R12 Mock Implementation - Business Process

ORA_APPS_R12_NG
Natgeo Gas
Project Management
(Mock R12 Implementation Project)

Project Sponsors:
Not applicable

Document Owners:
Gururaj Gouda

Contributors:





STANDARD DISCLAIMER:
This research and document is meant for educational purposes only. Any resemblance to real Organization/Unit is purely coincidental.



Table of Contents
About Client: 3
GAS Manufacturers and distributors overview: 4
Existing ERP/MIS tools: 5
Statistics: 5
Operating Structure 6
Existing Process: 6
Details of the existing Business process: (As-Is) 7
1.Procurement of Natural gas from Manufacturers and Local Distribution Companies (Buy) 7
2. Maintaining the gas in internal plant and procured from different vendors (Maintain) 9
3. Distributing/Selling as per the customer forecast demand. (Sell) 10
SCOPE: R12 Implementation Project for the Client Natgeo Gas 11



About Client:

Client: Natgeo Gas
Client info: http://www.natgeogas.com/
With the largest fleet of service society in Metro Atlanta, Natgeo Gas provides the most cost-efficient and reliable propane services for forklifts in the area.
 On-site cylinder fill, or cylinder exchange service available
 Regular scheduled deliveries from more than once a week to monthly depending on your usage. Will call service is available.
 24 hour emergency service.
 Fleet of fourteen radio dispatched trucks.
 Employee safety programs available.
 Cylinder storage racks and cages available in various sizes. We also sell tanks to those customers who would prefer to own their tanks.
 Cylinders available for every application.
 Parts & Service Center where we sell propane parts and equipment to support your needs.
 Service is always available to repair, recondition, requalify or move tanks. If a tank is leaking, our service department is dispatched immediately
Natgeo Gas works with builders who want to provide their customers with energy choices that make sense while enhancing the quality of their home. Our program includes underground tanks, contractor pricing and rebate programs. Whether you are building individual homes or an entire community, we can work with you to come up with the right gas solution.
Gas Price Programme: Natgeo Gas Distributors offers several different pricing and payment options to help you better manage your propane bill. Our most popular program is our Budget Billing Plan. This plan gives you the convenience of level, year round monthly payments based on your estimated annual usage. Instead of paying for your winter gas usage per delivery, you can spread your payments over a year. Additionally, you are also automatically enrolled on our “Guaranteed Keep-Full Delivery” service, which means that we will keep your tank filled and you won’t have to worry about running out of gas.

GAS Manufacturers and distributors overview:
Simplified Structure of Industry after Pipeline Unbundling


The diagram shows a simplified representation of the structure of the natural gas industry after pipeline unbundling and wellhead price deregulation. It is important to note that the actual ownership pathway of the gas may be significantly more complicated, as the marketer or the LDC are not the final users. Either of these two entities may sell directly to the end user, or to other marketers or LDCs.
The regulatory environment of the day has a dramatic effect on shaping the structure of the industry.
The actions of the federal government and its related agencies and departments can also have a significant impact on the structure and functioning of the natural gas industry.

Industry Makeup
Now that the basic structure of the natural gas industry has been discussed, it is possible to examine the business characteristics and relevant statistics of each industry segment.
• Producers - There are over 6,300 producers of natural gas in the United States.
• Processing - For more information on natural gas processing, visit the Gas Processors Association.
• Pipelines - There are about 160 pipeline companies in the United States, operating over 300,000 miles of pipe. Of this, approxiamtely 180,000 miles are interstate pipelines.
• Storage - The EIA maintains a weekly storage survey, monitoring the injection and withdrawal of stored natural gas. This survey gives a good indication of the status of the natural gas market, measuring the natural gas that is extracted or stored at any one time in response to the demand for natural gas.
• Marketing - The status of the natural gas marketing segment of the industry is constantly changing, as companies enter and exit from the industry quite frequently. As of 2000, there were over 260 companies involved in the marketing of natural gas. In this same year, about 80 percent of all the natural gas supplied and consumed in North America passed through the hands of natural gas marketers. The volume of non-physical natural gas that passes through the hands of marketers is very large, and can be much greater than the actual physical volume consumed.
• Local Distribution Companies - There are about 1,200 natural gas distribution companies in the U.S., with ownership of over 1.2 million miles of distribution pipe. While many of these companies maintain monopoly status over their distribution region, many states are currently in the process of offering consumer choice options with respect to their natural gas distribution.
The process of getting natural gas out of the ground, and to its final destination to be used, is a complicated one. There is a great deal of behind-the-scenes activity that goes into delivering natural gas to your home, even though it takes only the flick of a switch to turn it on. This section provides an overview of the processes that allow the natural gas industry to get their product out of the ground, and transform it into the natural gas that is used in your homes and in industry.
• The Exploration section outlines how natural gas is found, and how companies decide where to drill wells for it.
• The Extraction section focuses on the drilling process, and how natural gas is brought from its underground reservoirs to the surface.
• The Production section discusses what happens once the well is drilled, including the processing of natural gas once it is brought out from underground.
• The Transport section outlines how the natural gas is transported from the wellhead and processing plant, using the extensive network of pipelines throughout North America.
• The Storage section describes the storage of natural gas, how it is accomplished, and why it is necessary.
• The Distribution section focuses on the delivery of natural gas from the major pipelines to the end users, whoever they may be.
• The Marketing section discusses the role that natural gas marketers play in getting the gas from the wellhead to the end user.

Existing ERP/MIS tools:

Presently client using the EDI and Legacy system which cannot be integrated with oracle. So the existing MIS and ERP tool can be decommissioned once we get into new packaged solution.

Statistics:

Number of estimated system users: 100 ( Plus 20 Buffer)
Number of super users need to be trained in IT: 8
Maximum Duration of the project: 8 months

Operating Structure

Following diagram shows the basic organization structure for Natgeo gas. Natgeo has its registered headquarters at Cairo, Lake Forrest Drive, Suite 258, Cairo GA 30328.
Cairo also has storing units which supplies the gas to all southern part of Georgia. Their business process includes Receive and fulfills order, procure gas for Cairo and Sylvania via bidding process and maintain the inventory.This Unit is responsible for generating revenue, submitting financial reports and maintaining the ledgers. Most of the Natgeo business arises in this corporate sale office.


Fig 1.6
Sylvania, ABC West, Marine drive, GA 30358. Acts as a major supplier for defense wing. This organization only receives order and get the material procured from Cairo. It handles only shipping and maintaining inventory for Natgeo.
Oakwood, P.O. Box 99, Oakwood, Georgia,30566 is the biggest storing plant among all the 3. It works as procuring and selling unit for Natgeo. All north and West Georgia Commercial and domestic needs are fulfilled by the Oakwood plant.
Existing Process:
Existing Business process can be divided into 3 major sections
1. Procurement of Natural gas from different Manufacturers and Local Distribution Companies (Buy)
2. Maintaining the gas in internal plant and procured from different vendors (Maintain)
3. Distributing/Selling as per the customer forecast demand.(Sell)


Details of the existing Business process: (As-Is)
1.Procurement of Natural gas from Manufacturers and Local Distribution Companies (Buy)

When procuring Natural Gas Natgeo will select suitable suppliers of the item to be purchased from among registered suppliers. As a rule, tenders will be by competitive bidding between selected suppliers. However, in certain cases, a specific supplier may be designated based on patent rights held by that supplier, compatibility with the existing facilities, whether they are the sole supplier of a given item, or similar situations.
A request for tenders indicating the conditions of the tender, contract conditions, and tender specifications will be provided to potential suppliers who will be invited to submit tender proposals.
In addition to the proposal made in accordance with the tender specification, alternative proposals containing additional cost-saving options other than as specified by Natgeo in the tender specification may be submitted provided that such alternatives meet the performance and function requirements as specified in the tender specification.
In cases where any changes could result in a change in the bid price, the supplier will be asked to submit such price adjustment and explanation.
Natgeo will award the Long term contract (Least 3 months to Max of 6 months) for the specific supplier based on the price and the strict delivery dates. This contract can be renewed via new tendering process on every quarter if required.
Products are to be delivered as agreed to in the contract. Natgeo reserves the right to claim liquidated damages if delivery is delayed beyond the specified delivery deadline. Payments are made once commodity is received and QA is passed. There will not be delay of 15 days after the commodity passed QA test.

Flow Chart for BUY process:
Department/Users Business events
Procurement Refer the demand schedule

Refer the previous bids/quotes/Blankets if any

Raise RFQ for the suppliers

Get quotes from suppliers

Award quotes based on the price and date schedule

Issue Blanket agreement for the awardee

Monitor Supplier activities

Issue order based on demand schedule.

Receiving Dept receive the goods and Inspect.

Payables Pay for the Quality accepted

Close the books monthly

Finance Check for any discrepancies , report the same to Procurement dept. or fix .
Fig 1.2







2. Maintaining the gas in internal plant and procured from different vendors (Maintain)
Natgeo gas has 3three different reservoir plants in Cairo, Oakwood and Sylvania.

Natural Gas is usually measured by volume and is stated in cubic feet. The gas procured from the vendor is inspected and once it passes the QA will be transferred to the respective containers.

One tanker will store only one lot from a single supplier. There are around 35 storage tankers spread across 3 different cities in Natgeo which act as storing reservoirs. Stock person is responsible for checking and maintaining the exact quantity as per safety norms.

Monthly maintenance will be scheduled all tankers/reservoirs on 2nd Sunday of every month.

Natgeo gas maintains following 8 grades of natural gas depending on the usage and consumption pattern.

3. Distributing/Selling as per the customer forecast demand. (Sell)

The following figure illustrates the ‘Sell’ process for the Natgeo gas. The shipping may be via existing pipeline or through road, rail and ship. Marketing department is responsible for taking the orders and taking approval from the respective business head.

Shipping/Stock personnel takes care of shipping the natural gas grade to the respective end customers.

Receivables department set the credit option for the low profile customers and the payment need to be collected from the end customer within 20 days from the date of delivery.

Blanket sale agreement will be issued to the Industrial End customers who require staggered shipments.

If the Grade8- Propane - Defense only , need to be shipped in the Sylvania , Natgeo gas adopts drop ship process from the few suppliers in the Cairo city to reduce the shipping cost and to meet the scheduled ship date.



They use the 3rd party tool ORDER_DYNAMICS for booking the order for regular orders ( excluding the Blanket and drop ship process). This needs to be integrated with the new package. Regular orders would/will be entered in the old ERP tool.

Booking and shipping process will be implemented in the new ERP package solution.





SCOPE: R12 Implementation Project for the Client Natgeo Gas

We will choose Oracle apps package solution to map the above process and build the rigid system which will help partner to smoothen their business flows as well as help the top management to keep eye on their financial aspects at any point of time.
ERP: Oracle e-Business suite Release 12
Nature: Implementation and Post go live support

Modules:
Area Modules Integration with existing system
Common Oracle Financials
Oracle Cash Management
BUY Oracle Procurement
Oracle Sourcing
Oracle Payables
Maintain Oracle Inventory
Oracle Enterprise Asset Management
Sell Oracle Order Management Yes (ORDER_DYNAMICS)
Oracle Receivables

R12 Accounting Setup details (Outline)

The ledger is a basic concept in Release 12. The ledger replaces the 11i concept of a set of books. It represents an accounting representation for one or more legal entities or for a business need such as consolidation or management reporting.

Companies can now clearly and efficiently model its legal entities and their accounting representations in Release 12. This seems to be a major area in getting success of the shared service center and single instance initiatives where many or all legal entities of an enterprise are accounted for in a single instance, and data, setup, and processing must be effectively secured but also possibly shared.

Now, legal Entities can be mapped to entire Ledgers or if you account for more than one legal entity within a ledger, you can map a legal entity to balancing segments within a ledger.

While a set of books is defined by 3 C's
1. chart of accounts
2. functional currency
3. accounting calendar,
The addition in this list the ledger is defined by a 4th C: the accounting method,

This 4th C allows you to assign and manage a specific accounting method for each ledger. Therefore, when a legal entity is subject to multiple reporting requirements, separate ledgers can be used to record the accounting information.

Accounting Setup Manager is a new feature that streamlines the setup and implementation of Oracle Financial Applications. The Accounting Setup Manager will facilitate the setup required for simultaneous accounting for multiple reporting requirements.

With the Accounting Setup Manager, you can perform and maintain the following common setup components from a central location:
* Legal Entities
* Ledgers, primary and secondary
* Operating Units, which are assigned to primary ledgers
* Reporting Currencies, which is an enhanced feature
* Subledger Accounting Options.
This is where you define the accounting methods for each legal entity subledger transaction and associate them to the ledger where the accounting will be stored. * Intercompany Accounts and Balancing Rules * Accounting and Reporting Sequencing * Both Intercompany and Sequencing.

Upgrading?
The upgrade creates a separate accounting setup for each primary ledger that is Upgraded from a set of books. The status of the accounting setup will be completed. Each accounting setup is a grouping of accounting-related setup components.
The following lists the Release 12 setup components and how the Release 11i features map to them:
• Legal Entities: HR Organizations classified as GRE/ LE in Release 11i will be preserved as Legal Entities in Release 12. Legal entities can be manually assigned to a ledger and balancing segment values can optionally be mapped to legal entities to help you identify transactions by legal entity during transaction and journal processing.

• One Primary Ledger: Most sets of books in Release 11i will become primary ledgers in Release 12.
• Operating Units: All HR Organizations classified as operating units will be Preserved in Release 12. If operating units are assigned to a set of books, then they will be associated to a primary ledger in an accounting setup. You can now view all operating units assigned to an upgraded primary ledger using Accounting Setup Manager.
• Reporting Currencies: Multiple Reporting Currency (MRC) reporting sets of books become reporting currencies in Release 12.
• Secondary Ledgers: Multiple-Posting set of books (Global Accounting Engine) will upgrade to secondary ledgers.
• Intra-company Balancing: Inter-company Accounts in Release 11i is renamed to intra-company Balancing Rules, a feature provided by the new Advanced Global Inter-Company System.
• Inter-company Accounts The Release 11i Global Inter-company System (GIS) will be Replaced by Advanced Global Inter-company System (AGIS).

Apps SCM Module Setup steps

Oracle apps Accounting entries for P2P and O2C

Oracle apps Procurement Learning

Types of Key Flexfield Forms
Key flexfields appear on three different types of application form:
• Combinations form
• Foreign key form
• Range form

Set of Books
==========
A financial reporting entity that uses a particular chart of accounts,functional currency, and accounting calendar. Oracle General Ledger secures transaction information (such as journal entries and balances) by set of books. When you use Oracle General Ledger, you choose a responsibility that specifies a set of books. You then see information for that set of books only.

Business Group
============
The business group represents the highest level in the organization structure, such as the consolidated enterprise, a major division, or an operation company. The business group secures human resources information. For example, when you request a list of employees, you see all employees assigned to the business group of which your
organization is a part.

Legal Entity
=========
A legal company for which you prepare fiscal or tax reports. You assign tax identifiers and other legal entity information to this type of organization.

Balancing Entity
=============
Represents an accounting entity for which you prepare financial statements. This is a segment in the Accounting Flexfield structure (usually the Company segment) at which all accounting entries must balance. There may be multiple companies within the same structure, and each of these must balance within itself. Each legal entity can have one or more balancing entities. You can use Flexfield Value Security rules to restrict data entry of balancing segment values by legal entity or operating unit.

Operating Unit
=============
An organization that uses Oracle Cash Management, Order Management and Shipping Execution, Oracle Payables, Oracle Purchasing, and Oracle Receivables. It may be a sales office, a division, or a department. An operating unit is associated with a legal entity.
Information is secured by operating unit for these applications. Each user sees information only for their operating unit. To run any of these applications, you choose a responsibility associated with an organization classified as an operating unit.

Inventory Organization
==================
An organization for which you track inventory transactions and balances, and/or an organization that manufactures or distributes products. Examples include (but are not limited to) manufacturing plants, warehouses, distribution centers, and sales offices. The following applications secure information by inventory organization: Oracle Inventory, Bills of Material, Engineering, Work in Process, Master Scheduling/MRP, Capacity, and Purchasing receiving functions. To run any of these applications, you must choose an organization that has been classified as an inventory organization.


PO
=====
Lookups:
Acceptance Type:
FOB:
Pay Group:
Price Type:
Quotation Approval Reason:
Reply/Receive Via:
PO/Requisition Reason:
Vendor (Supplier) Type:

Line Types in Purchasing Documents
===========================
Oracle Purchasing provides the line type feature so that you can clearly differentiate orders for goods from those for services or outside processing. In addition, the services related line types support a broad range of service categories including general business services, consulting services, and contingent labor.

Purchasing provides you with the features you need to order both goods and services.

The line type governs the type of requisition, purchase order, RFQ, and quotation lines you create. Quantity-based line types let you order and receive and/or invoice based on the quantity of goods or services provided. Amount-based line types let you order and receive and/or invoice based on the value of the service provided.

Enter the Value Basis for the line type.
Amount: Receive items by amount. You cannot change the unit of measure and unit
price on purchasing document lines.
Fixed Price: If Oracle Services Procurement is implemented, enter services by
amount only. Receive items by amount. You cannot change the unit of measure and
unit price on purchasing document lines.
Quantity: Receive items by quantity. Outside Processing line types must have this
value basis.

Enter the Purchase Basis for the line type.
Goods: For quantity value based line types.
Services: For amount and fixed price based line types.
Temp Labor: If Oracle Services Procurement is implemented, for fixed price and rate
based line types.

• Bid - The quotation or RFQ is for a specific fixed quantity, location, and date.
• Catalog - The quotation or RFQ includes price breaks at different quantity levels.

Forward
=======
• Direct - The default approver is the first person in the preparer's approval path
that has sufficient approval authority.
• Hierarchy - The default approver is the next person in the preparer's approval
path regardless of whether they have approval authority. (Each person in the
approval path must take approval

Workflow Startup Process is the highest-level process in a workflow.
==============================================
The default startup process for the PO Approval workflow is the PO Approval Top
Process. The default startup process for the PO Requisition Approval workflow is
the Main Requisition Approval Process.

For requisitions only, select the Approval Transaction Type. If you have implemented Oracle Approvals Management, this selection associates the transaction type with the requisition document type.

Center-Led Procurement Accounting
==========================
In a centralized procurement environment you may create a purchase order in one operating unit, but require shipment to a different operating unit. Accounts are provided to ensure proper financial reconciliation between the procuring business unit and the receiving business unit using intercompany invoicing. This accounting requires that a transaction flow is defined between the two organizations.

Defining a transaction flow consists of these steps:
1. Define transaction flow
2. Define intermediate nodes
3. Define intercompany relationship

Controlling Purchasing Periods
======================
Use the Control Purchasing Periods window to control the purchasing periods defined in the Accounting Calendar window. You use purchasing periods to create journal entries in your general ledger system. Purchasing lets you create journal entries only for transactions you enter in an open purchasing period.


Expense Charge Account Rules
=======================
When determining the default charge account for a line with a destination type of expense, the account generator may reference the charge account defined on the employee record. If the account generator references the employee record, then the Expense Charge Account Rules enable you to override one or multiple segments of that default account based on the item category.

• Destination type is expense
• Purchase order was not created from a requisition
• Account was not set in preferences
• Account was not successfully derived from project-based rules
• Account was not successfully derived from the item setup

Timeout Feature
==============
The Timeout feature in the approval workflow enables you to specify a period of time after which, if no response has yet come from an approver, a reminder is sent. You can send up to two reminders to an approver using the Timeout feature. You can also specify that after a certain period of time, the document is forwarded automatically to the next approver in the hierarchy.

Starting the Send Notifications for Purchasing Documents Process:
==============================================
The workflow process, Send Notifications for Purchasing Documents, looks for documents that are incomplete, rejected, or in need of reapproval and sends notifications to the appropriate people of the document's status.

Approvals
=========
Approval hierarchies let you automatically route documents for approval. There are two kinds of approval hierarchies: position hierarchy and employee/supervisor relationships.

When you build your hierarchies, always begin with the most senior position and work down. Use your organization charts and predefined special approval paths to facilitate this process

Security Level
===========
Public All system users can access the document
Private Only the document owner and subsequent approvers can access the document
Purchasing Only the document owner, subsequent approvers, and individuals defined as buyers can access the document
Hierarchy Only the document owner, subsequent approvers, and individuals included in the security hierarchy can access the document Within the installation security hierarchy, you can access only those documents that you or
your reporting employees own

Access Level
==========
View Only Accessing employees can only view this document
Modify Accessing employees can view, modify, and freeze this document
Full Accessing employees can view, modify, freeze, close, cancel, and final-close this document

Defining Approval Authorization Rules
============================
An approval group is a set of authorization rules comprised of include/exclude and amount limit criteria for the following Object Types: Document Total, Account Range, Item Range, Item Category Range, and Location. For each position or job, you ultimately associate these approval groups with document types to implement your authorization rules.

Purchasing uses the most restrictive criteria during the authorization check.
A Pre-Approved document does not show up as supply. A Pre-Approved document is
one that meets the following conditions:
• A person with the final authority to approve the document approves it, but then forwards it to someone else for additional approval, thus changing its status to Pre-Approved.
• Your organization uses encumbrance (reserves funds for documents), and the document is authorized for approval but funds have not yet been reserved for it.

To mass forward documents:
======================
1. Select Forward Documents from the menu. Purchasing displays the Find Documents window, where you must identify an approver or document number and operating unit.. In this window enter or select the name of the original approver, or enter the document number, and select OK to display the Forward
Documents window.

Control:
========
When you cancel a purchase order entity, you are unable to receive or pay for cancelled items and services, however, you can pay for all previously received orders.

Final-closed documents are not accessible in the corresponding entry forms, and you cannot perform the following actions against final-closed entities: receive, transfer, inspect, deliver, correct receipt quantities, invoice, return to supplier, or return to receiving.

Freeze your purchase orders and releases to prevent changes or additions while maintaining the ability to receive and match invoices against received shipments. You cannot access frozen documents in the entry forms.

Place documents on hold to unapprove them while preventing printing, receiving, invoicing, and future approval until you remove the hold.

When you firm an order, Master Scheduling/MRP uses the firm date to create a time fence within which it will not suggest new planned purchase orders, cancellations, or reschedule-in actions.

Close, Close for Receiving, Close for Invoicing
Purchasing automatically closes shipments for receiving and invoicing based on controls that you specify in the Purchasing Options window. Once all shipments for a given line are closed, Purchasing automatically closes the line. When all lines for a given header are closed, Purchasing automatically closes the document..

Requisition Import.
===============
Master Scheduling/MRP, Work In Process, Order Management, and Inventory all provide requisition information to the requisition interface table from which Requisition Import creates requisitions.

Inventory Replenishment Requests
========================
Inventory generates replenishment requests automatically using the following methods:
• Min-Max Planning
• Reorder Point Planning
• Subinventory Replenishments for Replenishment Counts
• Kanban Replenishments

Internal Sale order Cycle:
===================
Create IR -> Approve> Create internal order CP> Run order Import CP> Book order> Pick release>ship confirm> Receipt