You can transfer items directly from one organization to another, or transfer items through intransit inventory. You can also use internal requisitions to replenish inventory to another organization; however, internal requisitions do not support freight charges. You can also transfer inventory between discrete and process organizations. As a result, you must properly handle the costing and accounting of transfers between process and discrete organizations. Transfers between discrete and process organizations use a transfer price that is set up between the organizations. See: Transfer Price Costing.

Inter-organizational transfers use the following functionality:

• Intransit inventory

  Intransit inventory represents inventory items that have not arrived at the receiving organization. You can move items from the shipping organization to intransit inventory using the Inter-organization Transfer window. Use the Receipts window to move items to the receiving organization.

• Direct Inter-Organization transfer

  When the inter-organization relationship is set to direct transfer in the Shipping Networks window, an issue and receipt transaction are performed in one step.

• Inter-Organization receipt

  Inventory creates the following calculation for material received intransit and material received directly from another organization:

  Current average or standard cost from shipping organization multiplied by transaction quantity plus freight charges and transfer credit charges.

  For a direct receipt, the organization that receives the material does not perform a transaction. The shipping organization performs a ship transaction to the receiving organization. Inventory considers the transfer a receipt in the receiving organization and updates the cost.

• Elemental cost visibility

  You can set elemental cost visibility during inter-organization transfers either to preserve the shipping organization's elemental costs or to summarize all elemental costs into the material cost element. Enable this option using the Elemental Visibility Enabled check box on the Main tab in the Shipping Networks window. This option is available for each line in the shipping network, regardless of direction.

  Combining all cost elements into the material cost element assures that the receiving organization does not have another organization's overhead in its calculation.

  Note: The correct option for elemental cost visibility must be set at the time that the transaction is costed, not at the time that the transaction occurs.

• Expense subinventories and expense items

  When you receive an inter-organization transfer into an expense subinventory, or receive an expense inventory item, set the Oracle Inventory INV: Allow Expense to Asset Transfer profile option is set to Yes. This issues the material from the expense subinventory.

  When you receive to expense locations or receive expense inventory items, the subinventory expense account is debited for the receiving organization instead of the valuation accounts. The subinventory expense account is charged the total transaction value from the other organization.

• Inter-Organization transfers and ledgers

  The Inter-Organization Direct Transfer transaction supports transfers from any ledger, including ledgers in different currencies.

• Freight transactions

  The Free on Board (FOB) point influences the accounting entries generated for the shipment to intransit inventory. The FOB point is determined by how the inter-organization shipping network is defined in the Shipping Networks window.

  In addition to accounting for the movement of the items, these transactions also update the inter-organization receivable and payable accounts.

  The FOB point changes the accounting for freight. When FOB is receipt, freight is accrued on the receipt transaction by the shipping organization. When FOB is shipment, freight is accrued on the shipment transaction by the receiving organization. For direct transfers, the receipt and shipment transactions occur at the same time.

See:

Defining Inter-Organization Shipping Networks,

Transferring Between Organizations,

Managing Receipts,

Purchase Order Receipt To Inventory,

Subinventory Transfers,

Managing Receipts, and

Entering Receiving Transactions.

Inter-Organization Transfer Transactions

Shipment Transactions (Intransit transfer only)

FOB receipt:

FOB shipment:

Receipt Transaction (Intransit transfer only)

FOB receipt:

FOB shipment:

Material Overhead and Inter-Organization Transfers

If your item has material overhead, you can earn material overhead in the receiving organization as part of the receipt transaction.

Direct Inter-Organization Transfer

Freight and Transfer Charges

FOB receipt:

FOB shipment:

Intransit includes both the freight and transfer charges. Inter-organization payable is only increased for the transfer charge.

Project Manufacturing Transfer Transactions

Direct Transfer

Standard Org. to Project excluding Expense to Expense

Average Org. to or from Project excluding Expense to Expense

Project to Standard excluding Expense to Expense

Receipt - Intransit Standard Organization into Project Organization Using Internal Orders

FOB receipt:

Receipt - Intransit Project Organization into Project Organization Using Internal Orders

FOB shipment:

Receipt - Intransit into Project Organization using Internal Orders

FOB receipt:

Transfer Project Organization from Standard Organization Using Internal Orders

FOB shipment:

Transfer - Project Organization from Project Organization Using Internal Orders

FOB shipment

Periodic Average Costing (PAC) Inter-organization Transfers Across Cost Groups

The costing and accounting for all inter-organization transactions that do not use transfer pricing use the sending cost group's Periodic Weighted Average Cost (PWAC). However, the sending cost may not be available to the receiving cost group at the time that the receiving cost processor runs. The sending cost is known only after running the PAC processes in the sending cost group. Simply running one process before the other doesn't solve this problem, because some items will go from Cost Group A to B, others will go from B to A, and some may go in both directions.

The best solution is to estimate the sending cost group's cost at the time that the application processes the receiving cost group. One method for an accurate estimate is to use the Periodic Absorption Cost Processor. This is an iterative process that can develop an exact calculation of the sending cost group's item cost along with the cost in the receiving cost group.

If your organization does not use the absorption cost processor, the application estimates the sending organization's PAC cost for this period using the sending organization's PAC cost from the previous period (if the cost groups are in the same legal entity). All cost group periods are closed together for a given legal entity, which ensures that the sending and receiving cost groups both pick up the same value for the shipment cost. Both groups will use the sending cost of the last closed period. If the groups are in different legal entities, then the sending cost estimate will come from the perpetual cost of the shipment transaction.

PAC cost of item in sending org = $110

PAC cost in receiving Org = $80

Estimated PWAC of sending CG = $100

Quantity transferred = 1 unit

For FOB - Shipment Transfers Using Sending CG PWAC:

The item cost in the receiving organization is re-averaged based on the sending cost group's estimated cost.

For FOB - Receipt Transfers Using Sending CG PWAC:

The item cost in the receiving organization is re-averaged based on the sending cost group's estimated cost.

For Direct Interorganization Transfers Using Sending Cost Group PWAC:

The item cost in the receiving organization is re-averaged based on the sending cost group's estimated cost.

In all cases, the inventory valuation account of the sending organization is always credited at the item's PAC cost, and the transfer variance contains the difference between the item's PAC cost and the estimated cost of the item in the sending organization. The estimate comes from either the item's PAC cost last period (same LE), or the perpetual cost of the shipment transaction (different LE). The Transfer Variance account entries will have an accounting line type of inter-org profit.