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Outside Processing Business Examples

In general, you use outside processing to facilitate the purchase and costing of supplier services included in your production activities. The following are three examples of how you can use outside processing in Oracle Manufacturing.

You are not required to manage your outside processing manufacturing activities exactly as described in the following examples. Rather, the objective of these examples is to highlight the flexibility of outside processing across a variety of situations.

Oracle recommends that you experiment and review the results of different approaches to determine the best implementation of the outside processing functionality for your unique needs. You should use these examples as a starting point to better understand how you might use outside processing at your manufacturing facilities.

A Computer Plating Service Example

You are a computer manufacturer who sends your frame assemblies to a supplier for plating. You have defined a primary routing for your assemblies that includes a supplier plating operation. Further, you have created a relationship, a contract, and even blanket purchase agreements with your plating supplier based on your production capabilities and capacity planning.

To support the purchase and costing of the supplier plating service, you define an outside resource called "Plating" with an autocharge type of PO Move, a UOM of EA for each, and a standard cost. Then you link this resource to an outside processing item called "Plating". This is the item that you purchase and receive from your supplier.

When your assemblies are ready for plating, you ship them to your supplier and enter a move transaction recording the move to the supplier plating operation. The move automatically initiates a purchase requisition for the "Plating" outside processing item based on the number of assemblies you moved. You create a purchase release for the requisition against a blanket order for the "Plating" outside processing item and send it to the supplier.

You receive the plated assemblies back from the supplier at the next operation on your routing. The job or repetitive schedule you use to control your production is automatically charged for the "Plating" outside resource when you receive the assemblies. The assemblies are automatically moved to the next operation for inspection to match your physical flow.

You perform inspection of the assemblies at the following operation and either move them on or return them to the supplier for rework. If you return them for rework, Oracle Manufacturing automatically reverses the charges and performs a reversing move transaction to accurately track the physical flow of your assemblies.

A Plating Service Setup Example

You are a computer manufacturer who sends your frame assemblies to a supplier for plating. As part of your contract, your supplier charges the same setup fee for each job or repetitive schedule, regardless of the number of assemblies on the job or repetitive schedule. You have defined a primary routing for your assemblies that includes a supplier plating operation with a Lot based outside resource for plating setup.

To support the purchase and costing of this setup charge, you define an outside resource called "Plating SU" with an autocharge type of PO Receipt, a UOM of EA for each, and a standard cost. Then you link this resource to an outside processing item called "Plating SU". The purchase quantity is always 1 on a job or repetitive schedule, unlike the "Plating" outside processing item, which was based on the number of assemblies you shipped.

When your assemblies are ready for plating, you ship them to your supplier and enter a move transaction recording the move to the supplier plating operation. The move automatically initiates a purchase requisition for a single "Plating SU" outside processing item associated with the "Plating SU" outside resource. You create a purchase order from the requisition and send it to the supplier.

When you receive the assemblies back from the supplier, there is a separate line item for "Plating SU". The job or repetitive schedule you use to control your production is automatically charged for the setup charge when you receive that item. The assemblies are not moved after this receipt; rather they are moved when you receive the "Plating" item since the "Plating" resource's autocharge type is PO Move.

A Supplier Labor Charging Example

You are a computer manufacturer who sends your frame assemblies to a supplier for plating. Your supplier charges a setup fee for each job or repetitive schedule and a plating service charge for each assembly he services. In addition, the supplier has a resource at his plant to perform periodic chemical analysis relating to the assembly plating process. Although this service is not a standard part of the plating process, you still include this outside resource on your routing so you can charge it as needed.

To support the purchase and costing of this chemical analysis resource, you define an outside resource called "Analysis" with an autocharge of PO Receipt, a UOM of EA for each, and a standard cost of $1. However, you do not link this resource to the "Analysis" outside processing item.

Since the "Analysis" resource is not linked to the "Analysis" outside processing item, your move transaction to the supplier plating operation never requisitions the resource. However, your buyer includes this item on purchase orders as necessary to authorize this periodic chemical analysis service. The buyer includes the amount he authorizes (such as 100 EA @ $1 = $100) and the job or repetitive schedule to charge.

When you receive assemblies back from the supplier, there is a separate line item for "Analysis" charges. The job or repetitive schedule the buyer referenced on the purchase order line is automatically charged for the chemical analysis service charges when you receive that item. The assemblies are not moved after this receipt.

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