Lockheed Martin
Joint Symposium 2001
Supply Chain Management
Managing Inventory, Orders, and Supply Chains with Oracle Applications 11i
Jeffrey S. Poulin
System Architect
LM-Systems Integration-Owego
(607)751-6899
Jeffrey.Poulin@lmco.com
David DuBois
Principal Information Eng.
LM-SI-Owego
(607)751-2099
David.DuBois@lmco.com
Fulton Gee
Advisory SW Engineer
LM-SI-Owego
(607)751-4194
Fulton.Gee@lmco.com
Robert Pratt
Staff SW Engineer
LM-SI-Owego
(607)751-4940
Robert.A.Pratt@lmco.com
Pat Driscoll
Advisory SW Engineer
LMSI-Owego
(607)751-6971
Pat.Driscoll@lmco.com
Dan Schmidt
Associate SW Engineer
LM-SI-Owego
(607)751-6916
Daniel.C.Schmidt@lmco.com
Wei Zhan
Research Engineer
LM-SI-Owego
(607)751-4109
Wei.Zhan@lmco.com
Abstract
The Supply Chain Management (SCM) team at LMSI-Owego has experience fielding and implementing the Oracle 11i
suite of warehouse and SCM applications. This paper presents the experience and knowledge that they developed on past
engagements, as research, and for a commercial contract with a large manufacturing client.
Keywords
Supply Chain Management, Oracle Applications 11i, Warehouse Management, Inventory, Orders, Advanced Planning,
Procurement, Enterprise Resource Planning (ERP)
1.
Introduction
The SCM team at LM Systems Integration-Owego has the mission of performing on SCM and ERP contracts with both
Department of Defense (DoD) and commercial customers. The team has experience fielding Oracle Application 11i
modules and has recently begun a large implementation for a commercial client that will involve finance, inventory, order
management, eProcurement, workflow, interfaces with Radio-Frequency computers and scanning devices, and warehouse
operations. This paper shares the hands-on experience that the SCM team has gained by presenting:


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An overview of the LMSI-Owego customers that employ or will potentially employ aspects of the Oracle
Applications 11i suite
The components of Oracle Applications 11i used in a typical SCM engagement
Changes to the typical Warehouse operation envisioned with the upcoming Oracle Warehouse Management
System (WMS), due for General Availability in June 2001
An overview of the manufacturing environment at a typical commercial customer site
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Joint Symposium 2001


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2.
How the team modeled and implemented warehouse operations and workflow
Changes to the demonstration capable with hand-held and vehicle mounted RF scanners and computers
Lessons learned.
Business Opportunities
LMSI-Owego has implemented Oracle Applications for several clients, to include the US General Services Agency, the
US DoD, and the US Air Force. During the past two years, LMSI-Owego has identified several other clients that have
business problems that it can potentially address through the use of an integrated SCM package such as Oracle
Applications 11i. These programs include:



3.
The USG Corporation, a major manufacturer of gypsum wallboard, ceiling products, and wallboard joint
compound. USG seeks increased efficiency in managing warehouse operations and processing orders from
customers.
General Motors, an automobile manufacturer and one of the largest corporations in the world. GM seeks
increased flexibility in order management, item configuration, data warehousing, and supply chain management.
US Department of Defense, where LMSI-Owego has deployed Oracle human resource and related modules, seeks
system sustainment and product upgrades of the current versions of Oracle Applications.
Overview of Oracle Applications 11i for SCM
The Oracle Application Suite includes over 50 tightly integrated modules built on top of the extremely successful Oracle
Financials framework. The Oracle eBusiness suite includes every conceivable function for managing and planning a
supply chain from vendors to Customers. Oracle has, in fact, provided everything that they think you need and packaged it
for fairly rapid configuration and deployment.
One drawback to this approach, however, comes from not necessarily having the “best of breed” for every function in the
suite. For example, other ERP or SCM software vendors may have (or at least currently have) better implementations of
individual functions. We have found this particularly true of the newer Oracle Modules (e.g., transportation, advanced
planning, order management), where the implementations clearly lack the function and robustness available elsewhere.
Oracle does quickly work to resolve these shortcomings. More importantly, we have found that the advantages of a
single-supplier and integrated suite almost always outweigh the marginal gains, costs, and risks associated with attempting
to meld products from disparate sources.
For our current engagement, we have obtained almost the entire suite of 11i applications. We have actually configured
and have running in our SCM lab the following modules:

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Financials, for chart of accounts, cost accounting
Inventory Management, for receiving, quality control, put-away, quantities on-hand
Purchasing, for supplier data, blanket purchase orders, re-supply requisitions
Work in Process (WIP), for internal movement of raw materials, raw material inventory updates
Order Management, for customer data, purchase orders, and shipping
Workflow, for implementing business processes and flows
Tutor, for documentation.
For our future engagements, we will configure the new Warehouse Management System (WMS), due out by Oracle in
June 2001. LMSI-Owego has participated in the Customer Advisory Boards and Beta programs for this product, which
repackages and adds functionality to the current warehouse modules. Additional function includes better accounting rules,
increased pre-packaged business rules (e.g., for picking, releasing, and storing), and a pre-integrated integration with
software to drive Radio Frequency devices such as scanners and bar code printers. LMSI-Owego intends to make this
module a leading solution candidate for large manufacturing and warehousing operations.
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4.
Example Manufacturing and Warehousing Environment
To make a realistic demonstration system, we decided to model the site of one of our commercial customers. In particular,
we selected the USG Corporation because of their interest in having LMSI-Owego implement a warehousing solution for
them using the Oracle WMS product. The SCM team visited the USG manufacturing site in East Chicago, Indiana, to
study the operation, gather sample data, and see how the Oracle SCM solution would fit into a real operation.
Figure 1 represents an abstract drawing of the USG East Chicago site, which in reality occupies about 1 square mile of
buildings, storage facilities, and assembly lines. The site manufactures two primary products. First, it makes gypsum
wallboard in a wide variety of sizes. This primarily requires paper and gypsum as raw materials, which USG receives at a
loading dock in the upper right of the diagram. The board manufacturing line runs ¼ mile from right to left across the top
of the diagram. When complete, USG stores and ships the wallboard from the “Board Finished Goods” area.
Figure 1- Layout of the Customer Warehouse
Second, USG manufactures Joint Compound at the East Chicago site. This all takes place in the box located in the lower
right of the diagram. The joint manufacturing area includes storage of raw materials (primarily plastic pails and joint mix),
an assembly line, storage for pallets of pales of manufactured joint compound, and a shipping area.
5.
The Demonstration System
The following describes our implementation of the Customer environment using the appropriate Oracle modules.
5.2.
The Customer’s Point of View
Having visited the factory that we would model, we had a pretty good understanding of the Customer’s point of view. As
shown in Figure 2, the demonstration system would focus on and revolve around the operations at the East Chicago site.
While this site has many suppliers, we would restrict our attention to one supplier of raw paper for the board
manufacturing line (the USG North Kansas City site), one supplier of plastic pails (the Century Industries Corporation),
and one supplier of plastic liners for joint mix (Advanced Packaging Technologies).
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Figure 2- Context of the Demonstration System
Within the East Chicago site we intended to model only a small portion of the manufacturing process for wallboard and
joint compound because we wanted to emphasize inventory and not manufacturing operations. So the Work in Process
steps only included the start and take-off points on the manufacturing lines. On the back-end we modeled the
replenishment of raw materials as the manufacturing process consumed them and the ordering of finished goods by USG
Customers.
5.3.
Setup of the Oracle Framework
Because of the tight integration of the Oracle Application suite, you cannot blindly select individual modules for
implementation. For example, for the SCM modules to run properly you must install and configure a substantial amount
of the financials framework, such as sets of books, accounting codes, and fiscal rules and procedures. If the client already
uses Oracle Financials, configuration of a SCM solution will become much easier. However, if a client does not have or
does not wish to use Oracle Financials, they may consider this framework a detriment to using the Oracle solution. While
Oracle provides interfaces to accommodate co-existence with other financial packages, the client must still set up and
maintain the interface as well as, in effect, two copies of the same financial information.
For the purposes of our demonstration, we set up a representative financial framework for the USG East Chicago plant on
top of the framework that comes with the “canned” demonstration provided by Oracle. This allowed us to quickly get to
the functions of interest to our Customer, namely inventory and warehouse management. By using Customer data we also
served the dual purpose of learning about Customer needs while at the same time creating a systems that contained data
meaningful to the Customer.
A couple of set-up steps require further explanation. Oracle provides “Flex fields” for the purpose of configuring the
product to a Customer. Oracle has two kinds of Flex fields:
1.
“Key Flex fields,” upon which Oracle heavily depends. You must set these up before loading Customer data and
once you set them up, you may not find it cost-effective to change them. Figure 3 shows the Accounting Key Flex
field, which consists of 5 segments representing an USG entity, department, account, location, and one for future
use. Nearly every Oracle module references these key Flex fields. Because of their critical nature, you must
make extreme measures when setting these up to consider future as well as current requirements.
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2.
“Descriptive Flex fields,” which Oracle provides for Customer use. You can use these to store Customer specific
information and, because Oracle does not use them for any Oracle-specific processing, you may modify these at
any time with little effort.
Figure 3- Setting up the Accounting "Key Flex field"
To grant and restrict user access to functions, Oracle uses “responsibilities,” or roles. For the purposes of the
demonstration, we established user-ids for fictional employees and assigned them to roles, such as dockworker, warehouse
foreman, and production manager. These require straightforward setup by the system administrator but because they rely
on the Oracle Human Resource functions, they serve as another example of the tight integration between the applications
and the framework upon which they run. A production implementation must involve a very detailed analysis of the
financials and other framework set up steps for the Customer.
6.
Functions Implemented
Once we had the Oracle framework in place for the demonstration system, we could proceed by identifying the functions
that we would implement for a representative Customer. We selected seven scenarios, along with a demonstration of the
business benefits of the results, as follows [1]:
1.
2.
3.
4.
7.
Receipt of purchased materials, or raw materials, from our three representative suppliers
Consumption of raw materials and put away of finished joint compound
Consumption of raw materials and put away of finished wallboard
Replenishment of raw materials at the Work in Process staging areas at the start of the manufacturing lines and
the automatic re-ordering of raw materials from suppliers based on blanket purchase agreements
Inventory management by physical inventory and cycle counting
Use of Workflow to control the introduction of new products to the wallboard product line, as well as the
integration of Tutor documentation into the on-line help and on-line user guides for the affected employees
Picking, packing, and shipping a Customer order of finished goods, as well as:

Demonstration of the reporting capabilities and visibility available as a result of using the 11i applications.
5.
6.
Due to space limitations, this paper will show only two of these scenarios.
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6.2.
Scenario #1- Receipt and Inspection of Raw Materials
This takes place at two places in the warehouse; at the receiving docks for the wallboard and for the joint production lines.
The process involves the arrival of a truck, train, or barge from a raw material supplier, the inspection of the paperwork
accompanying the shipment (usually a packing slip), inspection of the cargo to verify quantity, types, and quality,
recording of the receipt and inspection, and finally the put-away of the raw material into the appropriate location in the
warehouse. These steps can take place at various levels of automation, and with the advent of the Oracle WMS module,
will take place largely supported by hand-held RF scanners.
As shown in Figure 4, the dock worker verifies receipt of an expected shipment of 500 poly liners from the Advanced
Packaging supplier that have just arrived on a truck from the “4 Star” transportation company. Oracle populates this
screen upon entry of the packing slip number, or with WMS, upon scanning of the packing slip (the handheld device has a
compressed version of this screen).
Figure 4- Receipt of Raw Materials
Figure 5 shows that despite the order for 500 poly liners, only 200 arrived, of which 50 suffered a component defect. This
information immediately gets populated throughout the Oracle suite, notifying quality control of the problem, procurement
so they do not pay for the damaged items, and the manufacturing foreman of the shortage of raw materials. This
immediate and accurate availability of information can significantly improve the efficiency of the warehouse operation,
especially with respect to having optimal supplies on hand, managing payments to suppliers, and ensuring that the
assembly line maintains adequate stock.
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Figure 5- Recording the Inspection Results
6.3.
Scenario #6- Approval Process for New Products
We chose the next scenario as a good example of how to show how Oracle implements business processes using
Workflow, documentation via Tutor, and the corresponding generation of alerts and notifications. As shown in Figure 6,
nearly all the Oracle SCM modules support Oracle Workflow, which allows you to graphically depict a business process
and then implement the process directly in the appropriate Oracle module. This particular business process, for a product
or requisition approval, comes from the extensive library of pre-packaged workflows in the Oracle suite. After drawing
the workflow and obtaining approval from the Customer, Oracle will handle the processing of the request by forwarding
notifications and reminders to the persons identified in the diagram.
Figure 6- An Approval Process Documented in Oracle Workflow
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In our example, we have documented a process to approve a new wallboard product in the editor provided by Oracle
Tutor. As shown in Figure 7, this process simply requires three people; a controller to make the request, a production
manager to review and approve the request, and a product manager to give final approval. Tutor then automatically
generates a flowchart of the process and makes the documentation available to all parties both as part of their on-line help
and as part of their on-line “desk manuals” (user guides).
Figure 7- Documentation in Oracle Tutor
The benefits of the Workflow include faster and more efficient implementation of Customer-specific business rules
because you have integrated the definitions right into the solution. The benefits of using Tutor to manage one source for
all customer documentation seem apparent to anyone who has tried to keep many forms of documentation for a large
product up-to-date.
7.
Conclusion and Lessons Learned
LM Systems Integration-Owego has established a strong Center of Competence for implementation of SCM solutions
using Oracle Applications 11i. This team has found that the Oracle Application Suite requires a substantial setup effort,
especially with respect to the underlying framework of financials and human resource data. Furthermore, the integrator
must have a complete and intimate understanding of the Customer environment to correctly start an Oracle implementation
or else risk costly rework. To help in these engagements, our team includes a staff, laboratory, and solution partners with
experience configuring and fielding SCM solutions.
8.
References
[1] DuBois, David, “Demonstration of Oracle’s Standard Functionality for USG,” 20 April 2001.
9.
Acknowledgments
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Joint Symposium 2001
The SCM team would like to thank the USG Corporation for their cooperation in making a complete and meaningful
demonstration. In particular, we gratefully acknowledge Robert Juhl and Bob Van Puyenbroek for providing sample data
and their insights into manufacturing operations so that we could better reflect these in our system.
The team would also like to thank our Implementation Partners, Kelley Moore and Matthew Clancy, of Savantage, for
their invaluable contributions to the team and to our project.
10.
Author Biography
The authors serve as the Supply Chain Management team of Oracle Applications 11i experts at Lockheed Martin Systems
Integration, Owego, NY. Contact them at Jeffrey.Poulin@lmco.com.
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