Using EDI to support purchasing processes in Oracle Fusion Cloud

In supply chain management, procurement is a vital business process that involves multiple stakeholders — including the procuring organization, buyers, planners, sourcing managers, and suppliers — and their respective IT Systems. The procurement process requires extensive data exchanges between the procuring and supplying organizations. These data exchanges establish the roadmap for all future transactions between the two entities.

The buying process typically starts with the creation of a purchase requisition, which is converted into a purchase order. Purchase orders are communicated to the supplier via phone, fax, or email. There are multiple attributes exchanged between the two entities critical for the procurement process. They include the purchase order number, supplier, supplier site, buyer, item, quantity, price, ship-to location, bill-to location, requested delivery date, promised delivery date, payment terms, shipping method, and freight terms.

These attributes are subject to change and are managed through change order management. This makes the entire process cumbersome and error-prone. Consequently, there is a need to improve communication and simplify the change management process which, in turn, will enhance the end-to-end procure-to-pay process.

What is EDI?

EDI, which stands for electronic data interchange, enables the systematic exchange of business data between trading partners. It is an alternative to traditional approaches like using mail, faxes, and emails to communicate information. EDI minimizes users’ participation in the data exchange process because EDI documents can flow straight from the buyer’s IT system to the seller’s, thereby improving the data exchange process.

Key EDI transactions in Procure-to-Pay

In Oracle Fusion Cloud Procure-to-Pay, EDI uses multiple codes to facilitate business processes. Each EDI code resembles a designated step in the procure-to-pay cycle and can be categorized as either an inbound or outbound transaction depending on who is the recipient of the data. The codes include:

• EDI 850 - Purchase Order (outbound, from the buyer to the supplier)
• EDI 855 - Purchase Order Acknowledgement (inbound, to the buyer from the supplier)
• EDI 860 - Purchase Order Change Request – Buyer Initiated (outbound, from the buyer to the supplier)
• EDI 865 - Purchase Order Change Acknowledgement/Request – Supplier Initiated (inbound, to the buyer from the supplier)
• EDI 856 - Advance Shipment Notice (inbound, to the buyer from the supplier)
• EDI 810 – Invoice (inbound, to the buyer from the supplier)

Key considerations to facilitate EDI transactions 

The following steps can be taken to facilitate data exchanges between buying and supplying systems (assuming the procurement module is pre-configured):

• Conduct data mapping for attributes to be exchanged
• Configure collaboration messaging framework
• Enable supplier for EDI transactions
• Configure approval rules for purchase orders
• Configure change order template
• Maintain item cross-references
• Establish error handling framework

Understanding the Collaboration Messaging System

Oracle’s Collaboration Messaging Framework (CMK) enables Oracle Fusion applications to establish business-to-business (B2B) message-exchanging capabilities with customers or suppliers. It can use predefined service providers, including Justransform.com and Oracle Business Network. If one of these is being used, then all documents and messages are already set up.

Each trading partner is defined using the “Manage B2B Trading Partners” task for predefined service providers. Next, select the documents to be exchanged with the trading partner and then associate the trading partner with the suppliers participating in the EDI process.

CMK transforms B2B documents like purchase orders into an XML format and sends them to the service provider. The service provider transforms that information into a supplier-specific format which is subsequently consumed by the supplier’s order management system.

Inspirage can help

As a result, the EDI process provides extensive benefits to both the buying and supplying entities. It enables business automation, which in turn reduces costs, and offers seamless data exchange with better turnaround time on transactions. It also mitigates errors and increases data accuracy between the procuring organization and supplying entities. EDI offers a perfect blend of automation, improved business processes, enhanced turnaround time, and data accuracy. To learn more visit How You Configure Collaboration Messaging Framework or contact us today.

As the Integrated Supply Chain Specialists, with recognition from Gartner, IDC, and winners of Oracle’s 2021 Game Changer Award for SCM Service Delivery Partner of the Year, Inspirage is uniquely qualified to be your success partner. Whether you are upgrading your on-prem system or have decided to move to the cloud where continuous improvement is built-in, our team is prepared to guide you on your transformational journey.

A solution for easily managing processes associated with credit checks and holds 

As every business owner knows, customer creditworthiness can change over time. As a result, constantly staying on top of creditworthiness can be a significant challenge. Classifying customers based on their risk level, assigning appropriate credit limits, and monitoring and controlling customer sales orders have never been easy tasks, but Oracle Fusion Order Management helps client organizations overcome these challenges. Once a credit check option is enabled for a customer in Order Management, all subsequent sales orders can undergo a thorough credit check validation at the time of order booking and again at the time of order picking.

How it works

Order Management allows users to categorize customers into low, medium, and high-risk groups based on their payment history, purchasing value, reputation, and other factors. It then assigns each customer a credit amount and automatically applies a credit check hold whenever the customer’s sales order value exceeds its assigned credit amount. Additionally, there is the option of enabling a credit check for certain customers and disabling it for others.

In addition, Order Management allows users to define the specific currencies associated with a customer’s credit limit. Also, customer orders can be placed on a credit check hold at the time of sales order booking — even though the customer has not exceeded its credit limit — by enabling a credit hold at the customer account level.

In certain cases, Order Management supports applying a credit hold on a sales order with a value that is less than the customer’s credit limit. For example, if a customer’s credit limit is $10,000 USD, users can apply a credit check hold on any order with a value exceeding $2,000 USD by entering an order amount limit at the customer account level.

Implementing effective credit control involves:

• Conducting detailed analysis of all customers for creditworthiness in order to categorize them as low, medium, and high risk.
• Identifying which customers need to be enabled for credit check control and setting their credit amount.
• Determining whether to allow order booking with credit check or allow order booking pending credit review.
• Choose whether to enable credit check control during order picking — i.e., just before shipping. (This may be appropriate if the order fulfillment cycle is longer, resulting in a considerable time lapse between order booking and order shipping.)
• Deciding whether to apply credit check holds on all orders regardless of the credit limit or apply credit check holds based on an order value limit.
• Identifying which roles can remove credit check holds.

Order Management provides the following options for credit check management:

Option #1: Screen orders at submission time
Option #2: Screen orders during fulfillment (at picking/shipping)
Option #3: Use both Option #1 and Option #2

Case folder feature in Fusion Credit Management

Whenever there is a credit check failure in Order Management, a case folder is created that allows the Credit Analyst to review the failure. When case folders are successfully closed, the order is automatically processed in Order Management. When case folders are declined, the order is automatically reverted to a draft. In a few cases, a credit check hold on a sales order can be released by a user with the appropriate permission in the case of a rush or urgent order.

Credit exposure insights

When a new sales order is submitted, Order Management will check whether the total order value is within the available credit amount. If the total order value is less than the available credit amount, the order will be booked and processed (unless it fails the credit check process). Using Oracle Transactional Business Intelligence (OTBI), users can also create a custom report on customer credit exposure to ascertain the overall available credit of all customers.

Leveraging credit checks during order import

In most business scenarios, sales orders are created in Order Management via Order Import using either Web Service or FBDI (file-based data import). Oracle provides an option for either initiating the credit check process or not.

In the event of a credit hold, the customer’s primary contact will receive an email notification if that feature is enabled. Keep in mind, however, that Order Management will send email notifications when any hold is applied, not just a credit check hold.

In short, implementing a comprehensive Oracle Fusion Order Management credit check control process helps organizations minimize financial risks by categorizing all customers based on their risk levels and, ultimately, by managing cash flows more effectively.

 

 

Inspirage can help

Implementing a robust subscription management solution is key to facilitating efficient processes and generating a real impact for your business. Inspirage delivers value to our customers by achieving those results.

As the Integrated Supply Chain Specialists, with recognition from Gartner, IDC, and winners of Oracle’s 2021 Game Changer Award for SCM Service Delivery Partner of the Year, Inspirage is uniquely qualified to be your success partner. Whether you are upgrading your on-prem system or have decided to move to the cloud where continuous improvement is built-in, our team is prepared to guide you on your transformational journey.

We are very excited to announce the launch of a unique Inspirage initiative coming up this Summer and Fall: The Supply Chain Transformation European Tour 2022.

This is a series of exclusive networking events hosted by Inspirage and Oracle in seven countries across Europe targeting Business, Finance, and IT Leaders involved in Digital Transformation programs. During the events, we will share ways you can bring visibility and predictability into your supply chain and flawlessly execute and deliver business value with Oracle Cloud applications and Inspirage Control Tower solutions. You will hear customer testimonials from clients who have already transformed their operations and increased customer satisfaction by deploying these solutions.

Currently, all industrial sectors face disruptions and lack the stability needed to control their supply chains. At the same time, there is a high demand for their products. Backlogs are constantly growing as suppliers are unable to deliver materials on time, and the impact on customers is huge. These companies require urgent solutions that will provide better visibility into their suppliers and their supply chains. They need the ability to react quickly to supply chain issues and predict their outcomes.

Inspirage and Oracle are pioneers in developing and implementing integrated supply chain solutions to support complex businesses where extended supply chain management and control are critical for success. Inspirage’s innovative, cross-domain Enterprise Control Tower solution is designed to provide integrated, single-source-of-truth supply chain visibility and an execution platform that complements the Oracle ERP/SCM Cloud application suite. It allows the users to remove siloed views and effectively manage risks and disruptions, predict outcomes, and control their carbon footprint.
 

 
We will kick off our tour with our first event in Frankfurt, Germany, on 6 July 2022. Other countries will follow, including Sweden (6th September), Finland (8th September), Switzerland (27th September), France (29th September), Netherlands (4th October), and the UK (6th October).

Registration is already open for the German event  — click here to register. We suggest you sign up sooner rather than later as we have a limited number of spaces available. All the presentations will be delivered in German, with the exception of the Demo session. For the additional countries following Frankfurt, please register your interest by sending an email to inspirage.events@inspirage.com.

We hope to see you at our events!

Insights on simplifying the supply chain and reducing costs with mutually beneficial strategies

The Pros

• Building relationships: Consignment requires suppliers and retailers to work together and maintain contact on a regular basis. This supports your ability to continue working together and growing sales for each other in the future.  
• Product visibility: More customers can be exposed to a supplier’s product through consignment than if it were distributed through traditional methods.  

• Reduced inventory costs: You should have enough inventory to cover sell through and any safety stock or anticipation inventory. If you find yourself with inventory issues, it might be time to switch to the inventory cycle count method. Holding a large amount of merchandise inventory is expensive. With consignment, all storage costs are the responsibility of the retailer.  
• Insight into product trends: You can track your consigned inventory sales to discover which products convert and how long it takes. This allows a supplier to invest in the right product and only hold the most beneficial raw materials inventory in order to make the most profit.  
• Direct-to-retailer shipping: Instead of having inventory shipped to a warehouse and then to a retailer, you can have manufacturers deliver the inventory directly to the retailer. This streamlines the supply chain, saves labor costs, and gets goods on retailers’ shelves faster.  

Inspirage can help

As the Integrated Supply Chain Specialists, with recognition from Gartner, IDC, and winners of Oracle’s ERPM (Enterprise Resource Planning & Management) & Supply Chain Management Cloud Partner of the Year (Global) awards in recent years, Inspirage is uniquely qualified to be your success partner. Whether you are upgrading your on-prem system or have decided to move to the cloud where continuous improvement is built-in, our team is prepared to guide you on your transformational journey. Contact Inspirage today to learn more about the role supplier consigned inventory can play in your organization.

How to improve supplier compliance, visibility, risk management, and sourcing decisions

The Oracle Solution

With those goals in mind, Oracle Supplier Qualification Management functions as a single, cloud-based system for improving your view of the compliance, data accuracy, and visibility of each supplier in your supply chain network.  

Here’s how it works:  

Oracle Supplier Qualification Management allows you to build questionnaires to gather supplier information that is critical to your business. These online surveys can capture information from suppliers directly, as well as from internal stakeholders. The customizable questionnaires support conditional questions and question response types such as multiple-selection lists.    

You can then organize related questions into qualification areas and assign specific outcomes to your suppliers after evaluating the information you receive. Oracle Supplier Qualification Management also allows you to score suppliers automatically based on rules you create. These qualifications have an effective period; as the expiration date approaches, the solution automatically alerts you to initiate timely renewals and re-qualifications.  

Oracle Supplier Qualification Management comprises four nodes: Questions, Qualification Area, Qualification Model, and Initiative.

Inspirage can help

As the Integrated Supply Chain Specialists, with recognition from Gartner, IDC, and winners of Oracle’s ERPM (Enterprise Resource Planning & Management) & Supply Chain Management Cloud Partner of the Year (Global) awards in recent years, Inspirage is uniquely qualified to be your success partner. Whether you are upgrading your on-prem system or have decided to move to the cloud where continuous improvement is built-in, our team is prepared to guide you on your transformational journey. Contact us to learn more.

Product shortages have been a steady pain point for businesses and consumers, throughout the COVID-19 crisis. From grocery stores to big-box retailers, hardware suppliers, and more, products that are typically easy to find have been hard to come by – with some items being nearly impossible to track down.

Semiconductors may be the scarcest of them all. Otherwise known as an integrated circuit, or “chip” for short, the semiconductor is a special component that plays a unique role in dozens of manufacturing processes and consumer technologies, both big and small. Whether in motor vehicles, video gaming consoles, laptops, smartphones, scanners, or even many smart kitchen appliances, semiconductors serve as the nerve centers for the electronics people use every day. By conducting electricity – made possible through silicon – the semiconductor is a material that essentially makes modern conveniences possible.

However, due to a combination of factors, the semiconductor industry in general – and semiconductor manufacturing in particular – has been plagued by one supply chain issue after another. These issues have disrupted numerous manufacturing processes that rely on semiconductor technology for product functionality. As noted by the Department of Commerce, semiconductor fabrication in the United States and abroad was problematic before anyone knew about the coronavirus, never mind when the pandemic began wreaking havoc.

But why? How did the chip shortage materialize? How long is it projected to last? What are producers doing to enhance semiconductor device output and optimize supply chains?

At Inspirage, we are in the business of helping organizations make their supply chains more agile and adept and preparing them to meet disruptions head-on. We do this by digitally integrating their enterprises with Oracle Cloud solutions and, this was something we helped an international semiconductor fabrication equipment manufacturer achieve. But before we get into the particulars, let us examine how the semiconductor shortage came about, what is involved in the semiconductor manufacturing process, the growth in demand for integrated circuit technology, and what producers are doing to address their supply challenges.
 

 

How did the semiconductor shortage develop?

Much like the layered nature of supply chains themselves, the dip in semiconductor availability cannot be traced back to one single thing but rather a combination of factors. However, at the core of any shortage,  is a growth in demand, which the chip industry has encountered. Indeed, according to the Commerce Department, the median demand for chips in 2021 was 17% higher than in 2019.

The natural response to an increase in demand for any product is to enhance output, but this is something semiconductor chip manufacturing centers have had trouble doing. In 2019, the median inventory for semiconductor products was 40 days, the Commerce Department reported. But in 2021, the median supply of computer chips fell to just five days, leaving factories vulnerable to shutdowns.

Why have chip makers been unable to increase semiconductor production?

Just as semiconductors allow tech products to perform a wide variety of capabilities, chip manufacturing is somewhat labyrinthine in nature. For instance, for silicon to conduct electricity, it requires other constituent elements and materials, such as silicon dioxide, phosphorus, gallium, and boron. These charge carriers are added with special semiconductor manufacturing equipment, like capacitors and substrates. This component of the fabrication process is called doping.

As the Commerce Department has reported, however, the semiconductor industry was struggling back in 2019 to obtain some of the equipment necessary for semiconductors to achieve the appropriate level of electrical conductivity through doping. These production and semiconductor manufacturing difficulties set the stage for the pandemic shortages. The coronavirus’s novel nature – and the pandemic’s reaction to slow the spread – both reduced semiconductor production and ramped up demand.

Factories around the world shut down

At the start of the pandemic, little was known about the virus regarding how it spread and from where it originated. Two years later, some of these questions remain unanswered. What was clear was the contagiousness of the disease, as infection rates soared almost immediately. In an attempt to “flatten the curve,” scores of businesses worldwide reduced their operations or closed their doors entirely.

Among those businesses were several chip developers throughout much of the Asian continent,  where a considerable portion of the globe’s semiconductor supply originates. The Wall Street Journal points out that Taiwan, South Korea, China, and Japan account for 75% of global semiconductor production capacity.  It didn’t take long for chip developers in Silicon Valley and other parts of the U.S. to follow suit.

Lockdown measures intensified consumer demand

When businesses closed their offices to in-person work, it forced millions of employees to work from home 100% of the time. In the early stages of the coronavirus lockdown, 63% of Americans were working in remote environments, according to a Gallup survey. This resulted in a surge in demand for products that contain semiconductor technology, such as desktop computers, laptops, Wi-Fi infrastructure, and routers.

Additionally, with more people spending their free time in the comfort of their homes, demand for high-definition televisions and gaming consoles skyrocketed. But with semiconductor factories working with skeleton crews, the growth in demand led to shortages for products that require integrated circuit technology to operate appropriately. Many of those hard-to-find items continue to this day, like the PlayStation 5 and ultra-high-definition television sets from manufacturing giants like Samsung and Sony.

Highly fragmented industry structure

Another challenge contributing to the shortage relates to how the semiconductor industry is structured. As illustrated by Bob Krysiak, an independent tech industry consultant, the semiconductor sector is fairly evenly distributed. There isn’t a single chip developer or material provider that owns more than 15% of the market. This even-handedness is a good thing in some respects because it helps to increase competition and encourages manufacturing entities to embrace cooperation. But at the same time, this setup leaves much room for error. Each manufacturer is reliant on the next to complete the processing steps on their contribution to the process as a whole (e.g., silicon dioxide, wafer material, silicon, doping equipment, wet etching, wafer fabrication, and silicon crystal).
 

 
The siloed, independent nature of the semiconductor manufacturing industry parallels a challenge that a client of Inspirage’s was facing. Cohu, an international semiconductor equipment manufacturer, had acquired several other businesses, each with its unique manufacturing processes in place. Because each organization had its way of communicating, workflows, and operational norms, it prevented the company from producing collaboratively as a unit.

They turned to Inspirage to put the right pieces in place to support more visibility and ongoing growth, flexibility, and enhanced productivity. Company leaders wanted to simplify their global footprint by bringing every department, business unit, and entity together under a single platform. Since our client already had Oracle Cloud Human Capital Management (HCM) and was pleased with its results, it made the most sense to make the Oracle Cloud the default platform for supply chain, ERP, and product lifecycle management.

The company’s transformational ERP project has unified all the disparate teams and business units acquired through acquisition under a single Oracle Cloud solution. The visibility, planning, resourcing, and collaborative benefits have been tremendous, helping the business operate more efficiently, minimize supply chain delays, and boost profitability globally. The result: an integrated set of business processes leading to accelerated product releases which are essential in an economy in dire need of more availability of semiconductor devices.

What is the semiconductor industry doing to increase supply?

While the COVID-19 mitigation measures are gradually dissipating, which should help to increase work output, Bloomberg reports that the chip shortage is projected to continue for the remainder of 2022 and into 2023. In the meantime, chip manufacturers are making many strategic investments to build semiconductor supply. For example, Intel recently announced building two new semiconductor manufacturing factories in Ohio, part of a $20 billion project. But it will take years for those factories to start pumping out more products.

Manufacturers are also investing in cloud ERP solutions to help improve overall performance and output. And many, like Cohu, have selected the Oracle Cloud as their preferred solution. This cloud-based enterprise resource planning platform can set your business up for growth and efficiency by smoothing out formerly rough production processes and turning weak business points into strengths. The tenured team at Inspirage would be delighted to help you get started.

Contact us today to learn more about how we can help your business prepare for supply chain disruptions like those facing the semiconductor industry. Check out our blog section for related articles on supply chain challenges and Inspirage’s solutions.

How Oracle Supply Chain Financial Orchestration Supports Profit Margin, Accounting, and Interco-Invoice Generation

Considering Oracle SFO? First a case study

Organizations considering SFO implementation must begin by reviewing:

• Local and international compliance policies
• Accounting and costing standards for each entity
• Different pricing strategies for global sales
• The physical flow of material versus the financial flow
• Profit-sharing structures

To understand these considerations more clearly, let’s dive into a case study. Our client, Cohu, has a global sales process. The company exists in multiple countries across the globe, registered with different legal entities and profit center business units under one enterprise. Cohu has complex financial orchestration flows which are separated by the physical flow of material and the financial route between the selling, manufacturing, and technology-owning entities. It is difficult for Cohu to maintain these flows, perform intercompany transactions, and account for and share profit between these entities while adhering to local compliance policies.

If we examine their process more closely, we’ll see that the physical flow of inventory takes place between the Cohu US Delta (Selling Entity), located in the USA, and the Cohu MY Melaka (Manufacturing Entity), located in Malaysia. The Manufacturing Entity sends the physical product to the Selling Entity’s customers across the Globe. The Manufacturing Entity also sends the financial information and transfers ownership of the product in the financial books to Cohu DE Rasco (Technology Entity), which is located in Germany, owns this technology, and invested in the R&D of the product. Each organization is a separate legal entity in Cohu’s global enterprise structure. Because these organizations are located in different countries, they each require separate accounting and tax reporting. Inspirage implemented Oracle Fusion Supply Chain Financial Orchestration to capture, process, and perform an accurate account of these events. The events occur during an intercompany transaction. By utilizing SFO, Cohu was able to:

• Automate intercompany invoice generation and payment,
• Optimize operational efficiency by centralizing order management functions, and
• Reduce implementation costs and cycle time.

Inspirage can help

Inspirage understands these challenges and will help your business achieve seamless supply chain operations using Oracle’s Supply Chain Financial Orchestration solution. If you are unsure about moving to Oracle Cloud due to gaps between your business requirements and Oracle’s Cloud offering, it’s possible that we have already built a solution to bridge that gap. If not, we can customize something to fit. We will do the work behind the scenes, so you can focus on growing your business. Please visit the Oracle Cloud Marketplace to see a complete listing of Inspirage Solutions.

As the Integrated Supply Chain Specialists, with recognition from Gartner, IDC, and winners of Oracle’s ERPM (Enterprise Resource Planning & Management) & Supply Chain Management Cloud Partner of the Year (Global) awards in recent years, Inspirage is uniquely qualified to be your success partner. Whether you are upgrading your on-prem system or have decided to move to the cloud where continuous improvement is built-in, our team is prepared to guide you on your transformational journey. Contact us to learn more.

Staying ahead of the competition with efficient and effective spend management

Spend Classification: the foundation for spend analysis and management

Management guru Peter Drucker once said, “What’s measured, improves.” Spend management is no exception to this. However, the effectiveness of spend management is directly linked to the quality of the spend analytics available to any organization, and the quality of spend analytics is directly dependent on the accuracy of spend classification.

The widely adopted 5W-1H (Who, What, When, Where, Why, and How) methodology can be applied for spend classification as well.

• Usually, the information about “How Much” (amount being spent) and “When” (point in time) are readily available through different purchasing documents such as Quotations, Requisitions, Orders, Invoices, etc.
• The information about “What” (products and services purchased) can be captured from the purchasing categories used while creating different types of purchasing documents. Logical and comprehensive categorization is critical for accurate classification of different types of spends done by an organization.
• To make spend classification more meaningful and actionable, it is necessary to get complete information about “Where” (location), for “Who” (person/department), and “Why” (purpose) the expense is incurred.

For example, knowing that an organization spends $1 million for stationery items in a year across its 20 distribution centers in a specific geography is important information, but it cannot help anyone take action to reduce stationery expenses. On the other hand, if the breakdown of stationery spends by each distribution center, by months, by specific type of stationery items, by person/department, and by exact purpose is made available, it would be easy to identify outliers and exceptions and take appropriate actions to reduce the spending.

Spend management is not just about analyzing the spends incurred in the past and deciding the actions needed to control/reduce them in the future. Organizations that do not proactively forecast their spends, do not spread them appropriately — taking into consideration the cash flows — and do not proactively control the actual spends often end up with excess spending. In some areas, this causes spending to be restricted in other critical areas, thereby impacting key organizational goals. Many organizations conduct spend forecasting and budgeting in order to not only better manage their cash flows and working capital, but also to avoid undesirable situations which impact strategic goals. However, if the requisition-to-pay process is not tightly integrated with budgetary control, then controlling actual spends within budgeted amounts becomes a highly effort-intensive and error-prone task.

It is crucial to budget at the appropriate level of granularity, or it is difficult to effectively manage spends. In the example above, if budgeting is done only at the level of “stationery” as a spend category, then exercising control on distribution center stationary expenses or on specific sub-categories within “stationery” would be impossible to control. Therefore, spend classification using the 5W-1H methodology is necessary for effective budgetary control.

 

 

Inspirage can help

Inspirage has deep expertise in implementing procure-to-pay solutions that holistically support spend classification, spend analysis, and spend management (including budgetary control) capabilities across different industry verticals. These robust and scalable solutions are built with Procurement Transaction Account Builder (Procurement TAB) at its core.

What is Procurement TAB?

Transaction Account Builder (TAB) is a highly configurable rule-based account derivation engine that is primarily a part of Oracle Fusion Subledger Accounting. It is leveraged by Oracle Fusion Procurement Cloud for account derivation on procurement documents such as purchase requisitions and purchase orders.

Procurement TAB works with an organization’s Chart of Accounts (CoA) at its base. The Chart of Accounts typically consists of multiple account segments which form an account code combination with each segment representing a specific accounting attribute. For effective spend classification, the CoA should at least have one segment to represent each of the key attributes of spend.

• Where (for example, plant or warehouse)
• Whom (for which person/department)
• What (products/services purchased)
• Why (purpose)

An organization can use additional segments for a more granular classification of spend.

How is Procurement TAB configured?

Procurement TAB enables business users to author and manage their unique account derivation policies for generating the accounts in purchasing documents. The key components of such a policy configuration are:

• Account definition: Account rules are linked at the code combination level or at the segment level to different account types (Accrual, Charge, Variance).
• Account rules: An aggregation of seeded account sources and/or custom mapping sets for different purchasing scenarios which are used for a code combination or for specific segments.
• Mapping sets: Either linked to seeded account sources or independent. They are objects which hold mappings between attributes of purchasing documents (such as business unit, ship-to location, purchasing category, etc.) and corresponding account codes.
• Rule conditions: Decide applicability of relevant account sources/mapping sets for specific purchasing scenarios.

Common purchasing scenarios for which account derivation is usually configured include:

• Asset item purchase into inventory/expense destinations
• Expense purchase for goods/services for non-stockable goods with/without item code
• Inventory-expense purchase for stockable goods which are expensed out
• Outside processing of manufactured items
• Fixed asset purchase when the purchase amount is transferred to the fixed asset module and capitalized

Seeded account defaulting rules delivered within TAB address the common purchasing scenarios of customers, thereby substantially reducing efforts to set up from scratch. To achieve account defaulting for specific/unique scenarios, either the seeded rules can be extended by adding a layer of customization (by way of custom mapping sets and rule conditions for their applicability), or completely new account rules (with corresponding mapping sets) can be created and included in the account definition.

Procurement TAB Benefits

The following are a handful of ways that Procurement TAB helps with spend management:

Error-free spend classification

• Procurement TAB eliminates the need for manual input of accounts on purchasing documents.
• The accounts derived based on the key attributes of spend, as per 5W-1H methodology, form the basis of spend classification, free of any manual errors.

Fast and accurate spend analysis

• The 5W-1H of every spend can be precisely identified using account code values for each of the account segments.
• Using Oracle BI, the spend data classified at this granularity can be easily sliced and diced for in-depth spend analysis.

Actionable insights

• Spend patterns can be mapped for different spend categories by time, location, cost center, and purpose, represented by corresponding account codes.
• The outliers and exceptions can be easily identified, and appropriate actions to manage the spends in those areas can be worked out and implemented.

Spend forecasting and budgetary control

• With historical spend data classified by spend category, location, purpose, etc., spend forecasting can be done at a more granular level. This will help in allocating appropriate budget amounts for different spend.
• The actual spend can be proactively managed with budgetary control in place.

 

 
A comprehensively designed and implemented Procurement TAB solution — which not only supports the regular procure-to-pay process but also helps in efficiently and effectively managing spend — is the key driver in becoming a leader in spend management. Inspirage has successfully guided customers from different industry sectors to significantly improve their spend management capabilities using Oracle Fusion Procurement Cloud. If you are unsure about moving to Oracle Cloud due to gaps between your business requirements and Oracle’s Cloud offering, it’s possible that we have already built a solution to bridge that gap. If not, we can customize something to fit. We will do the work behind the scenes, so you can focus on growing your business.

Please visit the Oracle Cloud Marketplace to see a complete listing of Inspirage Solutions.

As the Integrated Supply Chain Specialists, with recognition from Gartner, IDC, and winners of Oracle’s ERPM (Enterprise Resource Planning & Management) & Supply Chain Management Cloud Partner of the Year (Global) awards in recent years, Inspirage is uniquely qualified to be your success partner. Whether you are upgrading your on-prem system or have decided to move to the cloud where continuous improvement is built-in, our team is prepared to guide you on your transformational journey. Contact us to learn more.

Governmental Accounting Standards Board (GASB) 34/35 Asset Accounting Solution: How-To Guide

Objectives and Functionality

GASB 34/35 Compliance in Action

The following is a how-to guide for implementing GASB 34/35-compliant functionality in your Oracle Financials Cloud instance:

Asset Clearing Accounts

• Assign the same asset clearing account to each corporate book.
• For multiple clearing accounts in a book or across books in the same ledger, set up the required mapping using the mapping set in sub-ledger accounting.
• For additional sub-ledger accounting setup, repeat the below setups. Note that this setup only covers standard invoices. If debit memos, credit memos, and prepayments require GASB accounting, repeat the steps below for each of these invoice types.

Expense Account to Clearing Accounting Mapping Set

• The invoice accounting for the secondary ledger displays journal lines to the expense account on the invoice instead of the asset clearing account if:
  • The mapping setup is not set up
  • There are unmapped values
• You can manually transfer incorrect amounts to the asset clearing account. This does not affect Create Mass Additions.

Create Mass Additions

• This program only transfers invoice lines with charge account type of expense or asset, and associated variances, freight, tax, and miscellaneous lines.
• Independent freight or miscellaneous invoice lines do not create assets.

Invoice Accounted Before Enabling this Feature

• The secondary ledger will not have the journal entries required for the asset clearing account. You can manually initialize the balances.
• You can create the invoices through the Create Mass Additions program above by backdating the dates.

Primary, Secondary, and Custom Ledgers/Sub-ledgers

• The primary ledger and corporate book contain the expensed assets, and the secondary ledger and tax book contain the depreciated assets. You must create custom sub-ledger accounting rules to map the asset expense accounts to the asset clearing account for the GASB secondary ledger.

Payables Sub-ledger Accounting:

• The journal entry you create for invoice accounting in the Standard Accrual sub-ledger accounting method creates a debit to the charge account on the invoice distribution. For the GASB secondary ledger, the expense account for the asset category is mapped to the asset clearing account.
  • Mapping Set: Create a mapping set in Payables to replace the invoice distribution expense account value with the asset clearing account value.
  • Account Rule: Create an account derivation rule that uses the above mapping set, and then assign this new rule to a journal entry rule set.
  • Journal Entry Rule Set: Copy the Invoice Accrual Basis journal entry rule set to create a custom journal entry rule set and for the Item Expense journal line rule, add the new account rule to the natural account segment in the segment rules.
  • Accounting Method: Copy the Standard sub-ledger accounting method to create a custom accounting method and add the new rule set to the custom accounting method by either deleting or end dating the current Invoices rule set.

General Ledger:

•  The primary ledger stores the expense journals for the assets, and the secondary ledger stores the GASB complaint journal entries. You must create a secondary ledger and assign the GASB accounting method.
  • Primary Ledger: The Primary ledger records the asset purchases as expenditures with the modified accrual accounting method.
  • Secondary Ledger: Create the secondary ledger that records the GASB compliant journal entries. It must have the same chart of accounts, currency, and calendar as the primary ledger. Specify the custom accounting method created above.
  • Primary to Secondary Ledger Mapping: Create a primary ledger to secondary ledger mapping. Set the data conversion level to Sub-ledger.

Fixed Assets:

• The corporate book does not depreciate the assets and does not transfer journal entries to the primary ledger. You do not need to depreciate these assets since they were fully expenses upon purchase. The associated tax book depreciates the assets and creates journal entries in the GASB secondary ledger.
  • Profile Option:
  • Enable “Enable GASB 34 Asset Additions for Assets” profile option:This profile option changes the behavior of the Create Mass Additions ess job set.
  • Corporate Book
    • Disable Allow Ledger Posting option: This will prevent the corporate book from sending any journal entries to the primary ledger.
    • Disable Depreciation option: This will prevent calculating the depreciation in the corporate book
  • Tax Book: Create a tax book associated with the corporate book to depreciate and create journals for the GASB secondary ledger.
    • Enable Allow Ledger Posting option: This will enable the tax book sending journal entries to the secondary ledger.
    • Enable Depreciation option: This will enable calculating the depreciation in the tax book.

Invoice Accounting:

• Create an invoice with the expense account. Two sets of journal entries are created.
  • Primary Ledger Journal: Debit the expense account.
  • GASB Secondary Ledger: Debit the asset clearing account.

Create Mass Additions

• Submit the Create Mass Additions Job Set from scheduled processes to transfer asset invoice line distributions from Payables to Assets, this job set consists of the following three ess jobs.
  • Update Asset Tracking: The Update Asset Tracking Flag job definition updates the Track as an asset option on distribution lines for the specified accounting date ranges and accounts.
  • Create Mass Additions: This job definition creates source lines in the corporate book for the invoices with the Track as Asset option enabled.
  • Update Asset Type: The Update Asset Type job definition changes the asset type from expensed to capitalized or CIP for the specified ledger, corporate book, and invoice accounts specified.

Asset Additions

• Use prepare Source Lines page to modify or add asset attributes for the asset created from the invoices selected for the corporate book.
• Use Post Mass Additions page to post mass additions to the corporate book.
• Copy Assets from corporate book to tax book.

Asset Accounting

• Copy Assets from corporate book to tax book
• Calculate depreciation on the assets in the tax book
• Create sub-ledger journal entries for the tax book
• Transfer the journals to the GASB secondary ledger
• Inquire Assets to view the tax book and depreciation accounting

 

 
Inspirage understands these challenges and will help your business achieve GASB 34/35 compliance using Oracle Financials Cloud. If you are unsure about moving to Oracle Cloud due to gaps between your business requirements and Oracle’s Cloud offering, it’s possible that we have already built a solution to bridge that gap. If not, we can customize something to fit. We will do the work behind the scenes, so you can focus on growing your business.

Please visit the Oracle Cloud Marketplace to see a complete listing of Inspirage Solutions.

As the Integrated Supply Chain Specialists, with recognition from Gartner, IDC, and winners of Oracle’s ERPM (Enterprise Resource Planning & Management) & Supply Chain Management Cloud Partner of the Year (Global) awards in recent years, Inspirage is uniquely qualified to be your success partner. Whether you are upgrading your on-prem system or have decided to move to the cloud where continuous improvement is built-in, our team is prepared to guide you on your transformational journey. Contact us to learn more.

Global company standardizes expense management system company-wide, reducing costs and managing compliance

Oracle Expense Cloud: In Practice

 

 
Our client has already implemented a variety of Oracle Cloud applications across all their entities. The Primary US entity was highlighted as a pilot by Inspirage to demonstrate the capability and flexibility provided by Oracle Expense Cloud. The pilot provided Inspirage the perfect opportunity to showcase the Oracle Expense Cloud module and its capability to the client.

Oracle Expense Cloud provides adequate tools and customization capabilities to maintain a standard procedure yet satisfy variations for the local statutory requirements. After a successful implementation in the US, plans were made to implement Oracle Expenses for all entities in two stages.

Inspirage understands the challenges global companies face with digital expense management. We can help your business achieve seamless expense management using Oracle’s Expense Cloud solution. If you are unsure about moving to Oracle Cloud due to gaps between your business requirements and Oracle’s Cloud offering, it’s possible that we have already built a solution to bridge that gap. If not, we can customize something to fit. We will do the work behind the scenes, so you can focus on growing your business.

Please visit the Oracle Cloud Marketplace to see a complete listing of Inspirage Solutions.

As the Integrated Supply Chain Specialists, with recognition from Gartner, IDC, and winners of Oracle’s ERPM (Enterprise Resource Planning & Management) & Supply Chain Management Cloud Partner of the Year (Global) awards in recent years, Inspirage is uniquely qualified to be your success partner. Whether you are upgrading your on-prem system or have decided to move to the cloud where continuous improvement is built-in, our team is prepared to guide you on your transformational journey. Contact us to learn more.

It is not an exaggeration to say that the entire fate of a business hinges on the quality of its enterprise resource planning (ERP) implementation. An ERP system not only represents a major financial investment for companies, but it also touches every essential aspect of their operations from accounting to supply chain management.

Accordingly, the costs of not properly implementing an ERP solution are substantial, with some of the most notable failures bearing multimillion-dollar price tags, as chronicled by ERP News. Recent trends in ERP development — most notably, the move to cloud ERP and the integration of relatively new technologies such as artificial intelligence (AI) — have been driven by organizations looking to ensure that their ERP solutions are less risk-prone. In other words, they’re looking for ERPs that are more cost-effective, better capable of supporting informed decision-making, and easily scalable as company operations grow.

With those considerations in mind, let’s look at some of the top trends in ERP in 2021 and beyond.

1. The ongoing rise of cloud ERP

Cloud ERP has gained significant momentum in recent years for several reasons:

• Latest and greatest functionality: Modern cloud-based ERPs always deliver the most recent features from their respective vendors, with updates arriving frequently (e.g., on a quarterly basis).
• Manageable costs: With cloud ERP, companies can move from capital expenditures to operating expenditures. This shift provides more budgetary flexibility and lets them pay for what they actually use.
• Straightforward access: As more employees go remote, cloud ERP provides the flexible access that they need. Workers don’t need to be within the four walls of the organization and can instead access applications over the internet.
• Scalability: By hosting EPR in the cloud, companies can eliminate the burden of managing and upgrading hardware and software on-premises. This newfound simplicity supports more scalable operations.

According to MarketsandMarkets, the global cloud ERP market will more than double in size between 2020 and 2025, reaching $101.1 billion in value.
 

 

2. AI comes to ERP

Artificial intelligence (AI) is changing how organizations collect, analyze, and apply their business data, so it’s not surprising that it has found a comfortable place within ERP solutions. Major use cases for AI in ERP include:

• Deeper data insights: As the amount of unstructured data that organizations generate continues to increase, AI provides a way to systematically identify patterns and surface actionable insights.
• Process automation: AI can automate a lot of otherwise tedious and time consuming tasks, such as categorizing financial information from invoices and verifying reports. This frees up time for human teams to focus on other priorities.
• Optimized scheduling: In logistics and planning, AI can play a pivotal role in determining the optimal delivery and labor schedules. A 2019 IPFS survey of 600 executives found that 40% of them intended to use AI for inventory planning.

ERP vendors are also increasingly building such capabilities directly into their solutions, saving customers the trouble of having to implement AI modules on their own.

3. Multi-tier ERP

“One ERP to rule them all” has been the traditional approach to ERP deployments, as organizations have looked to use a single ERP to serve all of their locations. However, this hasn’t always worked out well, since the specialized requirements of different business units often exceed the capabilities of a one-size-fits-all ERP solution. Moreover, the costs of continually retrofitting a single ERP for the entire business can be substantial.

An alternative approach that has become more popular over time is the multi-tier or two-tier ERP. Under this setup, an organization uses one core ERP at the corporate level and another for its various divisions and subsidiaries. This approach may involve a combination of on-premises and cloud-based ERP solutions. Gartner has highlighted the benefits of multi-tier ERP, calling it a path toward easier modernization of small and fast-growing business units.

Making the multi-tier ERP work requires tight integrations between multiple systems. As an experienced Oracle partner, Inspirage has integrated ERP, supply chain and other solutions for organizations of all kinds. Connect with our expert team to learn more about how we can guide your next project.

A Seamless Billing Solution for Progressive Billing Customers

Firms that handle complex engineer-to-order equipment often need a fraction of the total order booking value from their customers at the beginning of any initiative. The remaining balances are billed to the customer at other milestones, such as shipping of the product and, finally, at the customer acceptance. Since such orders have longer lead times and higher dollar values, milestone billing ensures that firms can have better cash flow and revenue throughout the transaction lifecycle and will not need to wait on lengthy order turnaround times. Customers also benefit since vendor firms are committed to supplying the intended service/product. Without a framework in business applications to support this process, it would be very tedious and manually intensive for businesses to do timely and accurate billing, leading to potential revenue mismatch and leakage.
 

 

Bridging the Gap

Inspirage designed and developed a solution that helps businesses define a billing plan and payment breakdown. For example, a customer may select a plan with a 10% initial payment, 30% due at the point of shipping, and the remaining 60% due when the customer provides the final acceptance of the product. With Inspirage’s Progressive Billing solution, which leverages the flexible features of Oracle CPQ (Configure, Price, Quote) and a seamless integration developed with ERP Cloud Order Management, sales teams and order managers can now choose the right billing plan for eligible customers and process the orders accurately and promptly. If necessary, customers can even be associated with more than one billing plan.

The system automatically calculates the right billing amount and line items that need to be included in a quote, and eventually into an invoice. When a specific billing plan is selected on the quote, the quote auto-generates a series of billing lines that capture a percentage of the order booked value, which will eventually be used for invoicing purposes. These lines are comprised of both positive and negative dollar values to help nullify the effect of billing twice.

When the solution is integrated with order management, companies can utilize Order Orchestration rules. The billing lines can be either manually interfaced for invoicing by users (first/last milestone billing) or automatically sent to invoicing when an event occurs, such as shipping to bill 30% of dollar amount upon shipping). All of this is achieved with a click of a button by selecting the right payment terms.

This solution has been built to work with the Oracle CX B2C Module with the Oracle ERP Cloud Accounts Receivables Module. Some key considerations before implementing this solution are:

• Designing and setting up billing plans in CPQ,
• Maintaining consistent key financial data in CPQ and ERP for smooth transaction flow (e.g., payment terms, transaction modes and types),
• Defining billing line items that represent various phases/events in CPQ and ERP,
• Defining order orchestration with different pause types, and
• Defining AR transaction types that need to be associated with specific line(s) for accurate invoicing.

Some best practices for dealing with progressive billing are:

• On-boarding customers with the right billing plan(s), and
• Managing customer account details accurately in Oracle CPQ and ERP modules and keeping them current.

Inspirage can help

With a well-coordinated process for milestone billing that leverages the robust features of CPQ and the order orchestration and invoicing abilities of Oracle ERP, companies are ensured to have simplified transaction processing, and at the same time, smooth and accurate billing. Inspirage’s Progressive Billing solution is already built and deployed at one of leading high-tech manufacturing firms whose operations span various geographical locations in the US, Asia, and Europe.

If you are on the fence about moving to Oracle Cloud due to gaps between your business requirements and Oracle’s Cloud offering, it is possible that we already built a solution to bridge that gap. If we do not have a prebuilt solution to address your challenges, we can customize something to fit. We will do the work behind the scenes, so you can focus on growing your business. Please visit the Oracle Cloud Marketplace to see a complete listing of Inspirage Solutions.

As the Integrated Supply Chain Specialists, with recognition from Gartner, IDC, and winners of Oracle’s ERPM (Enterprise Resource Planning & Management) & Supply Chain Management Cloud Partner of the Year (Global) awards in recent years, Inspirage is uniquely qualified to be your success partner. Whether you are upgrading your on-prem system or have decided to move to the cloud where continuous improvement is built-in, our team is prepared to guide you on your transformational journey. Contact us to learn more.

Hint: The Data Model Holds All of the Secrets

With so many options to choose from, selecting Enterprise software can be a challenging task. Even after an exhaustive search, sometimes the selection process does not lead to the desired outcome for your business long term. Let’s look at how best to approach software selection to ensure that you choose a solution that will best support your business needs.

Selecting Software for Long-Term Viability

As you have most likely experienced, going through the process of finding a new software solution can involve taking part in endless demonstrations. These can often leave you more confused than when you started. While demonstrations and reference checks are an essential part of the process, other considerations should not be overlooked. In addition to demonstrations, reference checks, gap analysis, and the other common techniques, mapping the ERP data model to your business is an essential part of determining if your new solution’s long-term viability.
 

 

Mapping the ERP Data Model to Your Business

For example, if you are a project manufacturing company, then it is safe to say that you understand the importance of having your ERP system’s database stripe all transaction data by project number. Our services were called on after a project manufacturing company narrowed its ERP selection to two vendors and chose the user interface with the best look and feel. Unfortunately, this vendor did not stripe the transaction data by project number, and the company faced ten years of workarounds following the implementation of that software. Inspirage was able to get this company on the road to efficiency and visibility with a solution that resolved its years of ongoing issues.

At your company, do you have alternative ways of making the same product? If so, then software that supports this scenario and accounts for different resources will be an essential feature. Simply supporting alternate resources is not enough. Software that drills down and allows the user to identify whether the alternate resource definition is global, at the work center level, or the routing level is vital to an efficient process. Having the ability to check the database design of the ERP you are considering allows you to figure out the level of granularity present in the data model.

Does your company have more than one manufacturing location? If so, you will need multi-site Material Requirement Planning (MRP). Make sure to check the data model to see if the manufacturing site stripes all the MRP-related data. If you are a process manufacturing company, it is important that you have available a dual unit of measure feature. Check the data model to see if it is present.

Finally, ask yourself what fulfillment models do you use (or want to use)? If you can gain a competitive advantage by using advanced fulfillment techniques like Back-to-Back, Drop-Ship, and Contract Manufacturing, then ensure that the ERP system you are considering supports these fulfillment techniques at the database level.
 

 

Putting It All Together

Unless you have recently implemented an enterprise system, the ERP system you are using today is probably not the same one you will be using ten years from now. Take time to understand your business needs so that the selection of and investment in your next ERP system does not cause more problems than it solves.

As a recognized Oracle partner, Inspirage’s team of experts can help you select and implement an ERP system that solves your business challenges. In addition to our Oracle Application expertise, we have created a library of innovative PaaS solutions to supercharge you Oracle Applications so they best fit your needs. Please visit the Oracle Cloud Marketplace to see a complete listing of Inspirage Solutions and contact us with any questions or to schedule a demo.

2020 created unprecedented challenges for nearly everyone, including finance teams that had to, for the first time, perform much of their work remotely. Moreover, this major on-the-fly adjustment to telecommuting compounded longstanding difficulties in managing financial processes, which remained a headache for many organizations throughout 2020.

The Biggest Problems with Financial Processes in 2020

According to a 2020 Forrester Consulting survey of 336 IT and finance executives around the world, 90% of respondents reported problems with their close process, with the most common stumbling blocks including:

• Error-prone manual processes: Flagged by 44% of survey takers, these types of activities, often revolving around spreadsheets and complex patchworks of other software, slow down financial operations and often require rework, anyway.
• Overly complex ERP systems: ERPs that feature lots of disparate vendors and technology stacks can easily lead to confusion, siloed processes and difficulties collaborating across teams.
• Not enough bandwidth for strategic projects: Many CFOs spend more time tracking down financial information across complicated ERP environments (17% of their work weeks, per the Forrester survey) than they do on business strategy (only 12%).

These challenges are not limited to financial consolidation and close processes. For many companies, financial processes are not yet automated or standardized, leading to time-consuming data entry (and re-entry) for reconciliations, reclassifications and adjustments.

Dealing with corrupted and/or outdated data is another hurdle, since the various systems involved may not be updated in real-time. Finance teams might not know what is being spent until they’re reviewing documents during the close itself, at which point they might still be waiting on assets from other departments and needing to re-check them for accuracy.

As teams look ahead to 2021 and beyond, a better approach is needed. Finance departments must contend not only with the above deep-seated issues but also with extended work-from-home as well as lingering uncertainty about how long it will take before their organizations recover from the turmoil caused by the coronavirus pandemic. Fortunately, there are reliable tools for doing so.

Building Better Financial Processes for the 2020s

Improving financial processes requires automation and adding advanced capabilities to an existing ERP can be transformative. Automate and modernize business processes across the board without introducing new complexity or higher costs by leveraging these key solution features:

A complete solution from the start

Ramping up with an Oracle Cloud solution is more straightforward than with more complex multi-vendor setups, which usually require extensive consulting before end-users can do anything beyond using a starter kit or template. Having a comprehensive platform from the get-go gives users power and also saves money.

Intelligent automation

The automation capabilities within Oracle applications allows for streamlined processes with broad support across both cloud and on-premise ERP solutions. Configurable rules and automatically applied accounting logic reduce the risk of human error while speeding up the day-to-day work of finance teams.

Flexibility to accommodate change

Financial processes are always evolving in response to changes in the business environment. Events like the COVID-19 pandemic underscore the importance of having an agile finance solution that can implement new models as necessary.

Overall, Oracle solutions enable improved reporting and analysis, through harmonization of key functionality in a consistent manner along with deeper process automation. This works in tandem with ERP solutions to refine and scale accounting activities, providing a crucial upgrade as teams become more remote and need standardized processes.

 
As an experienced and recognized Oracle partner, Inspirage has the expertise to guide your extension of your ERP system. Contact our team to learn more about how to get started on the path to superior financial process improvements.