Unlike most modules, that create transactions and maintain master data, the only purpose of the Project Manufacturing module is integration.  It establishes the rules to associate projects, tasks, expenditure types, and organizations (POET) to Supply Chain master data and transactions.  To understand the different integration points let’s first look at a typical supply chain cycle.

Typical Supply Chain Flow in Oracle E-Business Suite (EBS)

The first thing we need in our Supply Chain cycle is to know which products we need to purchase or manufacture. This information is known as “demand” for your product.  Demand can come in a number of different forms like sales demand forecasts, safety stock, or sales orders.  Once demand is captured then we move to the planning phase.  The MRP/Master Scheduling or Advanced Supply Chain Planning modules use the demand information along with other planning parameters to determine when to place purchase orders and when to release work orders.  Once the items on the purchase orders are received into inventory and the items on the work orders are manufactured, then you are ready to ship the product.  Shipping the item involves two steps: pick release and ship confirm.  The Pick Release process takes the item from inventory and stages it for shipping.  The Ship Confirm process closes the order line and generates an invoice line in Receivables interface.  The Invoicing process also has two steps:  importing the invoice and printing the invoice.  Once you have completed the invoicing process, you will then run the revenue recognition and accounting programs.  This will determine if you should recognize or defer your revenue and it will assign the proper accounting to each invoice line.  This is a typical supply chain cycle without the integration of Projects.  Now, let’s add Project Manufacturing to our flow and see the differences.

Supply Chain Flow with Projects

Type of Projects that Integrated with Supply Chain

Before we can start our supply chain cycle with Projects, we need to setup the project.  Project Manufacturing supports two different kinds of projects.  There’s the project you create in the Project Costing module and there’s a Seiban project.  The word Seiban comes from the Japanese word meaning “manufacturing number”.  This number allows you to separate your supply chain activity into groups for specific customers.  For this post, I’ll stick to discussing Project Costing projects.  After we have setup our project, the next step is to associate items with our project.

Capturing Product Demand by Project

Like the typical supply chain cycle, the project supply chain cycle needs to understand which products we need to purchase or manufacture at a project level.  With Project Manufacturing, you get an additional source of demand – Deliverables.  Deliverables are created in the Project Contracts and Project Management module and associate inventory items with your project.

Integrating Forecasts with Projects

One source of demand for ASCP and MRP is forecasts.  If you have inventory items with long-lead times, you may want to forecast these items before you get the order from the customer.  I ran into this scenario at two different clients.  One had an engine component that needed to ordered six months in advance and the other was growing crystals for an electronic component.

Integrating Safety Stock with Projects

Along with forecasts, you also may want to ensure you have enough stock on-hand to fulfill your project.  You can define user-defined safety stock by item by project.

Integrating Sales Orders with Projects

If you have an agreement in place with your customer, you can enter sales order and associate a project and task with each sales order line.

Integrating MRP and ASCP with Projects

Both MRP and and ASCP will collect project-level demand from the typical supply chain sources (sales orders, forecasts, and safety stock) and it can collect from the deliverables created in the Project Management or Project Contracts modules.  After it performs the planning calculation, it will recommend what inventory items to buy and make by project.

Integrating Inventory Requisitions and Purchase Orders with Projects

After you release planned orders from Planning, the project and task number will automatically populate on the requisition and purchase order.  Project Manufacturing, you now are allowed to enter a project on a PO shipment line with a destination type of “Inventory”.

Integrating Inventory with Projects

With Project Manufacturing enabled, you will see it adds two new segments to your locators.  These segments are the project and task.  This means all inventory is now associated with a project.  If these locators are blank, then Project Manufacturing will associate the inventory to a common project.  This common project is identified in the Project Manufacturing Organization Parameters form.

Integrating Work Orders with Projects

Like purchase orders, releasing planned orders from Planning will automatically populate the project and task number on the work order.  The work order can pull the components needed from the project’s inventory location.  This will prevent you from using material allocated to another project.

Integrating Shipping with Projects

With Project Manufacturing, you can use two sources for your shipping transactions.  You can use Order Management or you can use Project Contracts.

Integrating Invoicing with Projects

After you ship your products to the customer, you have two choices on how to invoice.  You can invoice from Order Management or you can invoice from Project Billing.  If your agreement with the customer is to bill when the items are shipped then invoicing out of Order Management may be a good choice.  To invoice from Project Billing based on shipment will either require you use deliverables or create a custom billing extension.  The drawback in invoicing from Order Management is you are not able profitability by project easily.

Integrating Revenue Recognition with Projects

Like invoicing, you have two choices for where you can recognize revenue.  You can recognize revenue with the invoices in Receivables or you can recognize revenue in Projects.  If you are customizing your product for a specific customer (engineered to order) and you just want to capture the total cost of the sale, then Receivables would be a good fit.  If your customer wants you to invoice them when the product is shipped, but accounting (GAAP) wants to use a percent complete for revenue recognition, then Projects would be a good fit.

Integrating Accounting with Projects

Project Manufacturing allows you to select which module will perform accounting.   For inventory costs, you can process accounting either in Cost Management or in Projects.  If you select to recognize revenue in Projects, you will perform revenue accounting in Projects.  Otherwise you will perform revenue accounting in Receivables.  The same is true for invoicing. If you select to invoice in Projects, you will perform invoice accounting in Projects.  Otherwise you will perform invoice accounting in Receivables.