger, Vision OperaRons (USA) => Reports => Request => Standard => Journal Entries Report Tailor this report in the Concurrent Program definiron to display addironal parameters such as account ranges. They are seeded but not displayed (XLAJELINESRPT) Slide 27

New SLA Reports: Subledger ReporRng Across All Modules Custom Menu path: General Ledger, Vision OperaRons (USA) => Reports => Request => Standard => Journal Entries Report Tailor this report in BI Publisher to add or remove available columns. Slide 28

New SLA Reports: Subledger Reporting Across All Modules Menu path: System Administrator => Concurrent => Program => Define => Journal Entries Report There are many available parameters for you to use. Customize the BI Publisher template to enable these parameters These same concepts work for the Journal Entries Cost Management Report as well Slide 29

COGS RecogniRon p In R12 customer shipment entries go to deferred COGS p Revenue and COGS are explicitly matched AR: Autoinvoice & Revenue RecogniRon Master Program CST: Inventory Cost Processor or Record Order Management CST: Collect Revenue RecogniRon InformaRon CST: Then Generate COGS RecogniRon Events p New AccounRng Entries to clear deferred COGS p Use the COGS Revenue and COGS Matching Report Slide 30

COGS RecogniRon AccounRng Entries p New AccounRng Entries to clear deferred COGS 1. Customer Shipment 10 10 2. COGS Recogni(on Inventory Deferred COGS 10 True COGS 10 p Use the COGS Revenue Matching Report Slide 31

New Deferred COGS Account Slide 32

COGS RecogniRon (ConRnued) p Dependencies This new feature introduces a dependency in the Receivables and CosRng period close processes CosRng will process COGS recogniron events in a closed inventory period unrl the Receivables period status is set to CLOSED You have to run Create AccounRng aqer you have closed your inventory orgs Having to remember to run COGS RecogniRon Processes followed by Create AccounRng may create confusion at month- end Slide 33

Related BOM Features p Fixed Component Usage Support: Support for lot- based materials that have a fixed usage regardless of the job size for discrete WIP jobs, OSFM lot- based jobs and Flow Manufacturing p Component Yield Support: You can now specify component yield factors which are separate from the assembly shrinkage. The Cost Rollup and related WIP and Planning programs support this new feature. Slide 34

Period Close DiagnosRcs p Forms Drilldown Using the same Inventory AccounRng Periods form you can drilldown to associated forms to view the problem transacrons p New workflow to norfy of failing transacrons p Period Close Pending TransacRons Report Report for the transacrons holding up the inventory accounrng period Slide 35

A/P Accruals p Perpetual A/P Accruals are Completely Rewriken Monthly load into summary tables Excellent detail and summary reporrng (same report/two templates) A/P Accrual write- offs go to your G/L Works right out of the box! p Period End Accruals: Calculate Accrual Balances at PO DistribuRon Level Period- end accrual entries stored in a separate accounrng table and automarcally reversed in the new month Uninvoiced Receipts Report and Period- End Accruals use same underlying code / same results Slide 36

A/P Accruals p Challenges with R12 Perpetual A/P Accruals Only shows your net posiron, only remaining balances Must reconcile month- by- month, cannot go back Can be difficult to idenrfy reconciliaron issues Intercompany A/P Accruals are now on the Miscellaneous A/P Accrual ReconciliaRon Report Slide 37

ReconciliaRon Improvements p Inventory Value Reports have an As of Date Inventory Value Report Receiving Value Report Intransit Value Report All Inventories Value Report This new feature solves the report cut- off issues at period- end Slide 38

ReconciliaRon Challenges p Subledger AccounRng and Inventory ReconciliaRon Most Release 12 ValuaRon Reports No Longer Show Accounts Release 12 dropped the valuaron accounts on most inventory reports as you could change your SLA rules and affect your valuaron accounts These Reports Dropped Because of SLA Concerns: Receiving Value by DesRnaRon Account Report Subinventory Account Value Report Cost Group Account Value Report If you accrue expenses at Rme of receipt, you have limited visibility for expenses remaining in your Receiving InspecRon asset balances Journals from Inventory and WIP no longer display the Org Code on the G/L Batch Header Slide 39

ReconciliaRon Challenges (Cont d) p Material and WIP DistribuRon Inquiries and Reports Release 12 Material and WIP distriburon inquiries & reports do not reflect the SLA results But SLA Journal Reports do not show operaronal informaron (you can tailor the output, there are another 50+ hidden fields) Release 12 records the Material accounrng and WIP accounrng entries by cost element rendering the old 11i inquiries and reports more difficult to use, especially for Standard CosRng. If using Standard CosRng, in R12, all WIP & Material accounrng entries are wriken by Cost Element / you can summarize in SLA but you don t have the same detail reporrng in SLA The material transacron accounrng table may triple in size when you go from R11i summary entries to R12 entries by Cost Element Slide 40

Subledger AccounRng p SLA Basic Architecture Enter Transac(on(s) Cost Manager Same Cost Transac(on Accoun(ng Tables One Common Accoun(ng Subledger Table Transac(on Accoun(ng Tables SLA Accoun(ng Tables XLA_EVENTS G/L Tables GL_LEDGERS Create Accoun(ng XLA_AE_HEADERS GL_ INTERFACE GL_JE_BATCHES XLA_AE_LINES GL_JE_HEADERS XLA_DISTRIBUTION_LIN KS GL_JE_LINES Slide 41

Cost Rollup Changes The Supply Chain Cost Rollup and Cost Rollup have been combined Slide 42

Cost Rollup Changes When you specify an Assignment Set you run the Supply Chain Cost Rollup Slide 43

ReporRng Changes for R12 (12.1 & Above) p Latest Release 12 has XML reports, lots and lots of them (But not where you expect them) Slide 44

Summary p Subledger AccounRng solves many account classificaron issues p Yet Subledger AccounRng causes addironal reconciliaron headaches Yet one more interface and batch job More levels of indirecron: mulrple accounrng tables Which accounrng table to tell your auditors and how to explain to them it is different? Must run Cost Management Subledger Period Close ExcepRons Report (by ledger but you can use Ledger Sets as well) Slide 45

Summary (ConRnued) p COGS RecogniRon works well, just have to get used to have new inventory COGS entries aqer you close the inventory accounrng periods p New period close diagnosrcs p Inventory reconciliaron issues are improved and also hindered in Release 12 Inventory value reports have as as of date But most inventory value reports have no valuaron accounts SRll only single warehouse Period Close ReconciliaRon Report not mulr- org (consider custom reports from period close snapshot table CST_PERIOD_SUMMARY) p Cost Management Reports Now Use BI Publisher Slide 46

For More Information OAUG Cost Mgmt SIG: www.volzconsulting.com/oaugcostsig.html Collaborate Papers: www.volzconsulting.com/resources.html p Collaborate and OAUG Cost Management Presentations A/P Accruals (Cost Mgmt SIG): March 2011 Presentation A/P Accruals for Release 12 COGS Recognition (Cost Mgmt SIG): May 2011 Presentation Tracing Sale of Inventory Through Oracle Inventory Reconciliation (Collaborate and Cost Mgmt SIG): November 2010 Presentation Inventory Reconciliation Subledger Accounting (Collaborate and Cost Mgmt SIG): Collaborate09 Presentation Cost Accounting As You Want It EBS R12 Cost Accounting with SLA Overview of Discrete Costing (OAUG Discrete MFG SIG Nov. 2010): Overview of Discrete Costing for Manufacturing Slide 47

Acknowledgements Oracle Cost Development Partners in crime at my clients Slide 48

Douglas Volz (doug@volzconsul(ng.com) Professional Background Doug Volz is a Senior Architect and Advisor for Oracle ApplicaRon projects, with a parrcular interest in Project and Cost Management. He has 30 years accumulated experience, including 5 years in Oracle Development (co- designing Oracle Cost Management) and 12 years in industry in Cost and AccounRng Management posirons. His Manufacturing and Cost systems experience covers project management, soqware design/development, delivery and consulrng services, for both Oracle CorporaRon, and mulrple internaronal consulrng firms. Prior to his systems career, Mr. Volz also held numerous management accounrng posirons for telecommunicarons, defense, and electronics companies. In his consulrng roles, Doug has served over 100 clients. Many of these were mulr- org, mulr- currency with global footprints. Countries include US, Mexico, UK, Netherlands, Belgium, Taiwan, P.R.O.C., Norway, Japan, Italy, Switzerland and Germany. Doug leads the OAUG Cost Management Special Interest Group. He also advises and parrcipates on the Oracle Customer Advisory Board for Fusion CosRng and for the SCM Financial OrchestraRon FuncRonal Forum. Core Exper(se p MulR- organizaron, MulR- currency ImplementaRons p Cost AccounRng Processes p Project Management and Senior Project Advisor p Core manufacturing & EAM processes Cost Management EAM Inventory Bills of Material WIP p Systems IntegraRon and Data Conversions Experience p Sample of clients served: Ø Beckman Coulter (US) Ø Matsushita (UK, Mexico) Ø Ø Ø Ø Ø Ø Celgene (US, Switzerland) Logitech (US, Taiwan, P.R.C.) Matsushita (UK, Mexico) NTL (now Virgin Media) TCI InternaRonal (US) Onninen AS (Norway) Slide 49

Any Ques(ons? Doug Volz doug@volzconsul(ng.com