Track Costs for Parallel Work Order Operations Using Precedence Constraints
You can now plan for your product costs when your work definitions have parallel operations enabled. This allows for accurate calculation of your product costs, when using the standard cost method. In Cost Accounting, you can cost your transactions and calculate your product costs when the work order operations are executed in parallel. This feature is applicable whether you use discrete manufacturing or process manufacturing.
Impact on the Roll Up Costs Process
Process Manufacturing
If you're using process manufacturing work definitions, when you roll up the costs of your products, the transfer percentage indicates the percentage of batch quantity moving to the next operation. This impact of transfer percentage continues until the parallel operations merge. This is calculated as the cumulative transfer percentage. If you also use operation yield with parallel operation, the cumulative yield now needs to account for transfer percentage.
Cumulative yield for operation with multiple previous operations = Sum (Cumulative yield of previous operation * Operation yield of current operation * Transfer percentage from previous operation)
Cumulative transfer percentage for operation with multiple previous operations = Sum (Cumulative transfer percentage of previous operation * Transfer percentage from previous operation)
Assuming that your process manufacturing work definition has the following dependency setup:
| From Operation | To Operation | Transfer Percentage |
| Null | 10 | 100% |
| 10 | 20 | 50% |
| 10 | 30 | 50% |
| 20 | 40 | 100% |
| 30 | 40 | 100% |
| 40 | Null | Null |
With operation yield defined for these operations, the cumulative yield and cumulative transfer percentage will be calculated as follows:
| Operation | Operation Yield | Cumulative Yield | Cumulative Transfer Percentage |
| 10 | 0.5 | 0.5 | 100% |
| 20 | 0.6 | 0.15 | 50% |
| 30 | 0.25 | 0.0625 | 50% |
| 40 | 0.85 | 0.180625 | 100% |
For calculating the costs, the ingredients and resources planned to be consumed on a variable basis will be scaled as follows:
Ingredient scaling factor = Cumulative yield of the operation where ingredient or resource is consumed / (Operation yield of operation * Cumulative transfer percentage of operation)
Product scaling factor = Cumulative yield of the operation where product is yielded / Cumulative transfer percentage of operation
When an operation has multiple previous operations, the cumulative costs at the start of this operation will be sum of the carried over costs from all immediate previous operations.
Additionally, these attributes have been added to the Rolled-up Costs page:
- Previous Operation Sequence
- Transfer Percentage
- Cumulative Transfer Percentage
Attributes Added to Rolled-up Costs Page
Note that for process manufacturing work definitions, reverse cumulative yield values aren't displayed in the Rolled-up Costs page.
Discrete Manufacturing
Consider a discrete manufacturing work definition with the following operation dependencies:
| From Operation | To Operation |
| Null | 10 |
| 10 | 20 |
| 10 | 30 |
| 20 | 40 |
| 30 | 40 |
| 40 | Null |
- To calculate the costs of outputs from discrete manufacturing work definitions where parallel operations are defined, it's assumed that the cost is split evenly between the parallel operations. In this case, the carried over cost from Op 10 is split evenly between Op 20 and Op 30, thereby making the transfer percentage as 50. In all other cases, the transfer percentage will be assumed to be 100%.
- When an operation has multiple previous operations, the cumulative costs at the start of this operation will be sum of the carried over costs from all immediate previous operations. In this case, at the start of Op 40, the cumulative cost will be the sum of carried over costs from Op 20 and Op 30.
- There's no difference in the calculating the estimated scrap loss for these work definitions.
- The cumulative yield attribute won't be displayed for these work definitions.
Operation Dependencies
Impact on Cost Accounting
With update 26B, Manufacturing now supports parallel operations, enabling multiple operations within a work order to run simultaneously. Work definitions can define operation dependencies using transfer percentage, which control how quantities flow from one operation to another.
While costing already supports work orders with scrap and partial completions and operation yield, this feature enhances the costing framework to also support parallel operations. As a result, work orders are no longer limited to a strictly linear execution model, and quantities can now split, merge, and flow across multiple operational paths. With this enhancement, you can now cost work orders with parallel operations across both process manufacturing and discrete manufacturing.
Changes to Costing Logic
When parallel operations are enabled on a work order, costing logic now applies the transfer percentage while calculating the operation-level start cost and accumulated WIP. As a result, the output costs and scrap costs generated from the operation are impacted.
The following examples illustrate how this change applies across different business flows.
Impact on Process Manufacturing Work Orders
Notional Batch Quantity
Consider a work definition with the following operation dependencies and outputs.
| From Operation | To Operation | Transfer Percentage |
| 10 | 20 | 50% |
| 10 | 30 | 50% |
| 20 | 40 | 100% |
| 30 | 40 | 100% |
| 40 | Null | Null |
Operation Dependencies
Input and Output Details
With parallel operations enabled for notional batch quantity, costs are calculated as shown below:
Cost Calculations for Notional Batch Quantity
- For the starting operation (Operation 10), the Start Cost is 0.
- On split from Operation 10 into parallel operations:
- Start Cost of Operation 20 = Carry-Forward Cost of Operation 10 * Transfer Percentage (Op 10 to Op 20)
- Start Cost of Operation 30 = Carry-Forward Cost of Operation 10 * Transfer Percentage (Op 10 to Op 30)
- On merge of parallel operations:
- Operation 20 and Operation 30 merge at Operation 40.
- Start Cost of Operation 40 = Carry-Forward Cost of Operation 20 + Carry-Forward Cost of Operation 30
- The same logic is applied for calculating the cost of a work order using Accumulated WIP.
Calculated Batch Quantity
When parallel operations are enabled for calculated batch quantities, costing logic follows the same approach as used for notional batch quantities.
Impact on Discrete Manufacturing Work Order
Consider a work definition with the following operation dependencies and outputs.
| From Operation | To Operation | Notional Costing Transfer Percentage |
| 10 | 20 | 50% |
| 10 | 30 | 50% |
| 20 | 40 | 100% |
| 30 | 40 | 100% |
| 40 | Null | Null |
Schematic View of Operation Dependencies
| Input Quantity | Unit Cost | Input Cost |
| 10 | $10 | $100 |
| 25 | $20 | $500 |
| 20 | $10 | $200 |
| 10 | $25 | $250 |
With parallel operations enabled for discrete, costs are calculated as shown below:
Cost Calculations for Discrete Work Order
For discrete work orders, transfer percentages aren't explicitly defined in manufacturing when parallel operations are enabled. However, to ensure accurate cost calculations, a notional costing transfer percentage is applied. The notional transfer percentage is distributed equally across the parallel operations. For example, if there are three parallel operations, each operation is assigned a transfer percentage of 33.33%.
Similar to process manufacturing work orders:
- On split, the start cost of each parallel operation is calculated as the carry-forward cost of the parent operation multiplied by its respective transfer percentage.
- On merge, the start cost of the merged operation is calculated as the sum of the carry-forward costs of the merging operations.
- The same logic is applied for calculating the cost of a work order using Accumulated WIP.
Some of the benefits of this feature include:
- Model realistic shop floor execution where operations run in parallel.
- Improve cost accuracy and margin calculations for complex operation flows.
- Reduce discrepancies between manufacturing execution and costing results.
Steps to enable and configure
If you want to use this feature, then you must opt in to its parent feature: Define the Operation Yield for the Work Definition to Model the Expected Quantity for an Operation in Process Manufacturing. If you’ve already opted in to this parent feature, then you don’t have to opt in again.
Tips and considerations
- Only the Redwood pages have been modified as part of this feature.
- All cost methods are supported.
- The primary difference between how work orders are costed in process manufacturing and discrete manufacturing is the handling of transfer percentages. For process manufacturing, costing uses the transfer percentages defined in Manufacturing. For discrete manufacturing, because Manufacturing supports parallel operations but doesn't define transfer percentages, costing derives a notional transfer percentage to ensure accurate cost calculations.
- For discrete work orders, only in parallel operations, scrap is treated as distinct to the operation in which it is reported. Accordingly, scrap in a parallel operation absorbs 100% of the cost incurred within that operation and prior operation costs only to the extent of the transfer percentage. It doesn't absorb costs from other parallel operations. If scrap needs to be accounted for across multiple parallel operations, a workaround is to report the scrap in an ad-hoc operation after the parallel operation with no components or resources issued to ensure the cost is appropriately absorbed.
- With transfer percentage, scrap and product costs are calculated as follows for both process manufacturing and discrete manufacturing work orders:
- Scrap Cost (parallel operation) = 100% of current operation cost + { (Prior operation carry-forward cost * Transfer percentage) * (Scrap quantity ) / (Scrap quantity + Completed quantity) }
- Product Cost (parallel operation) = 100% of current operation cost + { (Prior operation carry-forward cost * Transfer percentage) - (Scrap cost of the operation * Cost allocation factor) }
Key resources
- Oracle Fusion Cloud SCM: Implementing Manufacturing and Supply Chain Materials Management guide, available on the Oracle Help Center.
- Oracle Fusion Cloud SCM: Using Supply Chain Cost 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:
- Manage Cost Planning Scenario Definition (CST_MANAGE_SCENARIO)
- Perform Cost Rollup (CST_PERFORM_COST_ROLLUP)
- View Rolled Up Costs Rolled Up Costs (CST_REVIEW_ROLLEDUP_COSTS)
- Create Cost Accounting Distributions (CST_CREATE_COST_DISTRIBUTIONS)
- Review Work Order Costs (CST_REVIEW_WORK_ORDER_COSTS)