PeopleSoft Cost Management 9.1 PeopleBook

Getting Started With PeopleSoft Supply Chain Management Cost Management

This chapter provides an overview of PeopleSoft Supply Chain Management (SCM) Cost Management and discusses:

PeopleSoft SCM Cost Management overview.
PeopleSoft SCM Cost Management business processes.
PeopleSoft SCM Cost Management integration.
PeopleSoft SCM Cost Management implementation.

PeopleSoft SCM Cost Management Overview

PeopleSoft SCM Cost Management provides the control and flexibility you need to manage costs throughout your inventory and manufacturing processes. With powerful features that support multiple methods of costing, PeopleSoft Cost Management enables you to model your business exactly as you require it. With PeopleSoft Cost Management, you can:

Maintain multiple sets of books within an inventory business unit for financial, governmental, and management reporting purposes.
Define any number of cost methods to value inventory transactions; including, standard, actual, FIFO actual, LIFO actual, by specific lot ID or serial ID, perpetual weighted average, retroactive perpetual weighted average, periodic weighted average, or non-cost.
Determine the type of costing by item, inventory business unit, and cost book combination. This flexibility allows you to mix the type of costing within one inventory business unit; some items can use standard cost, other items can use actual cost, and so on. In addition, the same item can be costed differently using different cost books within the same inventory business unit.
Calculate the cost of each inventory transaction, including, material, conversion, conversion overhead, landed, inbound, outbound, and other costs based on your cost methods. The system also calculates and updates weighted average costs, purchase price variances, exchange rate variances, negative inventory depletions, consigned items, and return to vendor items.
Create accounting entries for all inventory transactions that have a financial impact on PeopleSoft Inventory and PeopleSoft Manufacturing. You can design transaction accounting for the basic transactions, location accounting, budget checking, interunit transfers, fund accounting, shipments on behalf of another revenue stream, and interunit expensed issues. These accounting entries can be posted to PeopleSoft General Ledger or a third-party general ledger system.
Calculate and track costs for makeable items in PeopleSoft Manufacturing. You can calculate the costs of makeable items, co-products, and by-products using standard, actual, or average cost methods. Additional costs besides material, labor, machine, and conversion costs, can be added to makeable items. The system enables you to revalue costs, analyze manufacturing performance, and perform cost simulations. You can closely monitor production costs at every stage in PeopleSoft Manufacturing using inquiry tools and reports to detect potential production variances and analyze completed production.
Manually adjust the actual or average cost of an item.
Include landed cost charges in an item's cost, including freight, insurance, duty, taxes, handling, and subcontracted services. Adjustments to landed costs based on the voucher in PeopleSoft Payables can be recorded in a variance account or added to the final cost of the item.
Record the cost of items transferred between inventory business units. The system calculates the correct transfer price based on the Transfer Pricing Definition component. Accounting entries are created based on your business configuration, including interunit sales and payable accounts if applicable.
Reconcile the cost of putaways in PeopleSoft Inventory with the vouchers in PeopleSoft Payables using the CM/AP Reconciliation Tool.
Review transaction costs and accounting entries using powerful inquiry tools and reports designed for financial and management accounting needs. You can monitor accounting entries before and after they are posted to the general ledger system.

PeopleSoft SCM Cost Management Business Processes

This graphic lists the PeopleSoft Cost Management business processes:

PeopleSoft Cost Management business processes

We cover these business processes in the business process chapters in this PeopleBook.

PeopleSoft SCM Cost Management Integration

PeopleSoft Cost Management illustrates the integration between PeopleSoft Cost Management and other PeopleSoft FSCM applications:

PeopleSoft Cost Management integration with other PeopleSoft applications

These PeopleSoft applications integrate with PeopleSoft Cost Management:

Inventory

Integration with PeopleSoft Inventory includes:

PeopleSoft Cost Management calculates the cost and creates the accounting entries to record putaways, shipments, adjustments, and other material movements in PeopleSoft Inventory. PeopleSoft Cost Management receives costing information from PeopleSoft Purchasing, Payables, and Manufacturing to record and update the cost of stock in each inventory business unit.
The Cost Rollup process in PeopleSoft Cost Management can calculate the costs of an inventory item. For manufactured items, the Update Production process (Cost Update/Revalue process page) then records these costs to be used when the item is putaway in PeopleSoft Inventory.

General Ledger

Integration with PeopleSoft General Ledger includes:

Accounting entries recording the activity in PeopleSoft Inventory are retrieved from PeopleSoft Cost Management and used as input to create journal entries that are posted in the PeopleSoft General Ledger business unit tied to the Inventory business unit.
PeopleSoft Cost Management enables you to analyze financial transactions online by using the financial inquiry pages. You can track financial transactions throughout the audit trail by drilling up to the journal entries in GL and drilling down to the accounting entries in PeopleSoft Cost Management.

Commitment Control

Integration with PeopleSoft Commitment Control includes:

A requisition or purchase order is entered in PeopleSoft Purchasing using commitment control and a pre-encumbrance or encumbrance is established. If the purchase order is sourced from PeopleSoft Inventory, then the encumbrance is relieved and replaced with a expenditure against the budget when the Accounting Line Creation process in PeopleSoft Cost Management is run with the Budget Check Accounting Lines check box selected to run the Commitment Control Budget Processor.
An expenditure is recorded in the budget when material stock request is created and stock is issued from PeopleSoft Inventory using a ChartField combination set up as a budgetary account for commitment control. The deduction to the budget occurs when you run the Accounting Line Creation process in PeopleSoft Cost Management with the Budget Check Accounting Lines check box selected.

Payables

Integration with PeopleSoft Payables includes:

When a consigned item or VMI consigned item is consumed using any one of various transactions in PeopleSoft Inventory or Manufacturing, ownership of the items is transferred from the vendor to the business. The Transaction Costing and Accounting Line Creation processes in PeopleSoft Cost Management make consignment information available to PeopleSoft Payables for the creation of vouchers.
The Landed Cost Extraction process in PeopleSoft Payables can pass cost adjustment information to PeopleSoft Cost Management for the stock putaways in inventory. These cost adjustments record differences between the purchase order cost and the voucher cost for direct material, subcontracted costs, and other landed costs including taxes and freight. The Transaction Costing process within the Cost Accounting Creation process updates inventory putaways, depletions, and variances for the adjustments.
When stock is returned to the vendor using the RTV feature, PeopleSoft Cost Management records an RTV variance for any differences between an item's RTV price on the debit memo derived from PeopleSoft Payables and the cost that is used to relieve the item from PeopleSoft Inventory.
The CM/AP Reconcile process in PeopleSoft Cost Management retrieves accounting entries in PeopleSoft Payables and finds the matching accounting entire in PeopleSoft Cost Management. This reconciliation process highlights the entries that cannot be matched.

Engineering

PeopleSoft Engineering retrieves item information from PeopleSoft Cost Management and Inventory for the engineering workbench environment to help you manage product introduction and change processes throughout the enterprise.

Product Configurator

When putting away an inventory item that is configured using PeopleSoft Product Configurator, the item is stored using a lot ID and a configuration code. The cost of a configured item is calculated by the Cost Rollup process in PeopleSoft Cost Management based on the item ID and configuration code.

Purchasing

Integration with PeopleSoft Purchasing includes:

When items on a purchase orders are received from the vendor in PeopleSoft Purchasing, the items can be put away in a PeopleSoft Inventory business unit using the putaway processes. PeopleSoft Cost Management calculates the cost of the receipts into inventory based on the purchase order price and any additional charges defined a miscellaneous charge codes (for example, landed costs).
To return items that have been stocked in inventory, the data on the Return to Vendor (RTV) pages is entered in PeopleSoft Purchasing and passed to PeopleSoft Inventory where the items are shipped or adjusted. PeopleSoft Cost Management records an adjusting entry for the cost of the returned items.

Manufacturing

Integration with PeopleSoft Manufacturing includes:

As PeopleSoft Manufacturing moves raw materials and subassemblies from inventory storage locations to WIP locations or directly to production, PeopleSoft Cost Management creates accounting entries to debit or credit storage locations as the materials move down the production line. This enables the system to accurately track the costs included in raw material and WIP at any point in time.
After the make item is produced, completions are recorded and the item is putaway in PeopleSoft Inventory. The Transaction Costing process in PeopleSoft Cost Management calculates the cost of the make item once the production ID or production schedule is closed for accounting. Later, if additional costs are recorded in PeopleSoft Manufacturing, the Transaction Costing process adjusts the original putaway and any depletions based on the putaway.

EPM (Enterprise Performance Management)

Use the Generate EPM Extract process to pass costing data from PeopleSoft Cost Management to PeopleSoft EPM by populating an on-hand staging table. A PeopleSoft EPM process extracts data from this table, transforms it, and places it into a PeopleSoft EPM data warehouse.

Project Costing

The costing data for project-related transactions is retrieved from PeopleSoft Cost Management records by the PeopleSoft Project Costing application in order to create resource transactions.

Maintenance Management

PeopleSoft Maintenance Management is a product within the asset life cycle management suite. This product manages the maintenance and repair of an asset.

PeopleSoft Cost Management provides estimated costs for each inventory item on a parts list or work order in PeopleSoft Maintenance Management.
When items are issued from PeopleSoft Inventory to a work order, PeopleSoft Maintenance Management can provide overriding ChartField combinations. These account distribution overrides are used with the existing accounting logic in PeopleSoft Cost Management to create the necessary accounting entries.

We cover integration considerations in the implementation chapters in this PeopleBook.

Supplemental information about third-party application integration is located on the My Oracle Support web site.

PeopleSoft SCM Cost Management Implementation

PeopleSoft Setup Manager enables you to generate a list of setup tasks for the organization based on the features that you are implementing. The setup tasks include the components that you must set up, listed in the order in which you must enter data into the component tables, and links to the corresponding PeopleBook documentation.

PeopleSoft Cost Management also provides component interfaces to help load data from the existing system into PeopleSoft Cost Management tables. Use the Excel to Component Interface utility with the component interfaces to populate the tables.

This table lists all of the components that have component interfaces:

Component	Component Interface	Reference
Distribution Type	CM_DISTR_TYPE_CI	See Defining Distribution Types.
Storage Area Accounting	STORAGE_ACCTS	See Using Storage Area Control.
Production Conversion Codes	CE_CONCODE	See Defining Conversion Codes.
Costing Conversion Overhead Rates	CE_CONV_OH_RATE	See Creating Cost Conversion Overhead Rates.
Costing Conversion Rates	CE_CONV_RATE	See Creating Cost Conversion Rates.
Forecasted Purchase Rates	CE_FCST	See Forecasting Purchase Costs.
Additional Costs by Item	CE_ITEMEXP	See Adding Additional Costs.
Conversion Overhead Codes	CE_OHCODE_CODE	See Defining Conversion Overhead Codes.
Transfer Pricing Definition	CM_TRAN_PRICE_CI	See Understanding Transfer Pricing Definitions.
Floor and Ceiling Values	CM_VALUE_REF_PGRP	See Generating Reports of Financial Transactions.
Assign Crew Actual Costs	CM_CREW_RATE	See Establishing Actual Costs for Crew.
Establish Actual Costs for Crew	CE_CREW_ACTCOST_CI	See Establishing Actual Costs for Crew.
InterUnit Transfer Accounting	INTERUNIT_DEF_INV	See Establishing Inventory Business Unit Pairs.

PeopleSoft Events and Notifications Framework

As your organization processes the continuous stream of transactions within your PeopleSoft system, the events and notifications framework enables you to monitor the transaction flow and alert your organization to any errors, changes, and stalled transactions. The messages generated by the events and notifications framework can notify you of the problem, give you a detailed description of the issue, and provide a link to the PeopleSoft page where you can resolve it. One of the ways to use the events and notifications framework is to create PeopleSoft Queries on one or more PeopleSoft tables, add the alert using the Alert Setup component, and then complete the alert setup steps. This method enables you to monitor data within a PeopleSoft table; for example, searching for stalled transactions, instead of looking at the results of a PeopleSoft process. When the Alerts process (EOEN_ALERT) is run, the PeopleSoft table is queried and the alert messages can be generated. These messages can be routed to the appropriate person (PeopleSoft user or non-PeopleSoft user) using an email, a PeopleSoft worklist entry, an XML message, or the PeopleSoft Notification Dashboard.

For the PeopleSoft Cost Management application, sample data includes the following PeopleSoft queries that have been setup to work with the events and notifications framework. These queries may require minor modifications to work in your environment. You can also copy and alter these queries to create new alert messages.

Query	Process Name	Process Category	Description
CM_PENDING_TRANS	IN_ALERTS	CM_PENDING_TRANSACTION	Generates alert messages for costing transactions that are still pending. One alert message is created for each business unit and cost book combination. This PeopleSoft query uses the same logic as the Pending Transactions inquiry page in PeopleSoft Cost Management.
CM_ACCTG_LN_ERROR	IN_ALERTS	CM_ACCTG_LINE_ERROR	Generates alert messages for costing transactions which have an error that is preventing the creation of the accounting lines. One alert message is created per business unit.
CM_ACCTG_LN_UNPOST	IN_ALERTS	CM_ACCTG_LINE_UNPOST	Generates alert messages for costing transactions that have not been posted to the general ledger. One alert message is created for each business unit and cost book combination.

See PeopleSoft Events and Notifications Framework 9.1 PeopleBook

Other Sources of Information

In the planning phase of the implementation, take advantage of all PeopleSoft sources of information, including the installation guides, table-loading sequences, data models, and business process maps. A complete list of these resources appears in the preface in the PeopleSoft Application Fundamentals PeopleBook,with information about where to find the most current version of each.