Landed Cost Management on Process Enabled organization
Documentation available: -
Note 837161.1 - EBS LCM - Suggested Common Setup Steps f or Landed Cost Management
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Note.860747.1 - EBS LCM How To Diagnose Issues With Landed Cost Management In Procure To Pay Cycle
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Note.978607.1 - EBS LCM OPM integration - using LCM As-Service
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Note.968122.1 - EBS LCM OPM integration - using LCM Pre-Receiving:
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Oracle Landed Cost Management Process Guide, Release 12.1, Part No. E14299-02
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Oracle Process Manufacturing Cost Management User's Guide, Release 12.1, Part No. E13655-03
1. Setup Steps for LCM: 1.1.LCM 1.1. LCM Accounts:
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General Ledger Responsibility, Setup – Financials – Flexfields – Key – Values
Enter account segments as follows:
Enter account segments as follows:
1.2.Setup 1.2. Setup for Advanced pricing (QP) profile options:
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System Administrator responsibility, Profile - System
1.3.Setup 1.3. Setup Cost Factors
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Purchasing Super User (process Operations) responsibility, Setup – Purchasing – Cost Factors
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Cost factor for freight: LCMFreight
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Note that Acquisition Cost indicator is set to ‘Inventory’ and Invoice Line Type must be set to appropriate value
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Cost factor for insurance: LCMInsurance
1.4.Setup 1.4. Setup Price Modifiers
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Purchasing Super User (process Operations) responsibility, responsibility, Advance Pricing - Modifiers – Modifier Setup
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On Discount and Charges tab:
1.5.Create LCM Shipment Line Types
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Landed Cost Management responsibility, Setup – Shipment Line Types
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Note that Landed Cost Management responsibility is not assigned by default to PROCESS_OPS user;
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Make sure to check ‘Include in the Landed Cost’ flag;
1.6.Create LCM Shipment Types
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Landed Cost Management responsibility, Setup – Shipment Line Types (value used for INL profile setup):
1.7.Setup UOM Classes
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Inventory Super User (Process Operations) r esponsibility, Setup – Unit of Measure – Classes
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Define Quantity, Volume and Weight UOM classes;
IMPORTANT: Define ‘Name’ field exactly as shown above in order to exactly match the values selected for Allocation basis field on Cost Factors setup page.
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Also, these UOM classes will be used further for Landed Cost Management profiles setup (i.e. INL profiles).
1.8.Setup Landed Cost Management profiles (i.e. INL profiles):
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System Administrator responsibility, Profile - System
1.9.Organization Setup:
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Inventory Super User (Process Operations) r esponsibility, Setup – Organizations – Parameters
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Make sure ‘LCM Enabled’ is checked;
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Then, enter LCM Variance account (i.e. 100-1120-8806-0000-0000)
1.10.
Setup Organization Receiving Parameters
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Inventory Super User (Process Operations) r esponsibility, Setup – Receiving Parameters
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We will use the setup option for ‘Pre-Receiving in LCM’ being checked.
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Note: Although all the existing setup screenshots are indicating that flag ‘Interface to Advanced Pricing’ from Cost factors section should NOT be checked, for this setup example, I checked the flag.
1.11.
Setup Landed Cost management options
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Landed Cost Management responsibility, Setup – Options
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IMPORTANT: We must setup Organization Access for responsibility Landed Cost Management and organization PR1. Otherwise, we cannot see Inventory Organization = PR1 in LCM Setup - Options page.
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Organization Access is being setup in Inventory Super User (Process Operations) responsibility, Setup – Organizations – Organization Access
1.12.
Additional setup for subledger accounting in OPM Financials:
1.12.1. Account Derivation Rules for INV, LCA and LCV journal line types:
1.12.2. Journal Line Definitions having attached new account derivations rules: -
Event Class = Deliver or Return from Inventory; Event Type = PO Receipt
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ADR updated: Inventory Valuation and Landed Cost Absorption
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Event Class = Landed Cost Adjustments; Event Type = Landed Cost Adjustment - Deliver
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ADR updated: Landed Cost Absorption
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Event Class = Receiving; Event Type = Receive to Inspection
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ADR updated: Landed Cost Absorption
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Event Class = Landed Cost Adjustments; Event Type = Landed Cost Adjustment - Receipt
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ADR updated: Landed Cost Absorption
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Event Class = Landed Cost Adjustments; Event Type = Landed Cost Adjustment - Valuation
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ADR updated: Inventory Valuation and Landed Cost Absorption
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Note that only required ADRs for this example have been defined.
1.12.3. Application Accounting Definition, having the new Journal Line Definitions being assigned:
1.12.4. Subledger Accounting Method having the new AAD being assigned for Process Manufacturing Financials:
1.12.5. Finally, checking that correct Subledger Accounting Method is being assigned to the O PM US ledger: -
Under General Ledger responsibility, go to Setup – Financials – Accounting Setup Manager – Accounting Setups
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Go to Update Accounting Options;
2. Functional Flow for getting Landed Cost in OPM Financials 2.1.Define inventory item GSLCM03 and assigned to PR1 inventory organization
2.2.IMPORTANT: Make sure that on Costing tab, the ‘Inventory Asset Value’ is being checked!
2.3.Create an approve a PO for item GSLCM02, qty = 100, unit price = 100
IMPORTANT: After the PO is being approved, the field LCM_FLAG on PO_LINES_LOCATIONS_ALL table should become ‘Y’, otherwise will not be found in LCM module. IMPORTANT: Make sure that Invoice Match Option = Receipt on the PO Shipment line.
2.4.Under Landed Cost Management responsibility, go to Workbench – Shipments
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Select Inventory Organization, then ‘Go’
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On next page, click on Create button:
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On Create Shipment page, on Header section, enter Operating Unit, LCM Shipment Type (i.e. SHIP), Receiving Location;
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On Line Groups, enter a Group Reference identifier (any text), Source Type = Purchase Order, Third party as the PO supplier, and its Site (last 2 information to be taken f rom PO header) then Apply changes
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go to Lines tab
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On the Lines tab, go to section Find Expected Shipment Lines and enter the Purchase order number, then click on Go button
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Once the Shipment line is being retrieved, selected and Save the LCM Shipment
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After LCM Shipment is saved, perform the Validation action by selecting Validation value from Actions LOV and click on GO button
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Once the Validation has been performed, we can execute Generate Charges action
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Next action is to Calculate charges
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Once the Calculation was done, we can view Landed Cost
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On Allocation page, we can verify the Estimated Amounts and total Unit Landed Cost ;
Note the charge amounts related to freight (1000 USD = 10% x total item value) and insurance (200 USD – fixed amount); -
To return to Shipment Header page, select ‘Return to Shipment’ link
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Finally, we ‘Complete’ the Shipment by executing the Submit action.
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Once the Shipment has been submitted, it can no longer be updated. Optionally, we can review the charges:
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When executing the Submit action, Receiving Transaction Processor is being run
2.5.Perform the normal PO receipt through the standard Receipts form
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Note that on Find Expected Receipts form, we have to specifically select Source Type = LCM and then, in Shipment field, look for LCM Shipments to be received.
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Normally, it is considered that, selecting Source Type = All, we should be able to see expected data. However, for the moment, we need to specifically select Source Type = LCM, to access LCM shipments to be received.
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Further, select the line to be received, enter required information for subinventory, location and lot and save the receipt.
2.6.In OPM Financials, submit Landed Cost Adjustments Import Process
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Then, running Actual Cost:
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When checking cost for item GSLCM03, we can see ESTIMATED landed cost for freight and insurance:
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Actual Cost Transactions are as follows:
2.7.Next, run Cost Update, OPM Accounting Pre-Processor and Create Accounting to see postings so far for PO Receipt 17711 and item GSLCM03:
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Cost Update:
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OPM Accounting Pre-Processor:
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Detailed Subledger Report for given OPM Accounting Pre-Processor reference number3304:
Purchasing Transactions Entity Name
Purchasing Transactions Organization PR1 Purchase Order 3921
Event Class Receiving Name Item GSLCM03 - GSLCM03 Supplier Winters Supply Company
Receipt Number 17711
Receipt Line 1 Number Quantity 100.00000 Ea
Transaction Id Journal Line Type
373
Event Type Name Base Currency
Transaction Date Base Currency
Account
Description
Debit
AAP ISP ISP LCA ISP
Credit 10,000.00
Receive to Inspection USD
30-JAN-2010 00:00:00 Billing Currency Debit
10,000.00
10,000.00
200.00
200.00
Credit 10,000.00
200.00 1,000.00
LCA Total
11,200.00
200.00 1,000.00
1,000.00 11,200.00
1,000.00 11,200.00
11,200.00
Purchasing Transactions Entity Name
Purchasing Transactions Organization PR1 Purchase Order 3921
Event Class Name Item Supplier
Receipt Number 17711
Receipt Line 1 Number Quantity 100.00000 Ea
Transaction Id Journal Line Type
23607993
Deliver to or Return from Inventory GSLCM03 - GSLCM03 Winters Supply Company
Event Type Name Base Currency
Transaction Date Base Currency
Account
Description
Debit 11,200.00
INV ISP Total
11,200.00
Credit 11,200.00 11,200.00
PO Receipt USD
30-JAN-2010 00:00:00 Billing Currency
Debit 11,200.00 11,200.00
Credit 11,200.00 11,200.00
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Create Accounting:
2.8.Enter 2 invoices in Payables: one to be matched with Item line type and second to be matched with Freight and Miscellaneous (for insurance) line types.
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Under Payables Super User responsibility, go to Invoices – Entry – Invoices
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First, enter invoice header details for the invoice to be matches with Item line type;
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Invoice total amount will be 11,000 USD, so final item unit price will be different than in PO (item unit price in PO is 100 USD with quantity = 100 Each ordered)
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After entering the invoice header details, click on Match button;
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On Matching form, select Type = Item, enter the receipt (i.e. 17711) and click Find:
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Select the line to be matched, change the unit price to 110 and click on Match button:
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Once the matched line has been added to the invoice, go to Actions button and select Validate option
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And the first invoice has been validated:
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Now, enter a new invoice for Freight and Insurance amounts
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We will select the same supplier, but invoice can be entered against any other supplier.
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Invoice total amount will be 1,300 USD (1,100 USD for Freight and 200 USD for Insurance).
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This should result in different actual Landed Cost for Freight (estimated landed cost for f reight was 1,000 USD).
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After entering invoice header details, click on match button to add matched invoice lines;
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First, select Type = Freight and same receipt number = 17710, then click Find:
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On Match Other Charges to Receipts form, enter Cost Factor Name (LCM Freight Charges) and related amount for freight (i.e. 1100 USD);
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Select the line to be matched and click Match;
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After invoice line for freight has been added, click again to Match button;
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This time, select Type = Miscellaneous and the same receipt number = 17711:
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On Match Other Charges form, enter Cost factor name = LCM Insurance Charge and related amount (i.e. 200 USD), then click Match;
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Now, the invoice line related to insurance has been added as well and we can validate the second invoice:
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At this point, we should have 4 records in INL_MATCHES_INT table:
2.9.Next steps are to import actual invoice prices into Landed Cost Management application.
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First, we need to run Matches Interface Import request
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The request log file confirms that the 4 transactions found in INL_MATCHES_INT table have been processed (and removed from this table):
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If we are checking the LCM Shipment number 2 in LCM Workbench, we will notice that ‘Pending Matching’ flag is now checked.
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Next step is to run ‘Submit Pending Shipments’ request from LCM responsibility:
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The log file confirms that LCM shipment has been processed:
2.10.
If we query the LCM Shipment number 3 in LCM Workbench, we can see the actual amounts:
2.11.
In OPM Financials, re-running Landed Cost Adjustments Import Process
2.12. Before running Actual Cost process in OPM Financials, checking the cost type , fiscal policy and cost calendar being defined:
2.13.
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Now, we can run Actual Cost process for following parameters:
Checking the cost for item GSLCM03, we see that actual Landed Cost has been included in item cost.
2.14.
Running Cost Update for given cost c alendar and period:
2.15.
Run OPM Accounting Pre-Processor for the period:
2.16.
Running Detailed Subledger Report for given OPM Accounting Pre-Processor reference number (3305):
2.17.
Postings related to item ‘GSLCM03’ are as follows:
2.18. Run Create Accounting and, then, re-run Detailed Subledger Report to see the accounts being assigned for Journal Line Types:
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Note that for INV and LCA journal line type we have to define specific Account Derivation Rules
