Oracle Inventory Overview, basic understanding!

What is inventory? In simple terms it is a stock of items that your business is selling in order to make a living. Almost every non-IT related business has some physical items to sell and hence Inventory is at the heart of almost any business and is central to the planning process.
The considerations in setting it up are at least as complex as those for any other single application. Commonly, Inventory will be installed during the implementation of Order Entry, Purchasing, Manufacturing, or Supply Chain Management but it is an extremely complex module in its own right with several important setup considerations.

Inventory System: The simplest function of an Inventory system is to keep track of your items i.e. which item came in and which item went out of inventory and when the item count reaches below a certain threshold value then alert the responsible person to replenish it soon. So how does items go in and out of the warehouse? Let say your company manufactures office chairs. When a customer orders 5 chairs and when you ship them to the customer the count of the item goes down and when you manufacture them internally and when the finished chair is ready and moved to the warehouse the item count increases. An item can be internally consumed too.

An inventory system provides physical management of a company’s stock until it is either used up or sold. It also performs a logical, cataloging function. This stock is referred to by its item number  (usually item number is the segment1 column of mtl_system_items) and has many attributes that affect the transactions that the modules can process against the item.
Every other module within Oracle Applications that needs to name types of objects looks to the Inventory Item Master for details regarding an item. These objects include products ordered through Oracle Order Entry, items invoiced through Oracle Receivables, items purchased through Oracle Purchasing, items paid for through Oracle Payables, items maintained through Oracle Service, and items charged against projects in Oracle Projects.
Every module in the Manufacturing suite (Engineering, Bills of Material, Work in Process,  Master Production Schedule/Material Requirements Planning, and Cost Management) deals with items named in Inventory.

Inventory’s can also track intangibles like magazine subscriptions. The company can sell these items along with physical objects. Assemblies that are never stocked can also be defined in Inventory. A phantom item, for example, represents an intermediate step in manufacture, an assembly that is never stocked in inventory because it is used immediately in a higher-level assembly.
Oracle Inventory’s on-hand balance is increased when an item is bought or made. Inventory relinquishes control and
decreases its balance when items are sold or put to their final use within the company. Pads of paper in the stock room are inventory; the same pad of paper on somebody’s desk is not-as far as the company is concerned, it is already used. A new desk in the warehouse belongs to inventory; a desk in somebody’s office is no longer in inventory. Many major purchases, such as plant and equipment, never have an on-hand balance because they are put to their final use
as soon as they are bought.

This ends a very basic overview of Oracle Inventory (infact true with any inventory management system)

Leave a Comment