OPM & Outside Processing: When will they meet??
R12 was a major release for OPM in the sense it merges process inventory with discrete inventory which resulted into streamlining of inventory operations & better integration with Order Management, Purchasing etc. Another change was the introduction of SLA for OPM, which finally hit the nail in coffin for much criticized MAC module. Afterwards, there are lots of enhancements like Multi-batch operations, Make-to-Order Functionality, Landed cost management etc. We now even have validated integration between 3rd party Regulatory document generation partners and OPM Regulatory Management. But, something was still missing. Something that process manufacturer is demanding from Oracle from long time??
The process companies, like other industries, rely heavily on contract manufacturing. When I was doing OPM Implementation for a medium size Oil industry back in 2004, the big hurdle was implementation of outside processing (OSP). It was not available in OPM. We had to develop a workaround by creating dummy warehouse for outside processing, and building few customizations on top of that. Sad to say, the scenario has not changed much as far as OSP is concerned. While certain tax requirements related with contract manufacturing have been covered by Localizations, specifically India Localization, these are more of a Band-Aids & the full solution is still awaited.
Oracle is also reiterating for some time about introducing OSP in OPM. In fact, it is one of their top most priority items, but nothing concrete came out. Finally, in recently concluded Oracle Open world 2011, they have discussed about it & provided their approach. The approach is more or less similar to discrete manufacturing and is provided below:
Company will have service agreement with OSP Vendor. The Raw or Unfinished materials are either delivered directly by RMS (Raw material supplier) to OSP Vendor facility or it can be shipped by the company. OSP Vendor will do the necessary processing and ship back the semi-finished or finished goods to company. Necessary documents like Bill of lading will be generated. There will also be option of Partial receipt & QC inspection. Lot Genealogy will be updated to show the OSP detail. Similarly, Subcontract Material Tracking/ Valuation will be available.
Now, as Oracle has provided their approach, it will not be long when this functionality will be available in OPM. It seems the long awaited wish of Client will finally be fulfilled.