In Oracle
Fusion, there are two primary types of organizations when it comes to
inventory and item management: the Item Organization and the Inventory
Organization. Understanding the distinction between them is key to ensuring
clean data governance and efficient operations.
The Item
Organization, also referred to as the Item Master, serves as the central
repository for all item definitions within an enterprise. It does not
participate in any inventory transactions—such as receiving, shipping, or
internal stock transfers.
In simple
terms, you can think of the Item Organization as a "repository"
for all your items. It contains the core item attributes—such as item name,
description, units of measure, form, fit, function, etc.—and acts as a reference
point for validation and consistency across the system. Any item created in
the Item Organization becomes available for assignment to one or more Inventory
Organizations.
· It is a ‘Logical Organization’ used
to create and maintain the item masters
· Centralized item repository with
control of the item attributes
· Item
Organization is not linked with any specific Business Unit / Legal
Entity / Ledger
· Hence a common Item Organization can be created and used across multiple BUs to meet the business requirements
Setup
Task: Manage Item
Organizations
· Usage = Item management
2. Inventory Organizations
Inventory
Organizations, on
the other hand, are the transactional entities where actual physical
movement of inventory takes place. These are the locations where you manage
day-to-day activities like receiving, storing, picking, packing, and
shipping items. An enterprise can have multiple Inventory Orgs
representing different warehouses, plants, or storage facilities across
regions.
Once an item
is defined in the Item Master Organization, it can be assigned to any
relevant Inventory Organization. This avoids the need to redefine or
recreate the item repeatedly across different orgs. Instead, item definitions
are centralized and controlled at the Master level, while
inventory-specific configurations—like subinventories, stock locators, and
costing—are managed at the Inventory Org level.
· Each
warehouse facility including 3PL warehouses, distribution centers, and manufacturing
plants will be defined as an inventory organization
· The
Inventory Org will be linked with the specific Business Unit / Legal Entity /
Ledger
Setup
Task: Manage
Inventory Organizations
· Usage = Inventory management
Inventory Org Naming Conventions:
•
In general, the Inventory Org Code should
be-
ü Easy
for the transformation logic while doing the data conversion from the legacy
system
ü Scalable
for future expansion of the new inventory organizations
ü Easily
understandable logic for the business users while they select the inventory
organizations from the LOV in different UIs
Key Technical Considerations:
a)
Organization Name – Max 240
characters
b)
Organization Code – Max 18 characters
•
Uppercase letters, numbers, or a
combination of both
•
No spaces allowed
in Org Code
•
We can't change the inventory
organization code. It is un-editable once it is saved.
• Inventory organization codes are used in multiple setups, so changing the code could have many unanticipated repercussions.
• The alternative approach is to create a new organization with the desired code and identical setup and then disable the unwanted code.
3. Item Master Organization
The item
master organization is linked with the respective inventory org in the
Organization Parameters.
Here, system
allows below organizations to be used as item master organization in the
configuration-
1.
Same
Inventory Organization
2.
Item
Organizations
3.
Any
inventory organization that is not linked with any PCBU
The recommended best practice is to use the Item Organization as an Item Master Organization and to maintain only one such item organization across the enterprise.
So, the
sequence of setup would be-
1.
Define
the Item Organization
2.
Define
the Inventory Organization
3. Establish the relation between these two orgs by using Item Organization as an Item Master Organization in the Parameters of the Inventory Organization.
Benefits
of This Structure:
- Data
Consistency:
Ensures all Inventory Orgs reference a single source of truth for item
definitions.
- Efficiency: Reduces redundancy by
eliminating the need to recreate items in every org.
- Control and Governance: Centralized maintenance of item data supports cleaner audits and better compliance.
Key Functionalities and Recommendations:
· You must create an item organization
before you can create items in Oracle Product Hub.
- The
recommended best practice is to define the Master Organization
as an Item Organization, and to maintain only one such
organization across the enterprise - Maintain a single, centralized
item master.
· This central item organization serves
as the authoritative source of truth for all item definitions.
· The Item Master Organization is
primarily intended for item setup and maintenance, rather than for inventory
transactions like receiving, shipping, or on-hand movements.
· This streamlined setup reduces system
complexity, enhances data consistency across child inventory organizations, and
simplifies item lifecycle governance.
· By keeping the Master Organization
focused solely on item definition and management, enterprises can ensure greater
control, standardization, and scalability across their inventory network.
· While it is technically permissible
to define an Inventory Organization as a Master Organization in Oracle
Fusion, this approach is not recommended as a best practice.
· The system does not impose
restrictions on using the same organization for both item definition and
inventory transactions, and some implementations may choose to do so for
simplicity or due to legacy structures. However, combining these roles within a
single organization can introduce challenges in data governance,
scalability, and operational clarity.
· When the Master Organization also
functions as a transactional inventory org, it may become burdened with
unnecessary configurations, such as storage locations, subinventories, and
costing methods.
· This not only increases complexity
but also heightens the risk of unintended changes to item definitions
driven by transactional needs.
· Furthermore, such a setup can limit
flexibility when managing multiple inventory organizations that require
shared item data but different operational rules.
· For these reasons, it is strongly
recommended to maintain a dedicated Master (Item) Organization, used
solely for defining and managing item attributes, separate from those used for
inventory operations.
· This separation ensures cleaner
data management, easier maintenance, and better alignment with enterprise-wide
item governance practices.
· Even if you don’t store and track the
inventory, you have to define at least one dummy Inventory Organization to
support the indirect procurement process.
· This is because in the
"Configure Procurement Business Function", you need to specify the "Inventory
Organization".
· While assigning the multiple
inventory orgs to a single cost org – it is essential to note that all
inventory orgs must have same master org.
· BU association is required with Item
Organization for Item Level Sales Account LOV to be populated and maintained at
the item master org level.
· But then the item organization can be
used with only those inventory organizations which are linked with the
particular BU to which it is associated with.
· If the BU is not assigned to item
organization, then the Item Level Sales Account Attribute has to be set to
child org control.
· To change the Item Org into Inventory
Org – You can navigate to Edit Item Organization page, change the value in the
Usage field to Inventory management.
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