Collaborative Planning with suppliers using Oracle Applications

SROAUG March 23, 2007 Arun Cavale Tom Buechler

Supplier Collaboration - Agenda

Collaborative Planning
Overview Positioning and Business Drivers

Vendor Managed Inventory (VMI)/Consigned

Features Set ups

Conversion considerations Gotchas & other lessons learned Q&A

Collaborative Planning
Overview

Oracle Supply Chain Management

Complete collaboration solution
Design Source Plan Procure Manufacture Fulfill
Integrated Intelligence

Purchasing Analysis Product Design Sourcing Contract Management

Collaborative Planning

Purchasing Execution

Logistics Outsourced Manufacturing Quality Receivables Order Promising

Payment & Inventory Reconciliation Replenishment

Customers

Suppliers

Carriers

Collaborative Planning
You

Customers

Forecast Forecast Purchase orders Purchase orders Inventory Inventory ATP requests ATP requests ASNs ASNs Supply commits Supply commits

Forecast Forecast Purchase orders Purchase orders Inventory Inventory ATP requests ATP requests ASNs ASNs Supply commits Supply commits

Suppliers

Share: Inventory levels, Demand, Supply, Performance Metrics, Exceptions

Extended Supply Chain

Customer
Visibility to Customers Soft Demands Better Collaboration for Order Commits Improved Order Promising

Supplier
Greater visibility of future supplies Visibility of Suppliers Capacity Supplier Commit process Vendor Managed Inventory at your site

Supplier Collaboration
Positioning and Business Drivers

Collaborate with Suppliers

Improve plan accuracy and reduce planning cycle time

You
Consensus forecast Sales forecast

Supplier
Forecast

Improve supplier delivery performance

Order forecasts Identify supply/demand mismatches

Run ASCP plan

Order forecast

Run plan

Supply commit (capacity)

Visibility to your suppliers constraints Supply commit comparison User-configurable exceptions Automated exception handling via workflow

Collaborate with Suppliers

Supplier collaboration through a single Portal
Suppliers Portal

Execution - Oracle iSupplier Portal

Involve suppliers in your procurement process Suppliers view or maintain agreements, orders, ASNs, receipts, returns, quality, delivery and shipment schedules, invoices, and payments
Planning

Execution

Vendor Managed Inventory Orders ASNs Receipts Invoices Payments Exceptions Forecasts Capacity Pegging Waterfall Analysis

Planning - Oracle Collaborative Planning

Involve suppliers in your planning process VMI, including exceptions Waterfall analysis - compare customer forecasts with supply commits User-configurable exceptions

Seamless integration with ERP

Generate replenishment orders in Oracle Purchasing

Suppliers, products, order modifiers, ASLs, sourcing

Multi-tier Collaboration
Full visibility and synchronization across multiple tiers You
Customer
Run plan Supply forecast Run plan Supply commit boards Supply commit memory Demand systems Consensus forecast

Contract Manufacturer
Demand boards

Supplier

Forecast memory

Supplier Collaboration Capabilities

Publish Forecasts to Suppliers Vendor Managed Inventory
Based on Published Supplier Forecast Visibility to Inventory Levels Provide Lot Modified Recommendations for Replenishment based on different methods Provide actionable exceptions

Receive Supply Commits Visibility to Supplier capacities

Vendor Managed Inventory & Consigned Inventory

Overview

Auto Inventory Replenishment

Reduce inventory through VMI

You
Supplier
VMI Agreement - Establish inventory policy VMI Agreement

Check Inventory Status Receive items Ship items

Provide inventory visibility by sharing on-hand and safety stock levels Transfer replenishment responsibility to suppliers
Reduce fulfillment time Automate replenishment process

Pay on receipt

Pay on use

Vendor Managed Inventory

Benefits of VMI

Automate the replenishment process

Supplier manages your inventory Replenishment signal is generated for the supplier when you require material

Improve fulfillment cycle times

Supplier has visibility into on-hand, safety stock, and forecast information Integrated with Oracle Purchasing

Vendor Managed Inventory

Capability

Secured access to plan information for suppliers

Restrict by Access Type or by Data Type

Trigger replenishments when available inventory falls below minimum levels

Send notification to the planner of that item Available inventory equals (on-hand + requisitions + POs + ASNs + receipts) Suggest a replenishment quantity that equals (maximum available inventory)

Supplier and customer monitor inventory levels using the inventory status screen

Consigned Inventory
Benefits of Consigned Inventory

Reduce Inventory Levels in Dollars / Increase Inventory Turns

Supplier owns the inventory Ownership transfer based on usage or aging

Collaborative Planning Vendor Managed Inventory & Consigned Inventory

Set Up

Collaborative Planning
Setup steps when deployed with E-Business Suite and APS Profile options MSC: Configuration should be = APS & CP MSC: Operator Company Name = your company name MSC: Vertical View Default Query = Yes MSC: VMI Default Query = Yes Suppliers Suppliers: You will setup suppliers in Purchasing Supplier sites: You will indicate the supplier site by entering it in the location column Users Company users: Users who belong to your company Supplier users: Users who belong to your suppliers
Assigning Responsibilities Supply Chain Planner Supply Chain Collaboration Manager

VMI/Consigned set ups

Supplier Site Pay on (ERS): Use; Receipt; Receipt and Use Summary Level: Consumption Advice or Pay Site

VMI/Consigned set ups

ASL - Global & Local Entries

VMI/Consigned set ups

ASL - Global & Local Entries

VMI/Consigned set ups

ASL VMI Planning Attributes
Automatic Allowed Approval Planning Method Forecast Horizon Min/Max

ASL Consignment Attributes

Billing Cycle Consume on Aging Aging Period Days

VMI/Consigned set ups

User defined consumption

Collaborative Planning Set ups

Define Access Security Rules

Vendor Managed Inventory & Consigned Inventory

Features

Vendor Managed Inventory

User procedure
PO: Customer creates Blanket Purchase Agreement PO: Customer defines VMI parameters in ASL CP: Customer collects ASL and available inventory level for each item-supplier(site) CP: Customer schedules and runs VMI replenishment engine CP: System automatically generates replenishments and kicks off requisition import process

iSP: Supplier submits ASNs

Vendor Managed Inventory

Setup: Scheduling the VMI Replenishment Engine

Schedule VMI Replenishment Engine

Provide Replenishment Time Fence (RTF) multiplier Supplies that fall within the time period [RTF x Processing Lead Time] are considered as available inventory
Example: RTF multiplier = 1

On-hand

PO1

PO2

PO3

t 1 x Processing Lead Time Total Supply = on-hand + PO1 + PO2

Vendor Managed Inventory

Viewing replenishments Suggested Replenishment Quantity: The quantity recommended for replenishment by CP. Equal to [inventory max (on-hand + PO + In transit + Receipt) Replenishment Quantity: The quantity that you want to release for replenishment. Must be less than suggested replenishment quantity In process quantity: The quantity that you have already released for replenishment. It is set to 0 after each replenishment engine run View forecast: Navigate to the horizontal screen to view forecast information for the item

Vendor Managed Inventory

Replenishments

Vendor Managed Inventory

Inventory Status
1. 2. 3. 4. 5. 6. 7. on-hand = 0; on-order qty *= 0

on-hand < minimum; on-order = 0 minimum <on-hand < maximum; on-order = 0 minimum < on-hand + on order < maximum ; on-hand < minimum on-hand < minimum and onhand + on-order > maximum on-hand > maximum; on-order = 0 on-hand = 0 ; minimum < on-order < maximum
* on-order quantity = Requisitions + PO + In transit + Receipt

VMI/Consigned features
Planning Transfers

VMI/Consigned features
Ownership Transfers Explicit Consumption

VMI/Consigned features
Ownership Transfers Implicit Consumption

VMI/Consigned features
Ownership Transfers Return to Consigned

VMI/Consigned features
Miscellaneous Transactions

VMI/Consigned features
On-hand Queries

VMI/Consigned features
On-hand Reports

VMI/Consigned features
On-hand Reports

VMI/Consigned features
On-hand Reports

VMI/Consigned features
On-hand Reports

VMI/Consigned features
On-hand Reports

VMI/Consigned features
On-hand Reports

VMI/Consigned features
Transaction Queries

VMI/Consigned features
Transaction Queries

VMI/Consigned features
Create Consumption Advice

VMI/Consigned features
Accounting entries

VMI/Consigned features
Accounting entries

Gotchas & other lessons learned

Supplier Receiving Comingling Consigned & non-consigned Material Negative On-hand Quantities VMI On Hand by Supplier Report min/max qtys from ASL if set & not calc. (see previous screen shot) Return to Consigned ER 5156251 Return to Supplier Accrual Write Off Create Consumption Advice Receiving Value Report patch 4422116 or CU2 Uninvoiced Receipts Report Accrual Reconciliation Report patch 5262139 Pick & Pack documents patch 4753630

Secured Supplier Receiving

Comingling Consigned & nonconsigned material

Negative On-hand Quantities

Conversion Considerations

Steps for VMI & Consigned On-Hand Conversions Set up Supplier / Supplier Sites Set up Blanket Purchase Orders Set up Approved Supplier Lists
Local With VMI and Consigned Attributes

Add Planning and Owning Party to OnHand conversion file

Supplier Collaboration
Summary

Summary
Collaborative Planning
provides greater visibility across the Supply Chain Increases Supplier Response Provides User Defined exceptions to alert planners

Vendor Managed Inventory off-loads non-critical planning functions Consigned Inventory reduces Inventory Carrying Costs

Contributors
Arun Cavale NexInfo Solutions arunc@nexinfosolutions.com 714.338.6165 Tom Buechler Turquoise Consulting Unlimited tom.buechler@adelphia.net 310.923.5719 Special thanks to:
Viji Ramesh OSI Consulting Guliz Veysoglu Altair Consulting