Enterprise Structure

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  • Structure Example1

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In this example, if the organizations used different functional currencies, they would have to be set up as separate inventory organizations. Inventory organizations inherit their functional currency from the Set of Books. This is not an updateable option. In this example, if the inventory organizations had different functional currencies, there would also need to be a second Set of Books. Even if the chart of accounts were the same and the calendar were the same, the functional currency difference would preclude these two locations from being one inventory organization.

ps. 3C : Currency , Calendar , Chart of Accounts

  • Structure Example 2

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Consider a second scenario:

  • Facility 1 - located in Florida
  • Facility 2 - located in California

Would this situation be better as one inventory organization or two?

Assume that the functional currency issue for both organizations is the same and the decision has been made for them to report to the same set of books. The same question has to be asked again, would this be better as one inventory organization or two?

A few questions to ask:

  • Do they use the same costing method?
  • Is the inventory going to be co-mingled within a sub-inventory for both locations? If so, how is the physical quantity going to be controlled?
  • Are there going to be physical shipments from one organization to another? Do they plan to use locator control?

If there are going to be physical shipments from one location to another, these will have to be modeled as sub-inventory transfers or locator to locator transfers within Oracle Inventory. If the physical distance is such the physical update is not real time, the company may want to consider separate inventory organizations. Sub-inventory and locator to locator transfers update the on hand balances real time and the transaction does not allow for intransit time. If two inventory organizations were created to model the physical locations, then intransit time could be modeled using inter-organization transfers.

•Assume the answer to question 1 is no, the two locations want to use different costing methods. In this scenario, the two facilities would have to be separate inventory organizations because there is only one costing method per organization.

•Assume the answers to questions 1 and 2 are no and yes respectively but the answer to question 3 is yes. Although it would not be required, the company may want to consider two inventory organizations in this scenario. If the company were to implement only one inventory organization it would require very strong internal control in order maintain integrity in inventory reporting. Locator control may be an option for two facilities in different locations but the physical difference and the resulting intransit time would make this option more challenging. Again, internal control and process control would have to be very strong in order to make this work.

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