Dual Unit of Measure : New functionality of R12 for discrete Inventory

Dual UOM or Catch Weight management is used primarily in the meat and metal Industries. In these industries due to variability of each piece logistic unit of measure will generally differ from the valuation unit of measure. Shipping and receiving generally happens in pieces or Box but payment happens on the weight. The key requirement for this business process is to track the inventory in two different unrelated UOMs where the relationship between both the UOMs is not fixed.

Inventory module’s Dual Unit of Measure functionality enables users to transact inventory items in two unrelated units of measures. With this functionality we can track item both in primary UOM as well as secondary UOM. Both the UOM and QTY are stored in the separate fields called secondary UOM and Secondary Qty in Database. This functionality was available in process inventory in 11i but introduced to discrete inventory also in R12.Thus, if a user chooses to enable dual unit of measure control for a given inventory item,Oracle Purchasing module will now require quantity entry in two units of measure according to the defaulting rules set up at the item level.

We need to be aware that by just defining an item in dual UOM does not set the system to track the transaction in both the UOM. While creating an item we should set “Tracking ” as ” Primary and Secondary”. once done system will track all transactions in primary and secondary quantity and UOM.Items, which are tracked for Primary & Secondary unit of measure, have visibility to both the primary and secondary units of measure throughout all the standard inventory inquiries for Oracle Inventory organizations.

 Setups and Process

 The Key setups and process for Dual UOM is

 Step 1: Create a New Item

Navigate to Inventory > Item > Master Item

 Under main Tab –>UOM Section

• Define primary UOM
• Tracking as Primary and Secondary
• Pricing as Primary
• Secondary UOM
• Defaulting as Default (if you don’t want application to automatically default the converted UOM value then select No default)

 Step 2: Define conversion between 1st UOM and 2nd UOM of this Item
Navigate to Inventory > Setup > UOM > Conversion

 Step 3: Do a Mis transaction or enter the sales order

 Because we set Defaulting value to “Default” in step 1, so when we input the Quantity, its auto calculate the Second Quantity use the UOM conversion defined in step 2.

 Step4: Validate the on hand Qty

 You could be able to see the inventory in Both the UOMs

Following modules of Oracle provide complete support to the Dual UOM once the  necessary setups are done at Item level.

 Purchasing

• Requisitioner can create online requisitions in two UOMs
• Requisition can be auto created by Buyers can create POs in two UOMs
• Receiving can be done in both the UOMs. User need to enter the quantites for both the UOM while receiving.

 Order Management & Shipping

• Sales orders can be entered in two UOMs
• Shipping can select the lot for which both the UOMs are defined

 Pricing

The pricing unit of measure can be defined as either the primary or the secondary unit of measure for the item. Price lists are then created for that item in its pricing unit of measure.

 E.g. If the meat has a pricing unit of measure in Kg, then at the time an order is taken the order line shows the default conversion value (for example, 2 Kg) as the pricing quantity  and because the shipping lot is yet not known. A price based on that 2 Kg is calculated. During shipping when the lot XYZ is selected which has a weight of 2.1 Kg the extended price will be changed to reflect the correct value.

 Costing

The primary unit of measure defined in the item master is assumed to be the costing unit of measure for that item. Therefore inventory valuation is based on the primary unit of measure for each item. Quite often this same unit of measure is used for pricing (cost plus pricing). For catch weight items, the primary unit of measure and costing unit of measure is not usually the count, but rather the actual weight/volume or logical unit of measure.

This is useful feature for few of the industry and with this new feature users will get more flexibility in using Oracle Inventory.