Oracle EBS – Inventory Organization – Overview

Information on multiple types of organizations used to build the business execution structure.

Oracle Inventory Organizations

Oracle Applications uses multiple types of organizations to build the business execution structure. At the top of the structure is the accounting set of books SOB), defined in the General Ledger. Next, different types of organizations are used to further define the organization structure and relationships. All organizations are defined and updated with the Define Organization form.

Set of Books. A General Ledger SOB, linked to the inventory organization, controls the financial accounting of inventory transactions. A SOB is made up of a chart of accounts, a financial calendar, and a currency. The general ledger secures transactions (journal entries, balances) by SOB.

Legal Entity. A legal entity organization defines the tax and fiscal reporting level. The legal entity represents the legal company.

Operating Unit. An operating unit organization defines the Purchasing, Order Entry, Accounts payable and Accounts Receivable level of operation. An operating unit may span multiple manufacturing facilities, distribution points and sales offices, or it may be limited to a single site.

Inventory Organization. Two flavors of inventory organizations are found in Oracle Applications. They are defined the same, and both are assigned a set of books, a legal entity organization, an operating unit organization, and a location. An item master organization is used for item number maintenance and validation. This master organization serves as a data repository storing items
and item attributes, master level categories and category sets, master level cross references, and numerous data defaults. On-hand balances, inventory movements, and other on-going inventory activities are not performed in an item master organization. Generally, the master organization is used as the validation organization for Purchasing and Order Entry. It is recommended that a single item Master organization be defined, even in multiple organization, multiple sets of books environments.

In addition to the item master organization there are one or more non-master inventory organizations. Like the item master inventory organization, the non-master organizations are assigned a set of books, a legal entity organization and an operating unit organization. The non-master inventory organization points to a master organization and looks to the master organization for master level item attributes, master level categories, and other master level controlled data.
Note that each organization has its own set of books/legal entity/operating unit relationship, so inventory organizations with differing SOB’s or operating units may share the same master organization.

These non-master inventory organizations are the execution level organizations. They hold on-hand balances and transaction history. Here is where inventory users execute their daily activities, such as receiving and issuing material, performing cycle counts, and viewing material availability and transaction history. A single organization therefore generally represents a single manufacturing site or distribution center.

Locations. A location code is an address. Each inventory organization must be assigned at least one location code.

Subinventories. A subinventory is used as a holding point for on-hand inventory and generally represents a stockroom, stocking area or cage used for storing material. Subinventories are defined within inventory organizations. An inventory organization may have any number of subinventories, and an asset account is assigned to each subinventory. Since the subinventory entity is logical, as there is not an address or physical location description associated with it, clients may define subinventories for any physical or logical grouping of inventory.

Examples of subinventories:

Stores. Used for the primary stockroom for storing raw materials and sub-assemblies FG. Used for Finished Goods inventory if finished goods are stocked WIP. Used for raw material and sub-assemblies stored in production areas and issued at operation or job completion (backflush). MRB. Used for Material Review Board goods. This is generally material that requires engineering review before disposition as scrap, rework, return to supplier or use as is.

Stock Locators. Stock locators are an optional entity that may be used to represent physical locations within a subinventory. You may choose to use stock locators for selected subinventories or selected items within selected subinventories. If locators are used, subinventory and locator track on-hand balances. Therefore, if locators are defined to represent a shelf within a stockroom, on-hand balances on the system would show the item and quantity down to the physical location within the facility.

Oracle Inventory uses a key flexfield for stock locators. This presents a few limitations for its use. Only one locator flexfield definition is allowed per install. Therefore, if the stockroom (subinventory) wants to track material by row, bin and shelf, it will likely define a three-segment flexfield with segments for row, bin, and shelf. If locators are desired for another subinventory, even in another organization, the structure will again be 3 segments for row, bin and shelf. In addition to this limitation, locators must be unique within an organization; you cannot use the same locator in different subinventories within an organization, but you can use the same locator in subinventories in a different organization.

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