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Internal Requisitions Example

Purchasing provides flexible internal requisitions that you can tailor to meet your needs. Review the example in this section to better understand how you can use internal requisitions.

You are not required to manage internal requisition activities exactly as described in the following example. Rather, the objective of these examples is to highlight the flexibility of internal requisitions across a variety of situations.

Oracle Manufacturing recommends that you experiment and review the results of different approaches to determine the best implementation of the internal requisition functionality for your unique needs. You should use this example as a starting point to better understand how you might use internal requisitions.

Example Overview

Global Computers, Incorporated is a computer manufacturer with organizations in Austin, TX and Sacramento, CA.

The Austin organization repetitively manufactures plastic components and uses the components, along with purchased items, to assemble base and cover assemblies in the Sacramento organization. Ownership of inter-organization transfers between Austin and Sacramento changes hands at the time of receipt (FOB Point: Receiving).

The Sacramento organization uses the Austin base and cover assemblies to assemble configurations of Sentinel computers. Sacramento also has a local sales offices for customer visits and demonstrations. Your salespeople distribute sales brochures during customer visits.

Employees can request Sentinel Computers for their own use, as well as mouse pads and wrist pads for their offices.

Define the following items at Global Computers:

Item Item Description  
A54888 Sentinel Base Assembly Assembled in Austin, Sub Assembly of Sentinel Computer, Internally Orderable in Austin, Default Source Type of Inventory, Default Source Organization of Austin, Default Source Subinventory of Repetitive Assembly
S86662 Sentinel Cover Assembly Sub Assembly of Sentinel Computer, Assembled in Austin, Internally Orderable from Austin, Default Source Type of Inventory, Default Source Organization of Austin, Default Source Subinventory of Repetitive Assembly
S56302 Sentinel Computer Assembled in Sacramento, Internally Orderable by Employees
C13139 Hard Drive Used in Sentinel Base Assembly
S85773 Sales Brochure Purchased from external suppliers, Stocked at Sacramento for internal use, Limited quantities on hand at the sales office
M1002 Mouse Pad Purchased from external suppliers, Stocked at Sacramento for internal use
M1002 Wrist Pad Purchased from external suppliers, Stocked at Sacramento for internal use
Table 1 - 15. (Page 2 of 2)

Define the following subinventories at Global Computers:

Organization Subinventory
Austin AUS-Finished Goods: Contains completed Sentinel Base Assemblies, Contains completed Sentinel Cover Assemblies, Tracked - asset subinventory
Austin Repetitive Assembly: Contains Hard Drives for final assembly in WIP, Uses Min/Max replenishment to signal replenishment, Request from AUS-Stores subinventory
Austin AUS-Stores: Contains additional supply of Hard Drives, Tracked - asset subinventory
Sacramento SAC-Finished Goods: Contains completed Sentinel Computers, Tracked - asset subinventory
Sacramento SAC-Stores: Contains completed Sentinel Base Assemblies shipped from Austin, Contains completed Sentinel Cover Assemblies shipped from Austin, Tracked - asset subinventory
Sacramento Office Supplies: Contains supply of Wrist Pads and Mouse Pads for internal use, Not tracked - expense subinventory
Sacramento Storage: Central storage for excess Sales Brochures, Tracked - asset subinventory
Sacramento Visit Center: Contains local supply of Sales Brochures for customer visits, Space for only 100 Sales Brochures, Not tracked - expense subinventory
Table 1 - 16. (Page 1 of 1)

Inventory Replenishment Request (Manufacturing)

You use one Hard Drive during the assembly of each Sentinel Base Assembly, and keep a limited supply of the Hard Drives in your Repetitive Assembly subinventory. As you consume Hard Drives from the Repetitive Assembly, you want to automatically send inventory replenishment requests to transfer additional Hard Drives from your Stores subinventory. The material handler needs to receive the inventory request and transfer the material before you run into a shortage situation. You create a report group that submits the Min-Max Planning, Requisition Import, Create Internal Sales Orders, and OrderImport processes every two hours.

As soon as the Hard Drive supply in the Repetitive Assembly subinventory drops below the minimum quantity, the next run of the Min-Max Planning process automatically creates a replenishment order for the reorder quantity. The reorder uses the item sourcing information to automatically create an intraorganization request in the Austin plant to move Hard Drives from Stores to the Repetitive Assembly subinventory. The request is automatically loaded as an internal requisition and an internal sales order, providing visibility of the request to the material handlers in the Austin plant.

The material handler also runs Pick Release every two hours to identify the pull requests from the shop floor subinventory. The next run of Pick Release creates a picking line for the subinventory transfer of Hard Drives. The material handler picks the Hard Drives out of the Stores subinventory, completes a ship confirmation and replenishes the Repetitive Assembly subinventory before a shortage occurs. The on-hand balances of the two subinventories are automatically updated by the Inventory Transaction Processor.

MRP Generated Inter-Organization Request (Manufacturing)

You use Oracle Master Scheduling/MRP and Supply Chain Planning in Sacramento to schedule production of the final assembly of the Sentinel Computer. The Sentinel Base Assembly and Sentinel Cover Assembly are provided by the Austin organization, so you define these items as "buy" items in Sacramento. You also specify the following sourcing information for the item:

Master Scheduling/MRP recommends that you produce 400 Sentinel Computers to fulfill demand over the next four weeks (100 each week), and you only have 100 Sentinel Cover Assemblies and 100 Sentinel Base Assemblies on hand in Sacramento. You need five days to ship material from Austin to Sacramento, so the planner implements planned orders for 100 Sentinel Cover Assemblies and 100 Sentinel Base Assemblies for the next three weeks using the Planner Workbench.

When the planner releases the planned orders for Sacramento, Master Scheduling/MRP automatically loads the Open Requisitions Interface and submits Requisition Import. Requisition import uses the sourcing information that you set up to create a requisition line for each week sourced from the Austin AUS-Finished Goods subinventory. In the background, the Create Internal Sales Orders and OrderImport processes automatically load the internal sales order against the Austin organization.

What if you have a three day production delay in Austin and you need to delay the third shipment of Sentinel Base Assemblies for a few days? Sacramento needs visibility to the delay to adjust the production schedules of the final assembly of the Sentinel Computers. In Austin, you can use the Schedule Orders window to update the scheduled shipment date by three days, or choose a different freight carrier for faster delivery if you need to expedite the shipment to prevent a shortage in Sacramento. When you ship the third shipment from Austin, you can update the expected arrival date, giving the planner and MRP in Sacramento full visibility of supply changes.

Each ship confirmation of the Sentinel Base Assemblies creates an intransit shipment from Austin to Sacramento. You do not require inspection of your own inter-organization transfers, so the receiving clerk in Sacramento receives directly into the Final Assembly subinventory when the shipment arrives. The intransit inventory balance is automatically updated and the inter-organization accounting entries are created along with the receipt transaction.

Inventory Replenishment Request (Office Stock Locations)

In the Sacramento sales office, you use internal requisitions to replenish your stock of sales brochures in the Visit Center.

Sales representatives use your brochures well, and most customers take brochures with them after the visit. You want easy access to brochures in the Visit Center, but only have room for 100 Sales Brochures. You typically use about 75 a week, but the number fluctuates with sales activity. Sales representatives take what they need; you do a stock count on Monday and Wednesday of each week and replenish whenever the stock count falls below 25.

You need to define min-max information for the Sales Brochures that you stock in the Visit Center subinventory. Use the Define Item/Subinventory information form to specify a planning method of Min-max planning, a minimum quantity of 25, and a maximum quantity of 100.

An assistant counts the Sales Brochures in the Visit Center on Monday, enters the results (20 remaining) into the Enter Replenishment Counts form, chooses On-Hand Quantity as the replenishment method, and runs the replenishment processor. Inventory automatically creates one replenishment request in the Open Requisitions Interface for 80 Sales Brochures to Visit Center from the Storage subinventory.

Requisition Import creates an approved internal requisition for subinventory transfers, and the sales order is automatically loaded.

The material handler reviews the picking slip, pulls the 80 Sales Brochures from Storage Subinventory and delivers them to the Visit Center. After delivering the material the handler records the shipment using the Confirm Shipments window. The shipment, receipt, and delivery information is recorded at once, and the on-hand balance of the Storage subinventory is updated automatically. Inventory automatically creates the necessary accounting entries to reduce the overall value of Sales Brochures in the Storage subinventory and charges the accounts associated with the Visit Center subinventory.

Online Request for Goods out of Inventory

In Sacramento, you stock low-cost office supplies on site to provide quick delivery to your employees. Employees can request items that are sourced from suppliers or inventory, but they do not know the source type at the time of the request. You also require internal requisitions to process requests for goods out of the stock locations. You have a company policy to always request items from Office Supplies whenever possible. You do not require any additional approvals, and a material handler picks the items out of inventory and delivers them directly to your office. A one day turnaround time is required for all internal requests.

As a requestor, you want to order the following items to improve your comfort and productivity:

Use the Requisitions window to create your request. Since company policy dictates that you request items from inventory whenever possible, the default requisition type is Internal Requisition and the default source type is Inventory. When you create the four requisition lines for your items, Purchasing automatically uses the item sourcing information to source the Mouse Pad and Wrist Pad from the Office Supplies subinventory, and the Sentinel Computer from the SAC-Finished Goods subinventory. Since the Glare Screen can only be purchased from suppliers, Purchasing sets the source type to Supplier and uses your sourcing rules and Approved Supplier List entries to determine the suggested supplier and document information. See: Automatic Sourcing. See: Approved Supplier List.

Material handlers need immediate visibility of your requests to be able to deliver in 24 hours. The system administrator sets the Create Internal Sales Orders and OrderImport processes to run every hour for internal sales orders.

The material handler in charge of the Office Supplies subinventory runs Pick Release twice a day to generate pick slips. The material handler reviews the picking slip, pulls the Mouse Pad and Wrist Pad from Storage and delivers them to your office. After getting your signature, the handler records the shipment using the Confirm Shipments window. The shipment, receipt, and delivery information is recorded at once, and the quantity delivered on the internal request is updated.

Office Supplies is an expense subinventory, and the correct accounts are charged when you receive the supplies into this subinventory. Since you are sourcing from an expense subinventory, ship confirmation does not generate any accounting entries for the issue of the items from the Office Supplies subinventory to your office location.

A separate material handler receives the Sentinel Computer request, and picks and ships it from the SAC-Finished Goods subinventory. When you complete the ship confirmation, Inventory automatically issues the Sentinel Computer out of the SAC-Finished Goods asset subinventory to the expense location listed on the requisition. Inventory and Purchasing also record the accounting transactions to credit the SAC-Finished Goods asset account and debits the appropriate charge account listed on the requisition.

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