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Creating warranty contract

When individuals or business buy products or equipments, manufacturers provide free warranty coverage for certain period of time. Oracle Applications provides a functionality to create warranty contracts on each serviceable products shipped from the manufacturer. 
To achieve the above functionality, you need to setup on the below:
1. Define Coverage (Service Contracts)
2. Mark the finished product as Install base trackeable & Enabled contract coverage (Inventory)
3. Define warranty item with warranty period (Inventory)
4. Include warranty item in the Finished Product Bill of Material (BOM)

Once you ship the finished product, it would create an item instance and subsequently create a warranty contract

Related Profile Options
OKS: Consolidate Warranty for Multiple Orders
Determines if an order for products with warranties, sold in Order Management, should be consolidated when the service contract is created. Similar warranties are grouped on a single contract rather than creating separate contracts
OKS: Contracts Validation Source
Allows the user to define the organization information that should be referenced when automatically creating a contract
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CRM For beginners

CRM stands for Customer Relationship Management. It is a process or methodology used to learn more about customers’ needs and behaviors in order to develop stronger relationships with them. CRM helps businesses gain insight into the behavior of customers. This in turn can help businesses to Provide better customer service, Increase customer revenues, Discover new customers,
Cross sell/Up Sell products more effectively, Help sales staff close deals faster,Make call centers more efficient and Simplify marketing and sales processes. CRM is more than just technology, its a strategy. It is about the interactions of the entire business with your customers.

Typically a CRM solution would cover broad areas of Marketing, Sales and Service.

Things are looking bright for CRM professionals over the next year, according to a number of recent reports, job boards and industry developments. Year 2007 has seen couple of postponement of CRM projects just for the simple reason of unavailability of skilled consultants. That shortage of skills seems to be translating into increased pay for those that have them. Last year, the financial services industry had the most demand for CRM jobs, followed by manufacturing and healthcare & then services.

Major players in the CRM domain are SAP, Oracle and Microsoft. With Siebel, Oracle CRM and Peoplesoft CRM customers to serve, it seems that Oracle would be busy in serving the huge client base as well as getting them togther.

Oracle’s acquisition of Siebel will hit SAP hard and make it more difficult for Microsoft to make inroads into the enterprise market. So its all going to be interesting !

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Oracle Cost Management – Standard costing

Standard costing is used by Customers who employ predetermined costs for valuing inventory and for charging material, resource, overhead, period close, and job close and schedule complete transactions. Differences between standard costs and actual costs are recorded as variances.

Manufacturing industries typically use standard costing. Costs of items can be shared across organizations using standard costing.

The unit cost of any item is the sum of the costs of all the cost elements.
There are 5 cost elements, which are defined as follows:

1. Material — The raw material/component cost at the lowest level of the bill of
material determined from the unit cost of the component item.

2. Material Overhead — The overhead cost of material, which can be used for any costs attributed to direct material costs.

3. Resource — Direct costs, such as people (labor), machines, space, or miscellaneous charges, required to manufacture products.

4. Overhead — The overhead cost of resource and outside processing, which is
used as a means to allocate department costs or activities.

5. Outside Processing — This is the cost of outside processing purchased from a supplier.

Sub-elements can be used as smaller classifications of the cost elements. Each cost element must be associated with one or more sub-elements. An amount or rate is attached to each sub element.

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WIP accounting classes

An accounting class is a group of various General Ledger accounts which allows you to arrive at job cost, production cost and maintenance costs.

The following are different accounting classes in Oracle WIP:

1) Standard discrete
Standard discrete accounting classes can be used to group job costs for building subassemblies and finished goods on shop floor. You can define and attach this accounting classes so that you can separately value and report the costs associated with subassembly and finished goods production.

2) Asset non standard discrete
If you use non-standard discrete jobs to track production costs as assets, you can define and assign an accounting class with a type of asset non-standard. Asset non-standard discrete jobs are costed the same as standard discrete jobs. Valuation accounts are charged when material is issued to a job and final costs and variances are calculated and posted to the appropriate variance and valuation accounts when the job is closed.

3) Expense non-standard discrete
Non-standard discrete accounting classes can be used to group and report various types of non-standard production costs, such as field service repair. For example to track recurring expenses – machine maintenance or engineering projects- with non-standard jobs, you can define and assign an accounting class with a type of expense non-standard to these jobs. The valuation accounts carry the costs incurred on these expense jobs as an asset during the period and automatically writes them off to the variance accounts at period close.

4) Repetitive accounting class
Repetitive accounting classes are used to group production costs and must be assigned to each repetitive line/assembly association that is created. Every repetitive schedule for that assembly on that line uses these accounts.

5) Standard Lot based
Standard lot based jobs control the material, resources, and operations required to build an assembly and collect costs. When you build lot based jobs, the standard lot based accounting class is used to separately value and report costs associated with yielded production at each individual operation on the routing.

6) Expense non standard lot based
Expense non-standard lot based accounting class jobs control material and collects costs for miscellaneous activity. These jobs are used for expense work orders for testing, prototypes, and rework where operation yield costing is not considered. You can perform all transactions (moves, jumps, scrap, splits, and update assemblies or routings) with the exception of job merge.

7) Maintenance accounting class
Maintenance accounting classes are used to group costs for work orders used in Oracle Enterprise Asset Management (eAM) Module . For example, if you are creating work orders for plant maintenance activities, you can define your accounting classes to separately value and report the costs related to asset.

The following valuation and variance accounts are associated with each accounting class.

Valuation accounts
1) Material account
2) Material overhead
3) Resource
4) Overhead
5) Outside Processing

Variance accounts
1) Material account
2) Material overhead
3) Resource
4) Overhead
5) Outside Processing
6) Standard cost
7) Bridging
8) Expense

Standard cost account is applicable to only standard costing method and Bridging and Expense accounts are applicable to average costing method only. Rest all accounts are applicable to both standard and average costing methods.

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Encumbrance / Budgetory Control in Oracle Applications

You can define encumbrance accounting or budgetary control in Financial options window:
Navigation: AP or PO —-> Setup–> Organizations –> Financial Options.

In order to use encumbrance accounting or budgetary control, you must install Payables, Purchasing, and General Ledger modules. You may go to encunbrance region to enable encumbrance accounting and to specify the default encumbrance types which Payables module assigns to your invoices, and Purchasing module assigns to your requisitions and purchase orders.

If you enable encumbrance accounting or budgetary control, Purchasing creates
encumbrances when you reserve funds for a requisition or purchase order. If you use the perpetual accrual method in Purchasing, it reverses the purchase order encumbrances when you inspect, accept, and deliver the units. If you are using the periodic accrual method in Purchasing, Payables reverses the purchase order encumbrances when you create accounting entries for invoices. Payables module creates encumbrances when there is a variance between a matched invoice and the purchase order to which it is matched, and when the invoice encumbrance type is different from the Purchasing encumbrance type.

Oracle EBS provides two predefined encumbrance types that you can use to identify requisition, purchase order, and invoice encumbrances:- Commitment and
Obligation. You can define additional encumbrance types in Oracle General Ledger module in the Encumbrance Types window.

1) Use Requisition Encumbrance
You may enable this option to encumber funds for requisitions. If you enable this option, Purchasing creates journal entries and transfers them to General Ledger to encumber funds for purchase requisitions.

If you enable Use Requisition Encumbrance, you must select an encumbrance type by which you can identify your requisition encumbrance journal entries. Purchasing assigns this encumbrance type to the encumbrance journal entries it creates for purchase requisitions. If you enable Use Requisition Encumbrance, you can indicate whether you want requisition preparer to have the option to reserve funds. If you do not enable this option, only requisition approvers will have the option to reserve funds.

2)Use PO Encumbrance
Enable this option to encumber funds for purchase orders, purchase order and receipt matched invoices, and basic invoices (not matched). If you enable this option, Purchasing encumbers funds for purchase orders and Payables encumbers funds for variances during Payables Invoice Validation for purchase order and receipt matched invoices. If you enable this option and enter a non-purchase order matched invoice, Payables will encumber funds for it during Payables Invoice Validation. All Payables encumbrances are reversed when you create accounting entries. If you enable Use Requisition Encumbrance, you must also enable this option.

If you enable Use Purchase Order Encumbrance, select a purchase order encumbrance type by which you can identify your purchase order encumbrance journal entries. Purchasing assigns this encumbrance type to the encumbrance journal entries it creates for purchase requisitions and purchase orders. If you use purchase order encumbrance, select an invoice encumbrance type by which you can identify your invoice encumbrance journal entries. Payables module assigns this encumbrance type to the encumbrance journal entries that it creates. It is recommended that you use an encumbrance type different from the Purchasing encumbrance type so you can identify invoice encumbrances

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