6Project-Driven Supply Chain

This chapter contains the following:

Overview of Project-Driven Supply Chain Management

Project-Driven Supply Chain is an end-to-end, integrated solution across the Oracle Supply Chain and Project Management Cloud applications. This solution is designed to support various business processes of manufacturing and asset-intensive companies.

You can use the Project-Driven Supply Chain solution to manage your supply chain processes in the context of projects without creating separate organizations for each project. You can also capture supply chain costs as project expenditures.

The integrated supply chain and project management cloud solution enables you to:

  • Plan project-specific supply

  • Segregate and manage project-specific inventory

  • Receive project-specific supply

  • Pick project-specific inventory

  • Ship project-specific inventory

  • Transfer project-specific inventory

  • Purchase project-specific inventory

  • Execute project-specific manufacturing

  • Perform project-specific maintenance

  • Execute project-striped supply chain without Oracle Project Financials

Project-Driven Supply Chain for Manufacturing Companies

Manufacturing companies use project-driven processes to provide turn-key solutions, or bundle sale of products with an on-going service, or execute contract manufacturing services on multiple contracts from one plant. In turn-key and service-based supply chain, one or more services such as product design and development, installation, and ongoing service are bundled with the sale of a product.

Here is an illustration that explains the project-driven supply chain process for manufacturing companies.

Illustration explaining the project-driven supply
chain process for manufacturing companies

Project-Driven Supply Chain for Asset-Intensive Companies

Asset-intensive companies build assets for internal use. These assets are typically capitalized when put in service.

Projects to build assets usually start with a corporate plan that outlines what assets will be built, their location and schedule, and a budget. The corporate plan is converted into an engineering and construction plan that contains a bill of materials. Based on these plans, project tasks and their budgets are defined. Materials and services are procured and the asset is constructed. Upon construction, the asset is capitalized for financial management and also interfaced with the installed base for maintenance.

Here is an illustration that explains the project-driven supply chain process for asset-intensive companies, such as utilities and communications.

 Illustration explaining the project-driven supply
chain process for asset-intensive companies

How the Project-Driven Supply Chain Solution Works

The Project-Driven Supply Chain solution integrates several products of Oracle Supply Chain and Oracle Project Management Cloud.

Project-Driven Supply Chain begins with the creation of a project in Oracle Project Portfolio Management. The integration of Oracle Project Management and Oracle Supply Chain enables supply chain products to support project attributes. Information such as project numbers and project cost attributes are available in the supply chain products to execute activities in the context of a project.

Project Number and Task Number are added as inventory attributes. They are used to segregate and value the inventory, and support project-specific transactions that are based on rules in the Inventory, Shipping, and Receiving applications.

Project attributes are also added to supply chain execution documents such as purchase requisition, purchase order, sales order, manufacturing work order, and maintenance order. The processes driven by these execution documents are also enhanced with project-specific business rules. Life cycle of these project-specific execution documents follows the business rules that are defined for the project. Any transactions associated with these documents that create a commitment or actual cost to the project are captured with project attributes to ensure that these costs are posted as expenditures to the project.

Project Financial Management maintains the financial work breakdown structure, budgets, commitments, and actual costs. Finally, the invoicing is done based on your settings in Project Contracts.

The Supply Planning application plans supplies by project group, project, or project and task. You can also review the project and task values for demands and supplies.

Here is an illustration that explains how the project-driven supply chain solution works.

Illustration to show how the project-driven supply
chain solution works.

For information about product-specific flows, see the Project-Driven Supply Chain Process Flows section.

How You Set Up Project-Driven Supply Chain

To set up Project-Driven Supply Chain, perform these tasks in the sequence listed below:.

Task Required Details

Opt in to the Project-Driven Supply Chain feature

Required

In the Offerings work area, enable the Project-Driven Supply Chain feature at the offering level for the Manufacturing and Supply Chain Materials Management offering.

Enable inventory tracking by project

Required

You can enable Oracle Projects integration on individual inventory organizations. Materials management transactions and manufacturing transactions will gather the project details.

Here's how you enable individual organizations to track by project:

  1. In the Setup and Maintenance work area, go to the Manage Inventory Organizations task:

    • Offering: Manufacturing and Supply Chain Materials Management

    • Functional Area: Facilities (click Show All Tasks)

    • Task: Manage Inventory Organizations

  2. Search for your inventory organization, and then click Manage Organization Parameters.

  3. Select the Enable inventory tracking by project option, a new option with this update, and then click Save and Close.

  4. Repeat steps 2 and 3 for additional inventory organizations, as required.

Set up the default expenditure types

Required

Review and maintain the set of expenditure types which will be the default to use in specific supply chain transactions supporting integration with projects.

Here's how you set up your default expenditure types:

  1. In the Setup and Maintenance work area, go to the Manage Inventory Organizations task:

    • Offering: Manufacturing and Supply Chain Materials Management

    • Functional Area: Facilities (click Show All Tasks)

    • Task: Manage Default Expenditure Types

  2. On the Manage Default Expenditure Types page, select a default value for each of the fields.

  3. Click Save and Close.

Manage project organization classification

Required

You must classify each inventory organization that's enabled for project-driven supply chain as a project expenditure organization.

Ensure that the organizations classified as project expenditure organizations belong to the hierarchy that you specified in the Configure Project Accounting Business Function task for the business unit.

Here's how you complete this setup task:

  1. To classify inventory organizations, in the Setup and Maintenance work area, use the Manage Project Organization Classifications task.

  2. To add an organization to the hierarchy:

    1. In the Setup and Maintenance work area, click Search and search for the Manage Organization Trees task.

    2. In the Manage Organization Trees page, select the organization hierarchy and add the new inventory organization.

      Ensure that the starting organization is at a minimum the inventory organization or any other organization in the hierarchy above that.

    3. Click Actions > Flatten and flatten the HR organization.

    4. Click Actions > Set Status > Active.

  3. Run the Maintain Project Organization process.

Set up project attribute defaults

Optional

Set up the defaults for contract number, funding source, or any user-defined attributes. These attributes can be defaulted at five levels, with the most specific definitions being chosen first, and more abstract defaults selected if necessary.

Set up item level attributes

Optional

Specify the expenditure type that needs to default onto material transactions and for creating outside processing requisitions. You can also specify if the item is hard pegged at Project and Task Level and if you can use material from common supplies if sufficient inventory does exist in the project and task-specific inventory on-hand.

Set up resource level default expenditure type

Optional

Specify the default expenditure type for the resource transactions when they're interfaced to costing.

Manage orchestration process definitions

Manage order lookups

Required

Prevent Order Management from sending order lines that include project details to Receivables.

For more information, see the Set Up Projects in Order Management topic in the Implementing Order Management guide.

Manage order management extensions

Manage processing constraints

Optional

Write your own Groovy script to process sales orders that include project details.

Disable the processing constraint that prevents the Order Entry Specialist from updating a fulfillment line that includes project details.

For more information, see the Import Your Project Details topic in the Implementing Order Management guide.

Import your project details

Optional

Import sales orders that include project details. Use REST API, a web service, or File-Based Data Import.

For more information, see the Set Up Projects in Order Management topic in the Implementing Order Management guide.

Manage valuation structures

Conditional

To track inventory values by project and task, you must set up the valuation structure with project number and task number costing attributes.

Manage cost profiles

Conditional

To track inventory values by project and task, you must set up the cost profile with a valuation structure containing the project number and task number costing attributes.

Note: You can't modify existing cost profiles with the new valuation structure. You can update an item cost profile with a new cost profile, which has a valuation structure containing project and task, only if the item cost profile isn't already used in transactions.

Manage valuation units

Conditional

If you use a manual valuation unit setup, you must set the valuation unit with a valuation structure containing the project number and task number costing attributes.

Manage project type cost exclusions

Conditional

Set up the project type for exclusion from cost collection. The cost collection setup would determine the following behavior:

  • Project expenditure isn't interfaced to Oracle Project Portfolio Management Cloud from Cost Management.

  • Commitment isn't recorded in Oracle Project Portfolio Management Cloud when using the project whose project type is excluded from cost collection.

  • If there should be any cost of goods sold recognition for sale order issue to projects or not. If the project type associated to the project isn't excluded from cost collection, then a debit is recorded using a new accounting line type called Project Clearing, to facilitate charging the shipment cost as expenditure to the project. If the project type is excluded from cost collection, then cost of goods sold accounting will happen within Cost Management.

  1. In the Setup and Maintenance work area, go to the Manage Project Type Cost Exclusions task:

    • Offering: Manufacturing and Supply Chain Materials Management

    • Functional Area: Facilities (click Show All Tasks)

    • Task: Manage Project Type Cost Exclusions

  2. Select the project types you want to exclude from cost collection and move them to the Cost Excluded list.

  3. Click Save and Close.

Project-Driven Supply Chain Process Flows

How You Execute Project-Specific Manufacturing

The Project-Driven Supply Chain solution provides the ability to execute project-specific manufacturing by creating a work order or through orderless execution, issue components from common or project-specific inventory, and put away the end product into project-specific inventory.

You can create a work order with the project number and task number in Manufacturing. You can also create a work order after the project-specific supply is planned in Supply Planning, and the make planned order is released to Manufacturing.

You can purchase outside processing services, procure material directly for project-specific work orders, and import material and resource costs to the project.

Here's the high-level process flow to execute project-specific manufacturing:

  1. Create a work order with the project number and task number in Manufacturing or by using the make planned order released to Manufacturing from Supply Planning.

    A work order is saved with the default project costing attributes. You can review and modify the attributes as required.

  2. Calculate material availability by project or task and release the work order.

    The work order is released only after Project Portfolio Management validates the project costing attributes.

  3. Pick material for work order based on project and task.

  4. Execute movement requests and review the completed transactions with reference to the project and task in Inventory Management.

  5. Interface the material transaction with the project and task references to inventory.

  6. Review dispatch list with project and task as additional search attributes.

  7. Report resource transactions.

  8. Report material transactions and review the completed transactions in Inventory Management.

  9. Close the work order.

  10. Run the Transfer Transactions from Production to Costing task and transfer the resource transactions to Costing.

  11. Run the Transfer Transactions from Inventory to Costing task and transfer the materials transactions to Costing.

  12. Create cost accounting distributions and review the project details for accounting distributions. The costs are final accounted and are imported into Project Portfolio Management where they're further managed.

  13. Generate project invoices to bill the customer based on the percentage of completion or milestones achieved on the project.

  14. If it's a capitalizable cost, you can proceed to execute the capitalization flow. You may also choose to allocate costs to other projects, project tasks, or accounts as appropriate.

Here's an illustration that explains the process flow for creating and executing work orders with project and task details:

Illustration explaining the process flow for creating
and executing work order with project and task details.

How You Plan Project-Specific Supply

Project-Driven Supply Chain is an end-to-end, integrated solution across supply chain and project management cloud applications. This solution supports business processes to plan project-specific supply to satisfy project demands.

Project-specific supply planning enables you to plan supplies based on projects in your organization. It improves your order fulfillment accuracy by ensuring components availability to build and fulfill orders. It also ensures completion of projects on time without excessive inventory.

Here's the high-level process flow to plan project-specific supply.

  1. Start your project-specific supply planning with the collection of these entities:

    • Project and task attribute values and their relationships from Project Portfolio Management.

    • Supplies and demands with project and task values from Inventory, Order Management, Purchasing, and Manufacturing.

    • Forecast and safety stock that are specific to project and task.

  2. The next step is to create project groups and assign projects to the groups. Creating project groups enables the planning process to net supplies within a project group across multiple projects and their tasks.

  3. You then create project netting rules. The planning process uses the netting rule to net and share supplies at the project group, project, and task levels.

  4. After collecting the planning data and creating netting rules and project groups, create a plan and associate the netting rule to the plan.

  5. After you configure plan options of your project-specific supply plan, run the plan from the Supply Planning or Demand and Supply Planning work area.

  6. You review the plan output with project and task values for supplies and demands and release planned orders with project and task to Manufacturing, Purchasing, and Inventory.

This illustration explains the high-level process flow to plan project-specific supply.

An illustration to show the project-specific supply
planning process flow.

How You Purchase Project-Specific Inventory

Project-Driven Supply Chain is an end-to-end, integrated solution across supply chain and project management cloud applications. This solution supports the business process to purchase project-specific material to satisfy project demand.

Project-specific purchase orders ensure that the cost of the purchase is charged to the project and the material is received into project inventory. With this feature, you can automate the purchase of project-specific materials for multiple projects and carry forward project attributes through the entire procure-to-pay cycle.

Here's the high-level process flow to purchase project-specific inventory:

  1. The process starts with the creation and approval of a requisition in Self-Service Procurement or with the release of a buy planned order from Supply Planning.

  2. After the requisition is approved, a project commitment is created.

  3. Next, the purchase order is created from the requisition and the project commitment is moved to the purchase order.

  4. This is followed by the receipt and put away of the end product into project-specific inventory that can be verified by checking on hand inventory for that project.

  5. After receipt and put away, the project commitment is relieved.

  6. Cost accounting distributions are created in costing and the project details are reviewed for the accounting distributions.

  7. The costs are final accounted and imported into Project Portfolio Management where they're further managed.

  8. And finally, the project invoices are generated to bill the customer based on the percentage of completion or milestones achieved on the project.

This illustration explains the high-level process flow to purchase project-specific inventory.

An illustration that explains the high-level process
flow to purchase project-specific inventory.

How You Perform Project-Specific Maintenance

Perform project-specific maintenance by creating a work order, issue components from common or project-specific inventory, and put away the end product into project-specific inventory. You can purchase outside processing services, procure material directly for project-specific work orders, and import material and resource costs to the project.

This diagram explains the process flow for creating and executing a work order with project and task details, across maintenance, inventory management, costing, and project portfolio management.

Process flow of how you perform project-specific
maintenance

Here's the high-level process flow to perform project-specific maintenance:

  1. Create a work order with the project and task in Oracle Maintenance.

    A work order is saved with the default project costing attributes. You can review and modify the attributes as required.

  2. Calculate Material Availability by Project/Task and release the work order.

    The work order is released only after Project Portfolio Management validates the project costing attributes.

  3. Pick material for work order based on project and task.

  4. Execute movement requests and review the completed transactions with reference to the project and task in Inventory Management.

  5. Interface the material transaction with the project and task references to inventory.

  6. Review maintenance dispatch list with project and task as additional search attributes.

  7. Report maintenance resource transactions.

  8. Report maintenance material transactions and review the completed transactions in Inventory Management.

  9. Run the Transfer Transactions from Maintenance to Costing task and transfer the resource transactions to Costing.

  10. Run the Transfer Transactions from Inventory to Costing task and transfer the materials transactions to Costing.

  11. Create cost accounting distributions and review the project details for accounting distributions. The costs are final accounted and are imported into Project Portfolio Management where they're further managed.

  12. Generate project invoices to bill the customer based on the percentage of completion or milestones achieved on the project.

How You Segregate and Manage Project-Specific Inventory

Project-Driven Supply Chain is an end-to-end, integrated solution across Supply Chain and Project Management Cloud applications. It provides the ability to execute project-specific inventory management by inventory transactions, counting, and reclassification of project-specific inventory.

Here's the high-level process flow to segregate and manage project-specific inventory:

  1. Perform inventory transactions like miscellaneous transactions, subinventory transfers, and interorganization transfers. Perform counting like cycle counting and physical inventory. Also, reclassify project inventory by using Create Project Transfer in Inventory Management.

  2. View the completed transactions on the Review Completed Transactions page. You can also view the changes in project inventory using the Manage Item Quantities page. The inventory transactions include the project costing details in inventory management and those details are transferred to costing through the Transfer Transactions from Inventory to Costing process.

  3. Costing creates the cost accounting distributions and you can review the project details for accounting distributions.

  4. The costs are accounted and imported into Project Portfolio Management where you can manage them further.

  5. Generate project invoices to bill the customer based on the percentage of completion or the milestones achieved on the project.

How You Receive Project-Specific Inventory

Project-Driven Supply Chain is an end-to-end, integrated solution across Procurement, Supply Chain, and Project Management Cloud applications. It provides the ability to receive project-specific manufacturing when a project-striped purchase order is created.

Here's the high-level process flow to receive project-specific inventory:

  1. The process starts with the creation of a project-specific purchase order in Procurement.

  2. Receiving then receives, inspects, and puts away the material in Inventory Management.

  3. Run the Transfer Inventory Transactions to Costing process to interface the deliver transactions to Cost Accounting.

  4. Run the Create Cost Accounting Distributions.

  5. Run Create Accounting.

  6. Review the cost accounting entries for the purchase order.

  7. Import the costs into Project Accounting.

  8. Review the project costs on the Manage Project Costs page.

How You Pick Project-Specific Inventory

Project-Driven Supply Chain is an end-to-end, integrated solution across Order Management, Manufacturing, Supply Chain, and Project Management Cloud applications. It provides the ability to pick project-specific inventory for a project specific sales order, transfer order, work order, or requisition movement request. You can create pick waves and pick project-specific material for projects. Based on rules, you can also pick material from a common pool of inventory when project-specific inventory isn't available.

Here's the high-level process flow to pick project-specific inventory:

  1. The process starts with the creation of a project-specific sales order in Order Management, a project-specific work order in Manufacturing, or a project-specific transfer order or movement request in Inventory management.

  2. This is followed by the pick release of the sales order, transfer order, or movement request in Inventory Management. The pick release for the work orders initiates in Manufacturing.

  3. Next, confirm the pick slips and review the material transactions in Inventory Management.

  4. Run the Transfer Transactions from Inventory to Costing process to transfer the inventory transactions to costing.

  5. Run the Transfer Transactions from Production to Costing process in Cost Accounting.

  6. Run the Create Cost Accounting Distributions process.

  7. Run the Create Accounting process and review the cost accounting distributions for the pick transactions in Cost Accounting.

  8. Import the costs into Project Accounting.

  9. Review the project costs on the Manage Project Costs page.

How You Transfer Project-Specific Inventory

Transfer project-specific inventory is part of the Project-Driven Supply Chain solution which is an end-to-end, integrated solution across Supply Chain and Project Management Cloud applications. It supports business processes to transfer project-specific material to another inventory organization, or within an inventory organization. It lets you automate the transfer of project-specific materials for multiple projects and carry forward project attributes throughout the entire transfer.

Here's the high-level process flow to transfer project-specific inventory:

  1. The process starts with the creation of a transfer order with project details based on one of these cases:

    • A requisition from Self-Service Procurement

    • A supply request from Supply Chain Orchestration

    • A transfer planned order from Supply Planning

  2. Then, transfer order lines create shipment lines, which are pick released and pick confirmed.

  3. Depending on the item definition, the shipment of material comes from either project inventory or common inventory.

  4. Once the shipment is confirmed, the application transfers the shipment transactions with associated project details to Costing.

  5. Costing creates the cost accounting distributions and you can review the project details for accounting distributions.

  6. You can import costed and accounted transactions from supply chain into Project Portfolio Management.

  7. If the cost incurred against the project is a billable cost, you can bill the customer based on the percentage of completion or milestones achieved on the project. If it's a capitalizable cost, you can execute the capitalization flow. If needed, you can allocate costs to other projects, project tasks, or accounts as appropriate.