Session ID:

INTL: Cloud and EBS Costing, You 10114

Can Track & Eliminate Profit in

Inventory (And Still Have a Life!) Prepared by:
Douglas A. Volz
President
Douglas Volz Consulting, Inc.
@douglasavolz

April 25, 2018

Remember to complete your evaluation for this session within the app!
 Agenda
 Background
 Background and Definitions
 Example Flows
 Overall Approach
 Overall Solution to ICP Tracking and Elimination
 Compare R12 vs. Cloud Cost ICP Solutions
 Similarities and Differences
 R12 ICP Cost Setups
 Transfer Pricing Profile Option
 Shipping Network
 Intercompany Relationships
 ICP Item Cost Setup & Entry

Slide 3
 Agenda
 Cloud ICP Costing Setups (SCFO)
 Quick Cloud Costing Overview
 Cloud Interorganization UI (Shipping Network)
 Supply Chain Financial Orchestration

 Lessons Learned
 Profit in Inventory Affects COA Structure
 Don’t Test in Production
 Everybody in Finance Has a Role
 Don’t Overcomplicate

Slide 4
 About the Speaker

Slide 5
 +1 510 755 7050
doug@volzconsulting.com
www.volzconsulting.com

About the Speaker Doug Volz Helping people use Oracle since 1990

 Professional Summary
 35+ years industry, design and consulting and “firefighting” experience
 Specializing in Cost Management business solutions
 Awarded 2014 OAUG Member of the Year
 Co-designed Oracle Cost Management at Oracle
 Implementations with international consulting firms, in twelve countries
 Led the Oracle Applications User Group for Cost Management since 2007
 Presenter at Collaborate (OAUG) and UKOUG since 1996
 Prior industry positions for General and Cost Accounting management

 Business Solutions
• Change cost methods • Fix system account setups
• Inventory reconciliation • Multi-org cost accounting reports
• Profit in inventory • Product Line & Margin analysis
• Intercompany • Cost Rollup and Update
• A/P accruals • Cost accounting training

Slide 6
6
 Business Solutions – Over 30 Presentations
─ http://oaug.org/communities/webinars#cost-management-sig
─ http://www.volzconsulting.com/resources.html

Start with the Summary Presentation:

 How to Manage the Inventory and Manufacturing Period Close and Remain Sane…

• Start here, concise summary for these 30+ presentations

• Plus nifty SQL Open/Close Period Status Report, works across all your inventory
organizations and operating units (in the white paper)

Slide 7
 Business Solutions – Over 30 Presentations
─ http://oaug.org/communities/webinars#cost-management-sig
─ http://www.volzconsulting.com/resources.html
A/P Accruals:
 (R11i) How to Setup, Use and Balance Your A/P Accrual Accounts
 (R12) A/P Accruals for Release 12 (OAUG Cost Management SIG)
 (R12) Resolve Your Inventory A/P Accruals Issues Now! Even for Intercompany Internal Orders and Consignment!

Change Your Cost Methods Without Re-implementing:

 Who Said Changing Cost Methods With Discrete Costing Can't be Done?

Costing Tips and Tricks:

 Make Cost Management Work for You!
 Oracle Cost Management Features and Workarounds

Cost Management & Subledger Accounting (SLA):

 Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA
 Subledger Accounting for Discrete & EAM Cost Accounting: Product Line and Expense Accounting Made Easy
 How to Create Shipping Burdens for Oracle Cost Management, in Spite of Subledger Accounting

Discrete & Process Cost Accounting Integration:

 We Can Create Combined Oracle Cost Accounting Reports for Both Discrete and Process Manufacturing

Inventory Reconciliation, Interfaces and Period Close Tips:

 Can We Actually Reconcile Project MFG to Inventory, WIP, Projects & G/L? What Was I Thinking?
 Reconcile Your Inventory to G/L Balances With Ease, From 1 to 1,000 Inventory Organizations!
 How in the Dickens Do I Handle Those Month-End Interfaces? (And Why Can’t I Close My Books?)

Slide 8
 Business Solutions – Over 30 Presentations
─ http://oaug.org/communities/webinars#cost-management-sig
─ http://www.volzconsulting.com/resources.html
Periodic Costing:
 Want to Know Your Average Costs? Run Periodic Costing Alongside Your Costing Method!

Profit in Inventory Solutions:

 Does Rel. 12 Solve Global Inter-Company Issues for Multiple Ledgers, Profit in Inventory and COGS?
 INTL: Cloud and EBS Costing, You Can Track & Eliminate Profit in Inventory (and still have a life!)

Transactions and Variances:

 eAM Costing, How Is It Different from Oracle MFG Costing?
 How to Setup, Transact and Use Outside Processing
 InterCompany – Fulfillment Delivery Options - an Oracle DropShip Example
 Manufacturing Variances for Oracle EBS
 Overview of Oracle Discrete Costing for Manufacturing
 Receiving as it Relates to Oracle Cost Management
 Ship to Invoicing Oracle Transaction Flows: Tracing a Sale Through Inventory

Other Related Presentations:

 Cost Allocations: Different Ways to Use Oracle EBS Cost Elements, Sub-Elements and Cost Allocation Methods
 Change Management is So Important!
 Don’t Forget Your Business Processes! Oracle Can’t Do it All for You
 Major Tables & Relationships for Oracle EBS Costing
 What's New in Oracle Release 12 – the Changes that Matter
 Why Upgrade to Oracle Release 12 Costing - What's In it for Me?

Slide 9
 Background and
Examples

Slide 10
 There Has to be an Easier Way !!

Slide 11
 Background and Examples
 Implemented profit in inventory solutions at:
 Pharmaceutical companies
 Medical instruments
 Hi-Tech and Electronics and many other firms

 Discrete and Process Costing with multiple inventory orgs,

currencies, operating units and ledgers

 With internal transfers across most organizations, using

multiple primary and secondary ledgers

 Inter-company pricing with profit in inventory and month-end

elimination issues
Slide 12
 Supply Chain Example
Inter-Org Shipping and Billing Logical Shipping Transactions

Distribution - Logistic Service Medical

Europe Providers - Europe Customers

Factory
Switzerland

Distribution - Logistic Service Medical

United States Providers - Americas Customers

Factory
Korea Distribution - Asia Logistic Service Medical
Providers - Asia Customers
Slide 13
 Profit in Inventory - Terms

 Two commonly used terms for profit in inventory

 ICP – Intercompany Profit

 PII – Profit in Inventory

Slide 14
 Profit in Inventory

 Represents profit based on sales to related parties

 Intercompany profit is the artificial gain or profit recorded when one internal
organization sells to another internal organization, and the receiving org’s cost is
different from the sending org’s transfer price

 At month-end, this artificial profit must be “eliminated” or removed from the

corporation’s results

 Intercompany profit is only consumed or removed from inventory with:

 Customer sales
 Destruction or scrap or other form of loss
 Internal consumption or use
Slide 15
 Intercompany Example (One Hop)

Ship Material to
Company B

Intercompany Receivable
Company A (Due from Company B) Company B

Intercompany Payables
(Due from Company A)

Slide 16
 Intercompany Example (Continued)

Company A Company B

Transaction Debit Credit Debit Credit

I/C COGS INVENTORY

Ship Material to
Company B INVENTORY ACCRUAL

Issue I/C Invoice I/C A/R

(Due from Company B) I/C REVENUE

Issue I/C Payable ACCRUAL

(Due from Company A) I/C A/P

Slide 17
 Intercompany Example with Customer Shipment
Ship Material
Ship Material to to
Company B Customer
COST SALES PRICE

Company Intercompany Receivable Company Customer

(Due from Company B)
A B
COST PLUS MARK-UP

Intercompany Payables
(Due from Company A)
COST PLUS MARK-UP

Slide 18
 Intercompany Example (With COGS)
(Includes ICP/PII)
Company A Company B
Transaction Debit Credit Debit Credit

I/C COGS INVENTORY

Ship Material to Company B
INVENTORY ACCRUAL

Issue I/C Invoice I/C A/R

(Due from Company B) I/C REVENUE

Issue I/C Payable ACCRUAL

(Due from Company A) I/C A/P

Sale to Customer COGS

(Company B) INVENTORY

Slide 19
 Another Intercompany Example (Two Hops)
Physically Ship Material to Company C

Intercompany Receivable Intercompany Receivable

Company (Due from Company B) (Due from Company C)
Company
A C
COST PLUS MARK-UP Company COST PLUS MARK-UP

Intercompany A/P B Intercompany A/P

(Due from Company A) (Due from Company B)
COST PLUS MARK-UP COST PLUS MARK-UP

Mark-Up 1 Mark-Up 2
Slide 20
 Lots of Complexity, Multiple Financial Entities
Corporate
Consolidated Corporate Consolidated Ledger
Ledger (USD)

Secondary Switzerland European

Ledger (CHE) LSP’s
SLs
LSP’s

Korea Asia-Pac Swiss PL European PL USA PL

Primary
(KRW) LEs (USD) (USD) (USD)
Ledger

Other CORP Other

Legal Entity Korea LE Asia-Pac Swiss LE LE
European LEs
LEs LEs

Operating Asia-Pac Switzerland Other

Unit Korea OU European US OU
OUs OU
OUs

Inventory
Orgs Asia-Pac Swiss Dist. Europe US LSP
ORG Dist. Centers Center LSP Orgs Orgs
Korea
Item
Switzerland Europe Dist. US Dist.
Master
Org Centers Centers
(MAS)

Slide 21
 Overall Approach to
Profit in Inventory

Slide 22
 Profit in Inventory – Basic Business Needs

 Two overall scenarios:

 Profit in inventory adjusted in local books

(eliminate in local books)

 Profit in inventory adjusted in consolidation ledger

(eliminate in consolidation books)

Usually eliminate in consolidated books, keep local books grossed up

with profit in inventory

Slide 23
 Profit in Inventory – Report in Consolidated Books

 Requirements

 Don’t want local tax authorities to see “real” margins

 Keep profit in inventory in the (Local) Margin Analysis Report

 Eliminate in the consolidated ledger using summary journals

 Requires end of month Profit in Inventory Valuation Reports

 Require the ability to support the consolidated entry with material

transaction history and month-end inventory value reporting

Slide 24
 Profit in Inventory – Which Costing Method?

 Standard Costing is Easier Than Average Costing

 For R12 Average Costing, for the end-of-month profit in inventory value report
you need to calculate the average ICP item cost for each month
 For Cloud Costing Average Costing, it calculates the ICP item cost for you
 But if using Average Costing, each month’s average ICP item cost may be
different and may be different for each account (Inventory, COGS,
Scrap, R&D, etc.)
• Average Costing has a constantly moving Perpetual Average Cost and may
have a constantly moving ICP amount
• Whereas with Standard Costing you can predetermine the Cost, Price and
ICP relationships into a Cost Model
 You accumulate ICP by organization by item for the month
 Store it in a cost type (R12) or by Cost Book (Cloud Costing)

Slide 25
 Profit in Inventory Solutions

Overall Approach

Step 1: Step 2: Step 3: Step 4: Step 5: Step 6:

Calculate Profit Store ICP by Run ICP/PII Run ICP/PII Write ICP/PII Run Pre-
START in Inventory per Org by Cost Inventory Accounting Elimination Consolidations DONE!
item Type (R12) or Valuation Transaction Journal Entries ICP/PII Elim.
Cost Book Reports Reports Report

Slide 26
 Underlying ICP/PII Elimination Principles

 Inventory Value Reports Same Values

This Month’s Last Month’s Monthly
ICP Inventory – ICP Inventory = Change in
Value Reports Value Reports ICP/PII Value

 Transaction Reports
Monthly Monthly
Transaction X ICP Item Cost = Change in
Quantities ICP/PII Value

Slide 27
 Compare R12 vs.
Cloud Cost ICP
Solutions

Slide 28
 Compare R12 vs. Cloud Costing
This Month’s Last Month’s Monthly
ICP Inventory – ICP Inventory = Change in
Value Reports Value Reports ICP/PII Value

Solution R12 Approach Cloud Costing Approach

Month-End Snapshot table:
Primary Data Source ICP Costs by Cost Book X Calculated Qtys
CST_PERIOD_CLOSE_SUMMARY

Store ICP Values By Cost Type, by ICP Sub-Element By Cost Book, by ICP Cost Element

Store Uplift Factors Diff. between Sales Price and Cost Implicit Transfer Price Mark-Up Factors
Calculate Month-End Onhand Multiply the stored ICP costs by Possibly modify existing Inventory Value
and Intransit ICP Values the Month-End Snapshot Report to include ICP values?
Calculate Month-End Multiply the cost type by the Multiply the stored ICP costs by the calculated
Receiving ICP Values calculated quantities for Receiving quantities for Receiving
Multiply the cost type by the
Calculate Month-End WIP ICP Multiply the stored ICP costs by the calculated
calculated quantities for WIP
Values quantities for components in WIP
components

Slide 29
Legend: Custom reporting solution
 R12 ICP Cost Setups

Slide 30
 R12 ICP Cost Setups
 CST: Transfer Pricing Profile Option

 Shipping Networks

 Intercompany Relations

 ICP Item Costs by Sub-Element

Slide 31
 R12: CST: Transfer Pricing Profile Option
Yes, Price as Incoming Cost
This setting turns off the Oracle
generated Profit in Inventory
transactions (works when price = cost)

Slide 32
 Internal Sales: IR/ISO

IC A/R

Intransit Intransit
Shipment Receipt
Internal Internal
Sales Order Requisition

Intransit
OU 1 – Company A OU 2 – Company B
Inv. Org 1 Inv. Org 2

IC A/P

Slide 33
 Profit in Inventory – R12 Features
(FOB Ship Example / CST: Transfer Price Option: Price as Incoming Cost)
Transfer No Oracle PII/ICP entry
Sending Organization O1 Price: $120 Receiving Organization O2 (price = cost)
Inventory Cost: $102 Standard Cost: $120
FOB
Shipment
INV INV Inter-Org Profit In
COGS In-transit I/C Accrual
Valuation Valuation PPV Inventory
Event (O1) (O1) (O2) (O2) (O2) (O2) (O2)

1. Shipment 102 102 120 0 120

2. Receipt 120 120

If the incoming
I/C
I/C Revenue Internal P/R price is I/C Accrual I/C Payable
Receivable
(O1) (O1) the same as the (O2) (O2)
receiving Org’s cost,
3. I/C AR 120 120 there is no PPV
4. I/C AP 120 120

Slide 34
 Profit in Inventory – R12 Features
(FOB Ship Example / CST: Transfer Price Option: Price Not as Incoming Cost)
Transfer Oracle created a
Sending Organization O1 Price: $120 Receiving Organization O2 PII/ICP accrual entry
Inventory Cost: $102 Standard Cost: $120
FOB
Shipment
INV INV Inter-Org Profit In
COGS In-transit Accrual
Valuation Valuation PPV Inventory
Event (O1) (O1) (O2) (O2) (O2) (O2) (O2)

1. Shipment 102 102 120 18 120 18

2. Receipt 120 120

I/C
I/C Revenue Accrual I/C Payable
Receivable
(O1) (O1) (O2) (O2)
3. I/C AR 120 120
4. I/C AP 120 120

Slide 35
 Profit in Inventory – Alternate: “Price Not as Incoming Cost”

 By using “Price Not as Incoming Cost” profit in inventory can be earned with
the intransit shipment or receipt transaction (depending on FOB setting)

 But it is not relieved during subsequent transfers out of inventory

 And you do not have a Profit in Inventory Value Report

R12 Recommendations:
1) Turn off the standard Oracle PII/ICP accounting entries, by setting the profile from
“Price Not as Incoming Cost” to “Price as Incoming Cost”
2) Ensure your internal prices equals the standard costs in your receiving organization.

Slide 36
 R12: Profit in Inventory and Internal Requisition Challenges

 Have to configure your item price logic for internal requisitions

 Out-of-the-box: internal requisition price equals the sending organization’s

item cost

 You want the internal requisition price based on the receiving organization’s
item cost, just like any external purchase order

 See: FAQ for Using Source Inventory Org Cost + Margin As Intercompany
AR Transfer Price In An Internal Order Using Intercompany or Using it for
the Internal Requisition Price (Doc ID 1356460.1)
Many thanks to Rufus Moses (Overhead Door Company) for this P/R clarification

Slide 37
 Shipping Network: Inventory Org to Org Relationships
Menu Path: Cost Management – SLA => Setup => Account Assignment => Shipping Network

Leave Elemental
Visibility
unchecked to
transfer as
“Material” costs

Slide 38
 Intercompany Transaction Flows: Relationships Between OUs
Menu Path: Inventory => Setup => Organizations => Intercompany Transaction Flows

This account is not

used for IR/ISO
transactions

Slide 39
 R12 Item Costing: Set Up ICP Cost Type
Menu Path: Cost Management – SLA => Setup => Cost Type

Profit in
Inventory

Slide 40
 R12 Item Costing: Set Up ICP Sub-Element
Menu Path: Cost Management – SLA => Setup => Sub Element => Material

Profit in
Inventory

Slide 41
 R12 Item Costing: Set Up ICP Item Costs by Sub-Element
Menu Path: Cost Management – SLA => Item Costs => Item Costs

Profit in
Inventory
Profit in
Inventory

Slide 42
 Cloud ICP Cost
Setups

Slide 43
 Cloud Costing (Very Quick!) Overview
General Ledger

Legal Entity

Profit Center

Reference Data Set Global

Organization
Cost Book and Cost Organization (Item Master)

Cost Inventory
Cost Book
Organization Organization
Costs by Cost Book

Cost Profile Costs Profile

Valuation Cost assigned by Item
Cost Policies
Structure Elements
Items
Valuation Cost Cost
Units Components Methods

Slide 44
 Cloud Costing has Unlimited Cost Elements

 Cloud Costing has five Cost Element Types: Adjustment, Material,

Material Overhead, Overhead, Profit in Inventory and Resource
 You can set up any number of Cost Elements by Type

Slide 45
 Cloud Costing: Standard Cost Example

Costs by Cost Book

Slide 46
 No Accounts or Mark-Up Factors on Shipping Network
 Interorganization Parameters (formerly EBS Shipping Network)

Slide 47
 Brave New World – Supply Chain Financial Orchestration

 Supply Chain Financial Orchestration Features

 Define configurable transfer pricing
Model Supply Chain
 Define intercompany documentation and ownership xfer points
Financial Flow
 Create multi-node financial routes

Separate Physical
Transactions from  Automate financial accounting
Financial Transactions

Monitor and report  Monitor and audit financial transactions

Slide 48
 SCFO: Model Financial Flows

 Model Financial Relationships Financial

 Define Transfer Pricing Rules Orchestration
Financial
 Establish Documentation and Flows Orchestration
Accounting Rules Qualifiers System
Options
 Build Rules to Match Events to
the financial Route
Profit Center
 Associate Business Units with BU to Party
Customers and Suppliers Relationships

Transfer Pricing Documentation and

Rules Accounting Rules

Slide 49
 Brave New World – Supply Chain Financial Orchestration

 Supply Chain Financial Orchestration Features

 Define configurable transfer pricing

Model Supply Chain
Financial Flow  Define intercompany documentation and ownership xfer points
 Create multi-node financial routes

Slide 50
 SCFO: Transfer Pricing Rules Setup

Based on Cost

Mark-Up Percent

Based on Price Mark-Up Percent

Slide 51
 SCFO: Manage Documentation and Accounting Rules

Return Flow

Slide 52
 Financial Orchestration Flows
 Primary Route Example: UK Ship, US Selling (to final customer)

Start Node End Node

“A primary route indicates an agreement to transact goods and services between the two primary profit center
business units. The start node represents the internal seller and end node represents the internal buyer.”
─ from Oracle R13D SCFO documentation
Slide 53
 Financial Orchestration Flows
 Financial Route Example: UK BU to US1 BU

“A financial route contains the terms and conditions that determine the nature of the intercompany transaction,
such as the documentation, accounting and pricing rule to use and so on. Each primary route must have at least
one financial route; and may have multiple financial routes.” ─ from Oracle R13D SCFO documentation
Slide 54
 Lessons Learned

Slide 55
 Lessons Learned – Impact to COA Design

 Profit in Inventory affects the Chart of Account Structure (COA) design

 ICP/PII does not reconcile by the Inter-Company Segment

• Trade COGS not journaled by Inter-Co Segment yet has ICP
• COGS quantities may be sourced from multiple internal organizations
• Scrap and Other COGS not journaled by Inter-Co Segment yet has ICP
• Does not work like AGIS (Global Intercompany System journals)

 Should have the following additional COA segments:

• Sub-Account: to reclass COGS, Inventory, etc. for ICP
• Product Line: to help reconcile the ICP elimination

Slide 56
 Lessons Learned – Impact to Ledger Design

 Should keep local books and even HQ/US non-consolidated books at gross

 Best practice:
• Create an ICP Ledger for elimination journals
• Allows use of same company numbers on the elimination journal
• And keeps the manual elimination journal out of the Consolidated Ledger

Slide 57
 Lessons Learned – Don’t Test in Production!

 By CRP2 – test your:

• ICP Elimination/Reclass Journal
• For all related receiving, inventory and WIP transactions
• All G/L Intercompany Eliminations across your global financials

 ICP Elimination/Reclass Journal:

• Based on custom ICP Material Transaction Summary Report
(Quantity transacted X ICP item costs)
• Create pivot table in MS Excel
• Record manual journal entry into the ICP Ledger, using a sub-account to reclass

 ICP G/L Reconciliation Report

• Add up all related G/L journals for ICP intercompany accounts and ICP sub-accounts and
see if they net to zero, before consolidation
Slide 58
 Lessons Learned – Everyone in Finance Has A Role!
 Cost Accounting:
 Maintains ICP Item Costs and the “Cost Model”
 Creates the ICP elimination/reclass journal entry
 Runs pre-consolidation ICP OOB Report
 Reconciles ICP out-of-balances (NOT overall intercompany OOBs)

 Receivables:
• Ensures all intercompany invoices are processed in same month as shipped
(see the Internal Margin Shipment Report in Appendix)

 Payables:
• Coordinates with Cost Accounting and as needed reclasses ICP out of A/P Accruals

 G/L Finance: eliminates all intercompany balances during Consolidations

Slide 59
 R12 Lessons Learned – Don’t Overcomplicate
 Unless your ICP is simple to follow, for R12 prefer use of offline Cost Type
• R12 Open Item Cost Interface removes any rolled up costs
(have to re-roll each time after importing your item costs)
• May be better to only keep ICP costs in an offline ICP Cost Type
• As an alternative you can try using the Cost Rollup Hook to include Mark-Up
factors in your Supply Chain Cost Rollup, but watch-out, as it puts the Mark-
Up into the Material Overhead Cost Element
 For R12, using multiple cost elements for “downstream” distribution
organizations can cause report writing difficulties
• At one client, for the ICP Material Account Summary Report, the SQL code
went from 500 lines of code to 3,200 lines of code, to ensure the calculated
quantities were correct, as: Qty X ICP item costs = ICP transaction Amounts
(multiple material accounting entries can cross join with the material
transactions causing double, triple, quadruple quantities)

Slide 60
 Profit in Inventory – Other Lessons
 Wise to use spreadsheet tools to speed ICP item cost data entry:
• R12: consider More4Apps Item Cost Wizard or API Wizard
• Cloud Costing: use built-in spreadsheet item cost loads
 Currency changes will cause inaccuracies
• (i.e. Standard cost based on 1.2 USD/Euro, but inter-org transfers
use the current daily transaction rate of 1.1)
 Transfer price changes will cause inaccuracies
• Cost Model has to be consistent
• With transfer price changes need to revalue your ICP amounts
• In the ideal world, store the ICP item costs:
– by item, org
– keep track of the monthly ICP item costs and original currency rate

Slide 61
 Acknowledgements

 Jade Global and Mohan Iyer, for gracious access to their Cloud Environment

 Valerie Dubois (for many tips on Supply Chain Financial Orchestration)

 Hans Kolbe, lead for OAUG Multi-Org SIG (numerous discussions!)

 Gordon Ralph, project manager (and eliminations expert!)

 Rufus Moses (Overhead Door Company) for his P/R pricing tips

 Past and present friends and clients

Slide 62
 Where to Get More Information:

 Cloud Costing Release 13:

https://docs.oracle.com/en/cloud/saas/supply-chain-management/r13-
update17d/faims/implementing-cost-accounting.html#FAIMS1921204

 Supply Chain Financial Orchestration Release 13:

https://docs.oracle.com/en/cloud/saas/supply-chain-management/r13-
update17d/faims/implementing-supply-chain-orchestration.html#FAIMS1922437

 Oracle Enterprise Repository for Oracle Fusion Applications:

http://www.oracle.com/webfolder/technetwork/docs/HTML/oer-redirect.html

 Oracle EBS Intercompany Transactions and Setup:

NCOAUG 2009: Intercompany Flow, by Ravi Sagaram

Slide 63
 Appendix

ICP Cost Report Samples

Slide 64
 Compare R12 vs. Cloud Costing
This Month’s Last Month’s Monthly
ICP Inventory – ICP Inventory = Change in
Value Reports Value Reports ICP/PII Value

Solution R12 Approach Cloud Costing Approach

Month-End Snapshot table:
Primary Data Source ICP Costs by Cost Book X Calculated Qtys
CST_PERIOD_CLOSE_SUMMARY

Store ICP Values By Cost Type, by ICP Sub-Element By Cost Book, by ICP Cost Element

Stored Uplift Factors Diff. between Sales Price and Cost Implicit Transfer Price Mark-Up Factors
Calculate Month-End Onhand Multiply the stored ICP costs by Possibly modify existing Inventory Value
and Intransit ICP Values the Month-End Snapshot Report to include ICP values?
Calculate Month-End Multiply the cost type by the Multiply the stored ICP costs by the calculated
Receiving ICP Values calculated quantities for Receiving quantities for Receiving
Multiply the cost type by the
Calculate Month-End WIP ICP Multiply the stored ICP costs by the calculated
calculated quantities for WIP
Values quantities for components in WIP
components

Slide 65
Legend: Custom reporting solution
 Profit in Inventory – Sample Reports (sample data only)

Slide 66
 Profit in Inventory – Sample Reports (sample data only)

Slide 67
 Profit in Inventory – Sample Reports (sample data only)
Monthly Monthly
Transaction X ICP Item Cost = Change in
Quantities ICP/PII Value

Slide 68
 Profit in Inventory – Sample Reports (sample data only)

 ICP Material Transaction Report – Offset Accounts

 Most ICP is offset by Inter-Company COGS, but you also have
 Misc. account issues/receipts, scrap and other transactions

Slide 69
 Profit in Inventory – Sample Reports (sample data only))

 WIP Component ICP Variance Report

 Estimate the amount of ICP included in your WIP Variances
 Your WIP variances may be overstated by the ICP

Slide 70
 Profit in Inventory – Sample Reports (sample data only)
 Internal Margin Shipment Report
 Verify your ICP/PII Cost Model:
Internal SO Price – Sending Org Unit Cost – ICP = 0
 Confirm that you invoiced all of your internal shipments

Slide 71
 doug@volzconsulting.com

Session ID:
10114

Remember to complete your evaluation for this session within the app!
Slide 72