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    Sumeet Vinayak
    How to make Freight Cost flow from Sending to Receiving Org...
    Topic posted November 21, 2018 by Sumeet VinayakRed Ribbon: 250+ Points, last edited November 21, 2018, tagged Cost Management, Financials, Fusion, White Paper 
    175 Views, 3 Comments
    Title:
    How to make Freight Cost flow from Sending to Receiving Org in an IMT
    Summary:
    How to make Freight Cost flow from Sending to Receiving Org in an IMT
    Content:

    Hi,

    The customer supply chain requires material flow between Inventory Orgs. The material flows can be between Inventory Orgs of the same Business Unit or across Business Units.

    There is no requirement for PO / SO / Invoicing when it’s across BUs. Also, there is no mark up (profit) involved in these transfers. However, there obviously is Freight Cost associated with these material transfers.

    The requirement is that the Sending Org should recover the freight cost (from accounting perspective) and there should be an increase in the inbound cost (for the same amount) for the receiving org. Note the Orgs are Perpetual Average (PAV) Costed.

    Any solution direction will be highly appreciated.

    Thanks

    Version:
    Version 18B but will soon move to 18C

    Comment

     

    • Krishna Ghantasala

      In R12 we added support to bring shipping costs recorded on shipment for IMT transfers but it was limited to expensing them in shipping org. There is a pending product backlog (ER) to pass these costs to destination org.

      ER: https://bug.oraclecorp.com/pls/bug/webbug_edit.edit_info_top?rptno=28773094

       

      The options user have till then is to model such costs

      1. As part of their transfer price workings (or)
      2. As Overheads in the destination org

      Regards,

       

      • Sumeet Vinayak

        Hi Krishna, 

        thanks for your response. We've thought about above options. But the issue is - 

        • Transfer Price-  It’s a flat percentage. We can apply qualifiers in the SFO Flow (like having different percentages for different Item Classes etc.). But cannot build weight / distance login into it. Are we missing some functionality of Transfer Pricing?
        • Overhead Rules – again we can set up these rates for Lot / Transaction / Unit by Item or Item Category. But these are set up for an Org only (not for a combination of Org). For example same overhead will be applied in Org 1 irrespective of whether IMT is from Org 2 or Org 3.  And obviously weight / Distance logic cannot be build into it.

        However thought about this new approach. Please provide your input / feedback on below. We've OTM

        1. Oracle Transportation Management (OTM) to send Shipping Cost directly to GL, expensing into the Shipping Org. Common solution for both External and Internal Shipments.
        2. For IMTs – OTM to send Shipping cost by Item. We will use ‘Create Cost Adjustment’ Rest API to add Shipping Cost in the Receiving Org (We will use a logical Sub Inventory to add the Cost before moving it into the Final destination Sub Inventory).

        The Receiving Org is always PAV Costed hence this should work. My initial thought was to add this the Shipping Org, it will work if Shipping Org is DC (PAC Costed) but will not work if Shipping Org is Mfg Facility (Standard Costed).

    • Krishna Ghantasala

      Hi Sumeet,

      I assume you are referring to Receipt Cost Adjustments using REST API and Yes your approach to add in the Receiving Org is a better one please.

      Regards,