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  • Outsourced Manufacturing for Discrete & Process Industries

    Karen Theel Senior Director, Manufacturing Product Strategy Anil Modwel Director, Product Development

    http://creative.gettyimages.com/source/Search/9','9','1','

  • Copyright 2013, Oracle and/or its affiliates. All rights reserved. Insert Information Protection Policy Classification from Slide 12 2

    Outsourced Manufacturing Business Practices

    OEM MP B

    C

    A

    Process Inhouse

    Process Outside

    Process Inhouse

    Manufacture Assembly Ship Partial Product

    Receive Finished Product

    10

    20

    30

    20

    OEM

    RMS B C

    MP

    *

    Buy Components

    Virtual Sale of Components

    B

    C

    Virtual Purchase of Assembly

    A

    B

    C

    A

    Drop Ship Components

    OEM

    RMS B C

    MP

    Buy Components

    Ship Components

    B

    C

    Receive Assembly

    A

    B

    C

    A

    Drop Ship Components

    * Applicable only for Japan, Korea, Taiwan

    OEM

    RMS B C

    MP

    Buy Components

    Sell Components (with Markup) B

    C

    Buy Assembly

    A

    B

    C

    A

    Drop Ship Components

  • Copyright 2013, Oracle and/or its affiliates. All rights reserved. Insert Information Protection Policy Classification from Slide 12 3

    Chargeable vs. Buy/Sell Vs Full Outsourcing Comparison

    Characteristic Chargeable Subcontracting Buy/Sell Subcontracting Full Outsourcing

    Subcontracting Component Ownership

    Component sales is Provisional and Ownership lies with the OEM

    Ownership is Transferred to MP after the components are shipped

    No component sale, components are shipped to MP on consigned basis, ownership of material is with OEM

    Country Specific Deployability Applicable to Japan, Korea and Taiwan All Countries All Countries

    Costing Method Available for Standard Cost Orgs only Available for Standard, Average, FIFO & LIFO Orgs

    Available for Standard Cost Orgs only

    Payables/Receivables/Netting Mandatory Optional Not relevant as there will not be any Sales invoices for components

    Accounting setup Requires Additional setup for accounting Subcontracting components (revenue, Receivables, COGS and PPV)

    Not relevant Require setup for accounting consigned Subcontracting components (COGS and PPV)

    Costs/Price setup consideration

    Assembly/Components costs/ prices need to be setup to avoid unrealized gain/loss

    Not relevant

    Purchase price of the assembly will be the Value addition

  • Copyright 2013, Oracle and/or its affiliates. All rights reserved. Insert Information Protection Policy Classification from Slide 12 4

    Full Outsourcing Business Process

    MP added value = $5

    RMS: Raw Material Supplier

    OEM : Original Equipment Manufacturer

    MP: Manufacturing Partner

    1 Ea

    B

    A

    C

    2 Ea

    B

    C

    Pay to MP $5 OEM

    RMS B

    C

    A

    MP doesnt pay for the Components

    MP

  • Copyright 2013, Oracle and/or its affiliates. All rights reserved. 5

    Automated Orchestration For Material Tracking and Financial Reconciliation

    OEM Org Contract Manufacturer Org

    Replenishment SO Item : C, QTY:10Ea Customer : MP

    Replenishment SO Item : B , QTY:20Ea Customer: MP

    Discrete Job Assembly : A QTY :10Ea

    Interlock

    Subcontracting Order Assembly : A , 10Ea Supplier : MP

    ASCP

    Auto receive Components

    Receive

    Receive

    Replenishment PO Item : C, QTY:10Ea Supplier : OEM

    Replenishment PO Item : B, QTY:20Ea Supplier : OEM

    B

    A

    C

    1 Ea 2 Ea

    Process Receiving Transactions

    Complete

    Misc Issue A

    Receive

    SHIP

    SHIP

    AP Invoice

    AR Invoice

    Pay to MP $ AP/AR Netting

  • Copyright 2013, Oracle and/or its affiliates. All rights reserved. Insert Information Protection Policy Classification from Slide 12 6

    Subcontract Order Status

    Main Point

    Inventory Balances

    Quality Financial Positions

    1 2

    4 3

    EBS Outsourced Manufacturing Four categories of visibility into outsourcing business

  • Copyright 2013, Oracle and/or its affiliates. All rights reserved. Insert Information Protection Policy Classification from Slide 12 7

    Visibility into Outsourced Manufacturing

    Typic al Business Questions

    How many subcontracting orders are delayed and which customers are impacted ?

    Whats the value of our material at manufacturing partner locations ?

    Whats the value of goods in transit to manufacturing partner locations?

    Whats the value of defective finished goods received from manufacturing partners ?

    Whats the value of uninvoiced subcontracting orders ?

  • Copyright 2013, Oracle and/or its affiliates. All rights reserved. Insert Information Protection Policy Classification from Slide 12 8

  • Copyright 2013, Oracle and/or its affiliates. All rights reserved. Insert Information Protection Policy Classification from Slide 12 9

    Key Performance Indicators

    Visibility into Outsourced Manufacturing

  • Copyright 2012, Oracle and/or its affiliates. All rights reserved. Oracle Proprietary and Confidential. 10

    View status of subcontract orders (delayed, on-time) and component allocations across manufacturing partners

    Subcontract Order Status

  • Copyright 2012, Oracle and/or its affiliates. All rights reserved. Oracle Proprietary and Confidential. 11

    View quantity and value of components in-transit or at manufacturing partner locations

    Inventory Balances

  • Copyright 2012, Oracle and/or its affiliates. All rights reserved. Oracle Proprietary and Confidential. 12

    View reasons for poor quality of outsourced products and their value across manufacturing partners.

    Quality

  • Copyright 2012, Oracle and/or its affiliates. All rights reserved. Oracle Proprietary and Confidential. 13

    View financial positions of subcontract and replenishment orders for a manufacturing partner

    Financial Positions

  • Copyright 2012, Oracle and/or its affiliates. All rights reserved. 14

    E-Business Suite Outsourced Manufacturing Business Benefits

    Gain full visibility into the overall health of outsourced manufacturing Quickly view and analyze financial transactions related to subcontract orders

    Track quality issues related to supplied components and finished products

    Monitor sales and procurement activities to meet on-time customer delivery

    Collaborate effectively with approved suppliers and contract manufacturers Analyze and negotiate service level agreements and pricing to optimize costs

    Mitigate risks related to inventory bottlenecks across manufacturing partners

  • Copyright 2013, Oracle and/or its affiliates. All rights reserved. 15

    Resources

    Oracle Outsourced Manufacturing for Discrete Industries Users Guide (12.1.3)

    EBS Manufacturing Release Content Guide (RCD)

    EBS Manufacturing Release Value Proposition (RVP)

    L1, L2, L3 recordings Oracle University

    Data Sheet

    DSS Demo

  • Outsourced Manufacturing for Process Industries

    http://creative.gettyimages.com/source/Search/9','9','1','

  • Copyright 2014, Oracle and/or its affiliates. All rights reserved. 17

    E-Business Suite Outsourced Manufacturing Solutions Comprehensive Support for Multi-Tiered, Mixed-Mode Outsourcing

    OEM

    RMS B C

    MP

    Buy Components

    Virtual Sale of Components

    B

    C

    Virtual Buy of Assembly

    A

    B

    C

    A

    Drop Ship Component

    s

    OEM

    RMS B C

    MP

    Buy Components

    Sell Components (with Markup)

    B

    C

    Buy Assembly

    A

    B

    C

    A

    Drop Ship Component

    s

    OEM

    RMS B C

    MP

    Buy Components

    Ship Components

    B

    C

    Receive Assembly

    A

    B

    C

    A

    Drop Ship Components OEM MP

    B

    C

    A

    Process In-house

    Process Outside

    Process In-house

    Manufacture Assembly

    Ship PFA

    Receive PFA

    Ship PFA

    Receive PFA

    10

    20

    30

    20

    Process

    OPM Planned Support:

    Phase 1: Outsourcing at Operation / Step Level planned for 12.2.4+

    Dashboard Endeca TBD

    Complete Outsourcing - TBD

    Chargeable (Shikyu) Subcontracting

    Non-Chargeable Subcontracting

    Buy/Sell Subcontracting

  • Copyright 2014, Oracle and/or its affiliates. All rights reserved. 18

    Background for OPM OSP

    Requirements were gathered from customers of various industries Metal Industries Alcoa, Macsteel, Charter Steel, ATI Metals, US Steel

    Food and Beverages Schreiber Foods, Amys Kitchen

    Life Sciences Colorcon,Beckman Coulter, Thermo-Fisher, Agilent Technologies

    Majority of customers preferred Outside Processing to the Outsource Manufacturing.

    Number One Enhancement request in SIG voting

  • Copyright 2014, Oracle and/or its affiliates. All rights reserved. 19

    Oracle Process Manuf

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