Propagate Cost Changes for Cost-Based Transfers in Actual Cost

If your organization uses the actual cost method, item costs might often change after shipment, for example, when you make manual cost adjustments or add extra charges like freight, insurance, or customs. These post-shipment changes aren’t reflected in the destination organization because the transfer price is treated as fixed after the transfer happens. This means the source organization ends up absorbing the gain or loss from the adjustment, while the inventory valuation of the destination organization stays outdated. Over time, this causes mismatched inventory values and inaccurate financial reporting.

Now, with this feature, you can propagate acquisition cost adjustments for cost-based inventory transfers. When the source organization uses the actual cost method and cost propagation is enabled, any cost adjustment made in the source is automatically reflected in the destination. This ensures the item cost in the destination organization reflects the true cost of goods, the source no longer carries the gain or loss, and downstream processes, such as projects, COGS, and budgetary control, stay accurate.


Cost propagation based on the organization's cost method

Cost propagation based on the organization's cost method

With this update, cost propagation is accurate across your inventory flows:

  • Supports both direct and in-transit inventory transfers within the same profit center business unit (PCBU).
  • Works for inventory as well as expense destinations.
  • Automatically propagates cost adjustments to projects and budgetary control for expense destinations.
  • Applies only when the source organization follows the actual cost method and cost propagation is enabled in the cost profile.
  • Updates both primary and secondary cost books when they share the same run control. If managed separately, only the linked book receives the update.

Distributions before and after cost propogation

Distributions before and after cost propogation

Some of the benefits of this feature include:

  • Keeps inventory valuation accurate across all organizations.
  • Removes unrealized gain or loss from the source organization.
  • Ensures gross margins and financial reports reflect true costs.
  • Automatically updates projects, budgetary control, and COGS with the right values.
  • Gives better visibility into the real landed cost of inventory items.

Steps to Enable and Configure

Use the Opt In UI to enable this feature. For instructions, refer to the Optional Uptake of New Features section of this document.

Offering: Manufacturing and Supply Chain Materials Management  No Longer Optional From: Update 26A

Tips And Considerations

  • Opt-In Control:
    You can opt in to this feature and can be turned off at any time. If it’s disabled later, only transactions created while it was active will continue to follow the new propagation logic.
  • Manual Adjustments:
    Manual cost adjustments made in the destination organization are honored locally. On returns, these adjustments are reflected as cost variances.
  • Projects and Budget Control:
    • Propagated adjustments flow to projects using the original transaction event types.
    • For expense destinations, budget control automatically updates the additional cost through the Funds Reservation API.
  • Exclusions:
    • Propagation isn't applicable for transfers across PCBU that use Oracle Supply Chain Financial Orchestration; such flows remain unchanged.
    • Propagation applies for primary to primary and primary to secondary cost books, but not for secondary to primary cost books.

Key Resources

  • Oracle Fusion Cloud SCM: Using Supply Chain Cost Management guide, available on the Oracle Help Center.
  • Oracle Fusion Cloud SCM: Implementing Manufacturing and Supply Chain Materials Management guide, available on the Oracle Help Center.

Access Requirements

Users who are assigned a configured job role that contains the following privileges can access this feature:

  • Create Cost Accounting Distributions (CST_CREATE_COST_DISTRIBUTIONS)
  • Create Receipt Accounting Distributions (CMR_CREATE_RECEIPT_ACCOUNTING_DISTRIBUTIONS)
  • Review Cost Accounting Distributions (CST_REVIEW_COST_DISTRIBUTIONS)
  • Review Receipt Accounting Distributions (CMR_REVIEW_RECEIPT_ACCOUNTING_DISTRIBUTIONS)
  • Review Item Costs (CST_REVIEW_ITEM_COST)