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August 25, 2020

Business specific Credit Checking in Oracle Order Management Cloud

Abstract

Credit Check is one of the most important aspects in 'Order to cash' flow. A diligent credit check on the front end of O2C minimizes issues that could occur as you reach the end of the process. It is an on-going process where customer's credit worthiness should be monitored continuously during the entire fulfillment cycle.

Oracle Cloud Order Management provides Credit check feature to help streamline the ordering process and minimize the financial risk that an organization can assume. Though it provides a robust automated credit check mechanism, the out of the box feature may not be able to address some business specific credit monitoring requirements. This blog highlights some common business requirements in Oracle Cloud Order Management credit check that can't be fulfilled using product's standard functionalities. Then it focuses on some solutioning ideas which can help achieving those requirements.


Credit Check in Oracle Order Management Cloud: Introduction

Oracle Cloud Order Management screens each sales order and verify that the customer has credit available that's sufficient to cover the cost of purchase. This screening can be done on each sales order or on each order line, and can hold order lines that failing credit check. Credit authorization failure sends notification to receivables credit management and creates a case folder which can be accessed by the credit analysts. case folder is a place in Accounts Receivable that includes customer information such as credit limit, credit rating, etc. and the sales order. Credit Analyst can approve or decline the authorization request for the order transaction based on financial risk assessment of customer profile. An approval or increasing credit limit can release the order from hold and lines can be progress forward. Whereas No action or decline will retain the order hold.

While the Order is on credit hold or if the hold is released manually in OM without authorization approval, processing of revisions is not allowed. Submitting any revision sends a notification to the Receivables Credit Management for pending authorization and puts the sales order on 'Credit Review Pending' status. At this point of time, either available credit needs to exceed open authorization or credit analyst needs to approved that to release order from hold.

Std. Credit Check Flow.jpg

Use cases and Challenges with OM Cloud Standard feature

Fusion Cloud out of the Box feature needs Credit Management functions enabled to validate credit worthiness of customer for a sales order transaction during the entire Order fulfillment cycle. This may not be able to cater the business requirements for some organizations having different process for credit authorization. Some of the common challenges with Cloud credit check may arise as:

  • Credit Management module can't be used due to licensing or any other reason. That means the credit hold should be managed within Order Management.
  • Credit Hold should stop only a specific set of fulfillment activities but not all. Some business processes want to prevent only Picking, Shipping and Invoicing tasks with credit hold. Material planning tasks such as scheduling, reservation, supply order creation should be allowed to support a long fulfillment cycle. Stopping initial activities can delay the fulfillment process.
  • Credit Hold should not stop revisions while the order has failed credit check. Standard functionality needs credit Management if authorization fails at order revision resulting in a deadlock situation. That can impact reporting, planning or procurement.
  • Credit re-authorization should not block revisions after the hold is released once. In case re-authorization fails here, the order goes on deadlock and needs Credit Management module.
  • Once the credit hold is released, Credit check and hold process should re-trigger only if order total changes.
  • Credit Hold should be applied at the order header level but not at line level. Organizations having orders with large number of lines may find it difficult to validate holds on lines and not like to release hold selecting all the lines across orders together. Instead, it would be easier to apply the hold at the header level.
  • Sales Order has long fulfillment cycle where credit check needs to be re-triggered on real-time before arranging shipments to check if credit authorization has expired. This process should work on revisions also without using credit management module.

 

Solution for business specific credit checking

The Out of the Box Credit Check functionality in OM Cloud can't be customized to address the business challenges mentioned above. Following options can be considered to overcome the limitations discussed and adopt business specific credit checking:

·         Verify Credit authorization during fulfillment:

When: This approach can be considered if

o   Picking and shipping tasks have to be prevented for failed credit authorization.
o   Screening needs to be done at the line level.
o   Credit authorization has expired for a pre-credit checked order.
o   Revisions should be made while line has failed credit check.
o   Activities such as scheduling, reservation, supply creation should be always allowed.
o   Use of Receivables Credit Management feature is not scope.

How: Turn Off Out of Box Credit Checking in OM. Add a credit check task in the orchestration process before shipping task.

Outcome: When orders are fulfilled with this process, credit check is initiated before picking. Lines failing authorization are shown with error and doesn't move further to prevent picking/shipping activities.

Verify Credit authorization during fulfillment.jpg

·         Apply CC Hold using webservice at order booking:

When: Choose this option to cater following business requirements together:

o   Hold only a specific set of activities.
o   Allow order revisions with hold.
o   Re-apply the hold only if order total change fails re-authorization on revision.
o   Apply the hold on header level.
o   Use of Receivables Credit Management feature is not in scope.
How:
1.       Turn Off Out of Box Credit Checking in OM.
2.       Define a custom credit hold that can temporarily stop only a specific task like shipping and invoicing.
3.       Use extension for credit checking:
a.       If credit hold is already present, then don't do anything.
b.       If credit hold was applied earlier but released, then check if the current order total is same as previous version's total. If not same then check credit.
c.       If credit hold wasn't applied earlier, then check credit worthiness.
d.       Check Credit worthiness calling webservice in the same extension.

 4.       If authorization fails, then call another webservice to apply custom credit hold.

Outcome: When the order is submitted first time, credit authorization is verified using custom process and order is put on hold for failure cases. Pre-shipment activities like scheduling, reservation, supply creation can be done while the order is on hold. Shipping activities are allowed only when the hold is released. Revisions can be made irrespective of holds. Once released, Hold is re-applied only when the order total changes during a future revision.

Apply CC Hold using webservice at order booking.jpg

·         Co-existence of std. and custom hold functionality:

When: Choose this approach to cater the business requirements mentioned in previous option. Some additional consideration points are:

o   Customization is not in scope.
o   Number of revisions that can re-trigger credit check again are usually less.

How: Keep OOB CC feature ON in OM. Include a logic to set Pre-Check flag to Yes on revisions in the previous custom approach.

Outcome: If authorization fails during order booking, std. credit check functionality is fired. On revisions, only custom functionality is executed which works as discussed in previous approach.

·         Verify Credit availability only on booking and ignore on revisions:

When: This solution approach can be considered when:

o   Credit hold should prevent all orchestration activities.
o   Revision creation is required without re-authorization.
o   Use of Receivables Credit Management feature is not in scope.
How: Keep OOB CC feature ON in OM. Include a logic to set Pre-Check flag to Yes on revisions in the previous custom approach.

Outcome: If authorization fails during order booking, std. credit check functionality is fired. On revisions, only custom functionality is executed which works as discussed in previous approach.

·         Screen Orders during both booking and fulfillment:

When: This approach can be implemented if

o   Sales Order has long fulfillment cycle where credit check needs to be re-triggered before arranging shipments to check if credit authorization has expired.
o   Credit checking is needed at the order booking also for initial screening.
o   Revisions should be allowed while line has failed credit check.
o   Use of Receivables Credit Management feature is not in scope.
o   Finance business doesn't want to increase the credit limit for the customer.
o   An external integrating application such as SOA or OIC can be used.
How: Keep Std. Credit check feature ON in OM if you want to apply std. credit check only at order booking but not after that. Else turn it OFF when you don't want to apply std. credit check hold at the booking. Add a custom credit check task in the orchestration process before shipping task that should call credit check webservice though a third party external application. External system can update the line status per authorization result and can apply a hold also optionally if credit check fails.

Outcome: When an order is submitted, credit check fail applies a hold on all lines. After the hold is released, the process is re-initiated at the custom task before picking. Lines failing authorization are shown with a credit check failed status and doesn't move further to prevent picking/shipping activities. If hold is configured to be called from integration application, then it applies on credit check failed lines. If authorization passes for the lines, then they move further for shipping activity. If hold is called at revision submit with extension, then it gets applied of credit check failure. Else, the re-authorization attempt is bypassed and full control is passed to credit check step in orchestration.

 

Conclusion and discussion

Applying a custom hold for credit check using extensions and OIC/SOA gives the flexibility to modify the validation rules and criteria for each business that is not possible with cloud seeded functionality. This enables them to take right and decisions in time without compromising on their existing business processes and resources. This custom solution may fall into exceptions occasionally but is flexible to handle that through manual action.

The solution presented in this paper combines all business use cases where an order hold is needs to be applied. If the actual requirement doesn't have all those cases, then part of the solution can be modified to customize as per the need. More business validations can be included as applicable. Though the solution talks about header level custom hold but it can be done at line level also doing similar arrangements for lines instead of header.

 

References

Oracle Cloud guide and books

1.       https://docs.oracle.com/en/cloud/saas/supply-chain-management/20b/faiom/features.html#FAIOM2572237

2.       https://docs.oracle.com/en/cloud/saas/supply-chain-management/20b/fauom/index.html

3.       https://docs.oracle.com/en/cloud/saas/financials/20b/oeswf/business-object-services.html#receivablescreditcheckingservice-d13711e8208

Oracle Support Notes

1.       https://support.oracle.com/epmos/faces/DocumentDisplay?_afrLoop=461260626530233&id=2064264.1&displayIndex=1&_afrWindowMode=0&_adf.ctrl-state=4x71tupf8_78#FIX

Oracle Customer Connect

1.       https://cloudcustomerconnect.oracle.com/resources/4cb7a01b8c/search/posts?find=&daysBack=0&userName=&tagName=Order+Management&type=

August 24, 2020

Well Begun is Half Done -- Select the right ERP package

Organizations world over have the constant urge to graduate from managing their business processes using multiple / disparate systems or with no system at all to ERP package-based business systems to reap benefits accruing out of better standardization, streamlined processes, improved productivity and controls. The need of the hour is ERP Package Evaluation that culminates in the right choice of ERP package for the organization

What is ERP Package Evaluation? It is a process that typically involves the following stages

·         Evaluation of available ERP packages on different parameters

o   Will it help meet the immediate, medium term and long-term business and IT objectives of the organization?

·         Make the right choice of ERP package

The next obvious question is Why carry out the ERP Package Evaluation exercise? Reasons are many, following is a partial list

  • ·         There are numerous ERP packages available in the market and there is a need to make an informed choice
  • ·         Constantly changing/evolving technologies, business/IT paradigms
  • ·         Need to align information technology solution choice with business vision
  • ·         Enable better preparedness to negotiate with package vendors
  • ·         Complexity of integrating disparate systems - post consolidation / merger / acquisition

The following methodology can be used for the ERP package evaluation process

Understanding Business Landscape & Requirements

This is the first step and involves internalizing the organization's vision and mission, getting a firm grip over the organization's company-level and industry-level critical success factors, key value drivers, current and future economic climate, important issues & considerations and competitive landscape. This should be followed by discussions with the organization's top management and A-team to get several key questions answered. A detailed questionnaire could prove useful. Following is a partial set of questions. The objective of the discovery should be to get a clear list of expectations from the ERP package-based transformation

  • ·         Organization Structure, operation locations, departments and functions in each location
  • ·         Details of product and service lines, R&D effort & spend
  • ·         Turnover information - overall and product/service line wise breakup
  • ·         Business processes/ functions proposed to be mapped to the ERP package
  • ·         List of mission critical processes
  • ·         Growth expectations (turnover, employees, geographies, product/ service lines)
  • ·         Master data elements and expected data volumes
  • ·         Reporting requirements (statutory, compliance, operational)
  • ·         Detailed understanding of existing IT system landscape
  • ·         Details of systems in-place, functionalities supported, process flows

o   Server specifications and locations, networking landscape

o   Interaction between current systems, details of systems approaching sunset

o   Security features around systems/ infrastructure

o   Disaster Recovery/ Business Continuity plans

Developing Business Scenarios

The objective of this step is to arrive at the list of business scenarios (based on information gathered in the previous step) whose fitment will become a key success factor for the ERP package in the fray. Failure of the package to address the identified scenarios could result in disqualification. A structured approach is necessary to develop the scenarios, with scenario description, data input, expected output, actual output, data considerations/variations, user interface requirements. Scenarios possible in the future could also be conceptualized. Process flows of the various identified scenarios need to be documented along with known variations/ twists

The fitment assessment could be based on extent of fitment, available options to address gaps. To assess satisfaction levels, the dimensions could be overall comfort level, UI effectiveness / ease of navigation / look & feel, ease of data manipulation, control and security

Tailor Evaluation Criteria & Scoring Matrix

With business scenarios clearly listed, the next step in the package evaluation process is to list the evaluation criteria and scoring matrix

The evaluation framework should comprise the following

  • ·         Criteria category (e.g. technical assessment)
  • ·         Detailed criteria per category
  • ·         Weightage for each criterion/ category
  • ·         Scoring key for each criterion
  • ·         Method to arrive at final composite score

Decision on weightages for identified criterion is critical. Following is a sample

  • ·         Product Functionality: 40-45%
  • ·         Technical Evaluation: 20-25%
  • ·         Costs Involved: 20%
  • ·         Vendor Credentials/expertise: 15%

For the criteria category of technical assessment, the following criteria could be applicable

Criteria

Details

Platform Support

 

         Operating System

         Database

         Web Server

         Application Server

         Portal

Architecture

 

         Application architecture

         Architecture characteristics (openness, accessibility, configurability, integrability)

         Development environment

Interface and Integration Support

 

         Out of the box integration

         Built-in web services integration

         Data loading and migration

         Process oriented integration

Reporting Support

 

         Facility for end users to create and run ad-hoc queries

         Create/customize web-based point & click reports

Security Features

 

         HTTPS and SSL support for secure content delivery to browser

         Authentication and authorization security (including single sign-on)

         Organizational security (role, dept etc.)

         Data Security features

         Audit Trail feature

Support for DW and BI

 

         Nature of multi-dimensional reporting

         Integration with external data warehouse

Flexibility

 

         Flexibility in deployment options (application and database servers on same physical box versus multiple boxes, support for distributed databases etc.)

         Flexibility in customization

         Scalability

Messaging

 

         Integration with standard/ widely used email applications

         Integration with standard fax servers

Maintenance, Support & Upgrade

 

         Diagnostic and technical support

         Remote Support

         Patch Management

         Upgrade Management

         Performance testing

         Data Archiving

Usability

 

         Intuitive navigation

         Configurability

         Task oriented dashboards

         Web client enablement


Recommendation on package selection

After careful analysis and study of the capabilities of the package and its score on identified criteria/aspects, a recommendation is arrived at


The following aspects are considered before arriving at the recommendation

Evaluation Framework Dimensions

       Score from Functionality Assessment

       Score from Technology Assessment

Other Key Considerations

       Market's assessment of the package (perception in the market)

       Ease of Implementation, Operations & Maintenance

       Infrastructure hosting and maintenance

       TCO

o   Licensing cost

o   Hardware cost

o   Consulting, Implementation & training costs

o   Recurring annual costs


Infosys Experience

Infosys has vast experience in carrying out ERP package evaluation exercises for organizations in various industries across the globe. Following are key takeaways based on experience

       Stakeholder Buy-in à It is vital to seek and obtain the blessings of all key organizational stakeholders

       Clarity in evaluation approach à It is advisable to develop the criteria before looking at the application

       Go past the hype à The key is to focus on the effectiveness of the business scenarios & the scoring model

       Focus on essential features à Prudently differentiating the Must have's and the Good-to-have's

       The package vendor's financial viability needs to be factored in

       It will be important to work with realistic projections - on customizations, training, ongoing support etc.


August 14, 2020

OTM based Digital Logistics Control Tower

Control Tower is the buzz word these days. Everyone wants to know what it is and how can they enable it for their organization. Let us explore what is a control tower and how can it be enabled by using the Infosys "Digital Logistics Control Tower" using Oracle Transportation Management (OTM).

What is a Logistics Control Tower?

It is a central hub which has the visibility of the entire transportation network across factories, distribution centers, warehouses, hubs, regions, countries and transport modes. It receives data from all systems to give a consolidated view of the network.

With this visibility, the control tower can detect or predict an anomaly so that appropriate actions can be taken.

It is not necessary that you have a control tower which handles all legs of the supply chain and work on an end-to-end view. It could be restricted to primary, secondary or even part of the movement. It is setup for the networks which gives you the maximum benefit rather than create it as a one-fit-all model.

How does it differ from a normal transportation management model?

Biggest difference is that a control tower is not really a tower or a physical location unlike the normal transportation model where the processes are managed from a physical warehouse, distribution center etc. and physically connected to the transport. Control tower on the contrary is not connected to just 1 or some locations but has data connectivity with all locations.

In the usual model of transportation, you do track your deliveries, you do the monitoring of your logistics and perform the actual execution of the load by the virtue of the pickup and delivery.

But all your reporting and strategizing is at a local level. The visibility and operations monitoring looks at local level to optimize and does not look at other facilities.

Control tower on the other hand will plan, monitor, track and take informed decisions based on the insights it gets from all data provided by the various stakeholders including location specific transport teams, logistics service providers, customers etc.

Since it gets the feed from local, regional & central operations, it has the visibility to monitor and take decisions at a holistic level. The strategizing which comes at a later point also looks at the most optimum operations considering all facilities and not just 1 facility.

How do you know if you need a control tower?

If an organization wants a control tower, it does not mean that they really need it. Some of the points which you should consider:

·         Does the transportation network cover a large geography with large number of logistics centers, countries or even continents?

·         Is your transportation outsourced with multiple carriers transporting the goods?

·         Do you have multiple systems from where you can get the full view (TMS, WMS, OMS etc.)?

·         Are you dependent on the external parties to provide the visibility?

·         Do you have issues in service compliance monitoring with deliveries getting lost / damaged or delayed frequently?

If the answer to the above questions is yes, then control tower might be one of the possible solutions you could look at.

Infosys Digital Logistics Control Tower

We at Infosys have explored all such problems faced by our customers and came up with a Digital Logistics Control Tower using Oracle Transportation Management (OTM Cloud and On-prem) and Oracle Analytics Cloud (OAC). It receives data from IoT devices and connects to a chatbot for automated conversation with the drivers and follow ups. All systems integrating seamlessly to give a "One Control Tower" experience.

The "Infosys Digital Logistics Control Tower" contains both Analytical and Operational control tower components.

Control Tower_1.png

                                                    Figure 1: Infosys Digital Logistics Control Tower

Operational Tower:

The operational tower has 2 components: a) Shipment Operations and b) Financial Operations

a)       Shipment Operations:

·         Helps the user on the day to day tracking operations

·         Connects to IoT for vehicle status.

·         Provides the visibility of the truck and the exact location on a map.

·         Highlights is a truck is stuck a location for a long time.

·         Uses ML algorithms to predict the estimated time of arrival based on current status and historical data. This is to determine possible delays and to take decision on when to start the trucks or change trucks enroute.

·         Enables users to connect take decisions based on the insights provided by the systems.

·         Enables to contact stakeholders either via OTM or via chatbot.

b)      Financial Operations:

·         Tracks the status of invoices whether self-billing invoices or carrier generated invoices.

·         Provides details on aging of invoices based on payment terms with carriers.

·         Provides mechanisms to follow up with the relevant stakeholders.

Analytical Tower:

This gives the power to take strategic decisions based on the KPIs which the control tower provides. Some of the key information provided by the tower are:

·         Carrier performance in terms of on-time delivery, additional charges, tender acceptance.

·         Turn-around time at locations to find out the key areas of bottleneck.

·         The highest freight cost consuming lanes.

·         Cost per Km, Kgs and CBM to analyze and renegotiate rate structures with the carriers.

Many more KPIs are available which can help take strategic decisions and make the transportation network of the future.

The key benefits of the Logistics Control Tower as evident from the above points are:

·         Increase in on-time delivery.

·         Streamlined process with tracking of each steps and reduction in bottlenecks.

·         Increased utilization of assets with better visibility of the trucks.

·         Better collaboration with carriers, customer, vendors etc.

·         Ultimately reduction in freight cost based on the operations and analytics combined.

How has it benefited Our Customers?

Many of our customer are using control towers for their daily operations and KPI management. Few examples are below:

One of our customer has created multiple control towers at strategic locations which helps in planning and tracking of orders globally. The control tower has helped in streamlining the regular planning and visibility activities which has increased the on-time performance and reduction in delays.

Another of our customer has created a control tower for global operations which looks at compliance from all stakeholders and financial tracking. This has increased the visibility of the shipments and helped informing destinations to take proactive actions. It has also reduced the errors in payment and plugging the holes in the freight costs.

These are just few examples for your reference.

The Digital Logistics Control Tower can help the organization to focus on adding value by providing visibility to the blind spots and take the transportation processes to the next generation using the best the technology can provide. The decision to step up to the next level is yours.


Reviewed by: Mohan Subramanian

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