How to Setup and Use Internal Orders in a Multi-Org Environment

Dale Peterson
Independent Consultant
Introduction
Any business that will implement Oracle with an
Inventory Structure that involves more than a single
Inventory Organization will have a need to move
material from one Inventory Organization to
another. This presentation will focus on the
process of moving Inventory Items from one
Inventory Organization to another Inventory
Organization which is accomplished through
several processes which includes Interorganization Transfers, Internal Requisitions and
Internal Sales Orders.

Scope of this paper

This paper covers all the setup steps, including
item attributes, that are required in Inventory, Order
Entry, and Purchasing in order to process Internal
Orders and Inter-organization Transfers. It will also
cover all the steps necessary to move items from
one Organization/Subinventory to another
Organization/Subinventory by both a manual and
an automated process. Plus it will detail the cost
transactions when moving within a single Set of
Books as well as in a Multiple Financial
Organizational Structure with multiple Sets of
Books and Operating Units. In addition, it will detail
all of the background processes and Interface
tables used to process data. Finally, it will explain
what to do when certain transactions get stuck in
an Interface table.
Also note that while the emphasis of this paper is
on Inter-Organization Internal Orders that all of the
setup steps and execution transactions are the
same for Intra-Organization/Subinventory Internal
Orders and Inter-Organization Transfers.
The same font and style will be used throughout
this paper when referring to each of the following:
Concurrent Program Times Roman Underline
Form Name Arial Bold
Character Navigation Path Times Roman Normal
GUI Navigator Path Arial Italialized
(Any Optional Step will be surrounded by
Parenthesis)

Note that all references to an Organization is

always in regards to an Inventory Organization
unless otherwise stated (like Operating Unit). Any
references to Operating Unit, Legal Entry, Global or
Site settings, or Multi-Org (Financial) are only
applicable to version 10.7.

Setup Steps
It has been experience (including many hours of
frustration) that the key to the successful
processing of Internal Orders is ensuring that ALL
the required setup is in place, because when
something is overlooked it will only cause problems
in one of the Interface tables.
The approach to these setup steps is one that only
identifies the steps necessary for the processing of
Internal Orders with the assumption that all the
other required steps within General Ledger,
Inventory, Order Entry and Purchasing are also
accomplished.
This paper is not written to explain or address all
the financial Multi-Org implications but rather some
of its major points. Note that each setup step
refers to either [Global] or [Site] or [Org]. Global is
anything that applies to all Sites regardless of Set
of Books. Site is any Site specific entity; with an
Order Entry Site being for a single Set of
Books/Operating Unit/OE Item Validation
Organization, with a Purchasing Site being for a
single Set of Books/Purchasing Item Validation
Organization. While an Inventory Site is not
applicable since everything is at the Organization
level. Org is every Inventory Organization that is
being used throughout the applications.
The sequence of these setup steps is not
necessarily required in this order but
recommended because of certain steps that are
necessary before others can be completed.
However within 10.7 ALL the listed Order Entry
steps are required before the Purchasing Options
can be completed and saved.
1. Define Key Flexfield Segments
[Global]
INV: / Nav Setup Flexfields Key Segments
INV: Setup-Flexfields-Key-Segments

Define the Eight major Key Flexfield Structures:

Accounting
Grade
Item Categories
Job
Position
Sales Orders
Stock Locators
System Items
These eight are required for processing Items
within Inventory and Order Entry.
2. Define Organization Locations
[Global]
INV: / Nav Setup Org Loc Define
INV: Setup-Organizations-Locations
Create Locations with addresses for each of the
Inventory Organizations that need to be defined.
3. Define Organizations
[Global]
INV: / Nav Setup Organization Define
INV: Setup-Organizations-Organizations
If release 10.6 or earlier then create each of the
Organizations that will be utilized for inventory
movement. If release 10.7 then create the entire
multi-org structure including Operating Unit(s),
Legal Entity(s), and Organizations. In either case
associate the previously created Location to the
Organization.
4. Define Organization Locations
[Global]
INV: / Nav Setup Org Loc Define
INV: Setup-Organizations-Locations
Revise Locations by associating the previously
created Organizations for each of the Locations.
5. Define Subinventory
[Org]
INV: / Nav Setup Org Structure Subinventory
INV: Setup-Organizations-Subinventories
Define at least one Assetable and Reservable
Subinventory in each Organization that will have
Inventory movement within it.
6. Define Inter-Organization Network [Org]
INV: / Nav Setup Org InterOrg Network
INV: Setup-Organizations-Shipping Networks
Define Inter-organization Shipping Network for
each Organization to Organization relationship.
Identify whether to use the Intransit inventory
location between Organizations or to ship the
material directly from one organization to another
organization. Establish at what FOB point the
receiving organization takes ownership of material,
either upon shipment (Shipping) or upon receipt
(Receiving). Determine the Receipt Routing to be
used at the Receiving Organization, however

regardless of which Receipt Routing is chosen here

if the Items Inspection Required attribute at the
Receiving Organization is set to Yes then it will still
enforce Inspection. Also determine whether or not
to enforce the use of Internal Requisitions for
tracking purposes. Also determine if there are to
be any transfer credits added to the shipping
organization. Lastly define the Accounts in which
costs will automatically be calculated, but
remember there are no invoices generated for
Internal Requisitions.
7. Define Users
SYSAD: / Nav Security Users Define
SYSAD: Security-Users-Define

[Global]

Create all the Users necessary for Internal Order

processing. Employees cannot be assigned yet
because they have not been defined yet. Assign
the appropriate responsibilities to each user.
8. Update System Profile Options
SYSAD: / Nav Profiles System
INV: Setup-Profiles-System

[Site]

All the System Profile Options need to be

established, however, these are ones critical to the
Internal Order process:
HR: Business Group & HR: User Type
Set this profile at the Responsibility Level to the
appropriate Business Group and User Type.
INV: RC Requisition Approval
Set this to either Approved or Unapproved
depending on whether Requisitions that are
created via the Requisition Import need to be
manually approved (for every single Requisition) or
can be generated in an Approved status.
MO: Operating Unit {10.7 only}
Set this profile at the Responsibility Level to the
appropriate Operating Unit.
OE: Autobackorder
Set this profile at the any Level with the
understanding that it works differently for Internal
Orders in that if it is set to Yes and a specific
Source Subinventory is specified on the Internal
Requisition and not enough quantity is available in
that specified Subinventory then Pick Release will
create a backorder even if there is additional
quantities in other Subinventories, whereas if it is
set to No then Pick Release will not pick the order
until the entire ordered quantity is available.
OE: Item Flexfield
Set this profile at the Site Level only to the name of
the System Items Key Flexfield Structure Name.
OE: Item Validation Organization

Set this profile at the Responsibility Level to the

appropriate Organization.
OE: Set of Books
Set this profile at the Responsibility Level to the
appropriate Set of Books.
NOTE for 10.7 version: For each of the above
Responsibility Level profile options that there must
be at least one Responsibility for each Set of
Books/Operating Unit/Item Validation combination,
and assigned to each one of the four options.
9. Define Order Entry QuickCodes [Global]
OE: / Nav Setup QuickCodes Order
OE: Setup-QuickCodes-Order Entry
Define a QuickCode of SALES_CHANNEL which
will be used throughout the Internal Order process.
This can be any value but Internal Sales Channel
is recommended for clear visibility.
10. Define Price Lists
OE: / Nav PriceList Define
OE: Pricing-Lists-Price Lists

[Global]

Define an Internal Price List. This can be any value

but Internal Price List is recommended for clear
visibility. Note that there is no need to assign any
items to this Price List because the cost associated
with any item that is Internal Ordered will
automatically use that items Frozen Cost.
11. Define Freight Carriers
[Org]
OE: / Nav Setup FreightCarriers
OE: Setup-Shipping-Freight-Carriers
Define any Freight Carriers to be used for the
Internal Order process. However, the exact same
Freight Carrier Name must be defined in ALL
Organizations that will be using the same Carrier.
12. Define Standard Value Rule Set
OE: / Nav Setup Rule Value
OE: Setup-Rules-Values

[Global]

Copy the seeded Standard Value Rule Set named

Internal Sales Order Template and then update at
least these options: Sales Channel, Price List,
Payment Terms, and Freight Carrier.
11. Define Order Cycle
OE: / Nav Setup Order Cycle Define
OE: Setup-Orders-Cycles-Cycles

[Site]

Create a standard Internal Order Cycle. This can

be any value but Internal Order Cycle is

recommended for clear visibility. Determine if

there needs to be an approval step somewhere in
the order cycle, if there is it is typically between
Enter and Demand. Here are the required Order
Cycle steps: Enter, Demand, Pick Release,
Backorder Release, Ship Confirm, Inventory
Interface, and Complete Order. An Internal Order
does NOT generate an AR Invoice even if
Receivables Interface is included in the Order
Cycle.
13. Define Order Source
OE: / Nav Setup Order Source
OE: Setup-Orders-Sources

[Global]

Define Internal Requisition Order Source

Numbering scheme if it is to be different than an
existing Order Source Numbering scheme. It is
recommended to be different for ease of visibility.
14. Define OrderImport Source
OE: / Nav Setup Orders OrderSource
OE: Setup-Orders-OrderImport

[Global]

Enable the Internal Requisition OrderImport Source

for Internal Requisitions. and ensure the USE ID is
set to Yes.
15. Define Order Type
OE: / Nav Setup Order Type
OE: Setup-Orders-Type

[Site]

Define Internal Requisition Order Type. Assign the

previously created Order Cycle. The Order
Category must be set to Internal Sales Order.
Assign the previously created Order Number
Source. Assign the previously created Standard
Value Rule Set Name. Assign the previously
created Price List.
16. Define Customer
OE: Customer Define
OE: Customers-Standard

[Global]

Define Customer. Use Type = Internal and create

a customer for each Organization. Also create a
Ship-to with the same address as the deliver-to
Location/Organization. {For each Ship-to usage an
Internal Location must be associated; SC only}.
NOTE: OE requires both a ship-to and bill-to for
each order even though internal sales orders are
not invoiced. So it is recommended to make a
single customer address both the primary bill-to
and primary ship-to.

17. Organization Association

[Global]
OE: / Nav Setup Organization Location Assoc.
{Character Only} Associate the Organization
Deliver-to Location to a Customer Ship-to site.
18. Define Purchasing Line Type
[Global]
PO: / Nav Setup Purchasing Codes Line
PO: Setup-Purchasing-Line Types
Define at least one Line Type designated for
Inventory. It is recommended to create a new
Purchasing Line Type named Inventory for clear
visibility.
19. Define Purchasing Options
[Site]
OE: / Nav Setup Purchasing Options Purchasing
OE: Setup-Organizations-Purchasing Options
Determine which Requisition Import Group method
should be used to facilitate requisition processing,
this is typically set to Item. Assign the one of the
previously created Line Types as the Default Line
Type. Set the Enforce Full Lot Quantity to
determine whether to always round the Requisition
Quantity to the next whole integer (Mandatory), or
to allow for decimal quantities (None). Assign the
Internal Requisition OE Order Type and the
Internal Requisition OE OrderImport Source to
Purchasing.
20. Define Financial Options
PO: Setup Financials Options
PO: Setup-Financials-Options

[Site]

23. Define Position Hierarchies

[Global]
PO: / Nav Setup Org Personnel Hierarchies
PO: Setup-Personnel-Position Hierarchy
Define a Position Hierarchy that is appropriate for
the approval of Internal Orders (this can be the
same Position Hierarchy used for all Purchasing
Document Types).
24. Define Approval Groups
[Global]
PO: / Nav Setup Org Authorizations Groups
PO: Setup-Approvals-Approval Groups
Define as many Approval Groups as needed for the
appropriate approval levels required to meet the
business needs. Typically the approval levels are
higher than the Standard Requisition approval
levels since the inventory is already company
owned, plus the more approvals that an Internal
Order has to go through the longer it will take to get
the material to its final destination especially if the
final destination is a distribution Organization.
25. Assign Approval Groups
[Global]
PO: / Nav Setup Org Authorizations Controls
PO: Setup-Approvals-Approval Assignments
Assign the previously created Approval Groups to
the appropriate Job or Job/Position for the
Document Type Approve Internal Requisitions.
Note: the Organization referred to throughout the
Purchasing Hierarchy setup is a HR Organization
which is typically the same as the HR Business
Group.

Assign the Purchasing Item Validation Organization

for each Site. Determine whether Purchasing is
going to use Employee/Supervisor (Job) Hierarchy
or Position Hierarchy by setting the Use Approval
Hierarchies flag.

26. Define Employees

[Global]
PO: / Nav Setup Org Personnel Employees
HR: / Nav Personnel Employees
PO: Setup-Personnel-Employees (w/o HR)
HR: People-Enter and Maintain

21. Define Jobs

PO: / Nav Setup Org Personnel Jobs
PO: Setup-Personnel-Jobs

Define all the appropriate Jobs to be used in the

Purchasing Hierarchy.

Define all the Employees that will be creating any

type of Purchasing Document Type including the
Internal Requisition. Assign the appropriate Job or
Job and Position for each Employee within
whichever HR Organization is being used for the
approval process.

22. Define Positions

[Global]
PO: / Nav Setup Org Personnel Positions
PO: Setup-Personnel-Positions

27. Define Users

SYSAD: / Nav Security Users Define
SYSAD: Security-Users-Define

If the Use Approval Hierarchies is set to Yes then

define all the appropriate Positions to be used in
the Purchasing Hierarchy.

Revise all the Users necessary for Internal Order

processing. Each user needing to create an
Internal Requisition (either manually or via

[Global]

[Global]

Requisition Import) mush have their Employee

associated to their User.
28. Run Reports
PO: Reports Run
PO: Reports-Run

[Global]

If the financial option Use Approval Hierarchies is

set to Yes then the report entitled Fill Employee
Hierarchy must be run in order to build the
hierarchical relationships.
29. Define Document Type
[Global]
PO: Setup Purchasing Document Codes
PO: Setup-Purchasing-Document Types
Revise the seeded Internal Requisition Document
Type. The Document SubType must be Internal.
Change the other document options to meet the
business needs of inter-organizational transfers,
including the default Approval Hierarchy if it is
being used.
30. Define/Revise Items
INV: / Nav Item Define
INV: / Nav Item Update
INV: Items-Master Items
INV: Items-Organization Items

[Org]

Change Item Attributes. Reference Appendix A

Item Attribute Settings for the correct setting of
Item Attributes and change the respective values
for each item that is going to be moved from one
Organization to another.
31. Define Item Source Options
[Org]
INV: / Nav Item Controls Subinventory Item
INV: / Nav Item Controls Subinventory SubItem OR
INV: / Nav Set Org Structure Subinventory OR
INV: / Nav Item Update OR
INV: / Nav Set Org Parameters
INV: Setup-Organizations-Subinventories OR
INV: Organization Items OR
INV: Setup-Organizations-Parameters
Define Item Sourcing Options for any item that will
be automatically planned and requisitioned via
Requisition Import. First of all, determine which
type of planning method is going to be used for a
specific item, then determine at which level at one
of 4 Hierarchical levels the sourcing options are
going to be assigned, then make the appropriate
changes.
For the Item/Subinventory level both the item and
the subinventory must changed to reflect which
organization and what Type of sourcing, Inventory,

is to be utilized, as well as any Min-Max planning

information.
For the Subinventory level establish the Type as
Inventory and which Organization is the supplier to
this Subinventory.
For the Item level change the attribute
Replenishment Source Type to Inventory, and
identify the Source Organization, and optionally the
Source Subinventory.
For the Organizational level (only used if previous
three are blank) identify the sourcing type as
Inventory, and which Organization is the supplier to
this organization.

Manual Creation and Execution [All at Org]

1. Create Internal Requisition
PO: / Nav Documents Requisitions Enter
PO: Requisitions-Requisitions
Create Internal Requisition. Document Type must
be Internal Requisition. Destination Organization
must be specified. Destination Subinventory must
be specified. Source Type must be Inventory.
Source Organization must be specified. Source
Subinventory is optional.
2. Approve Internal Requisition
PO: / Nav Document Requisitions Enter OR
PO: / Nav Document Management Approve
PO: Requisitions-Requisitions
Approve the Internal Requisition by whomever has
the appropriate approval level for the amount of the
Internal Requisition. Remember it does NOT
matter what the user inputs into the Price column
of an Internal Requisition because it will always use
that items Standard Frozen Cost for the price.
Once the Internal Requisition has been approved
there are several reports that can run. The two
most useful reports are Internal Requisition Status
Report which displays where the item is in the
process, and Requisitions on Cancelled Sales Order
Report which displays the requisitions which need
to be cancelled.
3. Create Internal Sales Order
PO: / Nav Reports Run
PO: Reports Run
Run the specific concurrent program Create Internal
Sales Order to process any approved Internal
Requisitions.

Oracle uses three interface tables to pass

information from Purchasing to Order Entry, which
are detailed below.
It creates one record for each Int. Req. Line in
SO_HEADERS_INTERFACE(_ALL) with the
following key columns
original_system_reference Int. Req. Number
order_type
OE Int. Order Type
customer_id
Del-to Customer
ship_to_site_use_id
Del-to Ship-to Usage
price_list_name
OE Internal Price List
org_id
Operating Unit Org ID
It generates one record for each Int. Req. Line in
SO_LINES_INTERFACE(_ALL) with the following
key columns:
original_system_reference Int. Req. Number
ordered_quantity
Int. Req. Quantity
list_price
Item Frozen Cost
inventory_item_id
Item ID
ship_to_site_use_id
Del-to Ship-to Usage
transaction_comments
Requestor Name
warehouse_id
Shipping Org ID
org_id
Operating Unit Org ID
It generates one record for each Int. Req. Line in
SO_LINE_DETAILS_INTERFACE with the
following key columns:
original_system_reference
Int. Req. Number
original_system_line_reference Int. Req. Line No.
quantity
Int. Req. Quantity
4. Import Order into Order Entry
OE: Reports Run
OE: Orders-Import Order
OrderImport with the Order Source = Internal
(Step only necessary if Report Group is not run
automatically)
NOTE: If the profile OE: Reservations is set to Yes,
then the Internal Sales Order is Demanded rather
than Reserved.
This process creates the Internal Sales Orders by
using the information in
SO_HEADERS_INTERFACE(_ALL),
SO_LINES_INTERFACE(_ALL), and
SO_LINE_DETAILS_INTERFACE and inserting
row(s) into SO_HEADERS(_ALL),
SO_LINES(_ALL), and SO_LINE_DETAILS.
In addition it inserts row(s) into
MTL_DEMAND_INTERFACE based on the data
from the new generated Internal Sales Order.

If errors occur that leave records in any of the

above interfaces it is almost always because of
improper setup and usually the best action is to
delete the records in the interface tables and
cancel the offending Requisition.
5. (View Internal Sales Order)
OE: / Nav View Orders
OE: Orders-Workbench
Optionally view the Internal Sales Order at anytime
throughout the process to check the status of an
internal sales order.
6. (Modify Internal Sales Order)
OE: / Nav Orders Schedule
OE: Orders-Schedule-Schedule Orders
(Can optionally modify Internal Sales Order
Schedule at anytime prior to Ship Confirm)
However on an Internal Sales Order only the
Schedule Date, Schedule Status, Quantity
Reserved, Freight Carrier, Shipment Priority, Ship
Set Number, and Ship-to Contact can be changed
on an Internal Sales Order.
NOTE: An Internal Sales Order line can only have
one Schedule Date so it cannot be split into
multiple delivery schedules. However multiple
partial quantities can be shipped and the expected
receipt date can be modified each time.
7. Pick Release
OE: / Nav Ship Release
OE: Shipping-Pick Release
Pick Released all Internal Orders within a specific
Organization.
NOTE: If a Source Subinventory has been
identified in the Internal Requisition and if
OE:Autobackorder profile is Yes, and if there is
insufficient quantity within the specified
Subinventory then a shortage will be created, even
if there is sufficient quantity in another
subinventory; whereas if OE: Autobackorder is set
to No then OE will not pick release the order until
ALL of the sufficient quantity is available.
8. Confirm Shipment
OE: / Nav Ship Confirm
OE: Shipping-Confirm-Pick OR
OE: Shipping-Confirm Shipments-Batch
Confirm Sales Order Shipment. This either moves
the material to Intransit or directly to the Receiving
Organization/Subinventory if the Process Online is
set to Yes, else this occurs after the next step.

Also, an Arrival Date must be input, or use the

default of todays date, before the Close Pick Slip.
Once an item has been shipped online Oracle uses
either one, two, or three interface tables
(depending on whether the item is either 1: neither
lot or serial controlled; or 2: lot or serial controlled;
or 3: lot and serial controlled) to move information
from Order Entry to Inventory:
MTL_TRANSACTIONS_INTERFACE,
MTL_TRANSACTION_LOTS_INTERFACE,
MTL_SERIAL_NUMBERS_INTERFACE.
If errors occur that leave records in any of the
above interfaces it can happen because of a
variety of reasons and the only resolution is to
analyze the data, determine the cause, update the
interface table(s) with the correct data and resubmit the transactions. These can be found in the
Open Interfaces form.
9. Update Shipping and Inventory
OE: / Nav Reports Run
OE: Shipping-Interface AND
OE: Shipping-Confirm Shipments-Update Ship.
This is required if Ship Confirm Process Online =
No. Run two concurrent processes Update Shipping
Information and Inventory Interface.
Once an item has been successfully Inventory
Interfaced Oracle uses either one, two, or three
interface tables (depending on whether the item is
either 1: neither lot or serial controlled; or 2: lot or
serial controlled; or 3: lot and serial controlled) to
move information from Order Entry to Inventory:
MTL_TRANSACTIONS_INTERFACE,
MTL_TRANSACTION_LOTS_INTERFACE,
MTL_SERIAL_NUMBERS_INTERFACE.
10. Receive into Receiving Organization
PO: / Nav Receipts Enter
INV: / Nav Receipts Enter
PO: Receiving-Receipts OR
INV: Transactions-Receiving-Receipts
Receive Internal Sales Order. The SOURCE
TYPE must be Internal. The items will either be
delivered to a Receiving Location for inspection
and/or movement or delivered directly to a
Subinventory depending on the items attributes
within the Receiving Organization.
11. (Inspect Items)
PO: /Nav Receipts Transact
INV: / Nav Receipts Transact

PO: Receiving-Receiving Transactions OR

INV: Transactions-Receiving-Rec. Trans.
Inspect items. Only required if item is required for
inspection, which for internally source items they
would not be since they were inspected at the
source Organization.
12. (Deliver items to Subinventory)
PO: /Nav Receipts Transaction
INV: / Nav Receipts Transaction
PO: Receiving-Receiving Transactions OR
INV: Transactions-Receiving-Rec. Trans.
Receive items into stock. Required only if item was
not delivered directly to stock.

Automatic Creation & Execution [All at Org]

1. Automatically generate Internal Requisition
PO: / Nav Reports Run
PO: Reports-Run
Create Internal Requisitions via MRP; Min-Max,
Reorder point, or Subinventory planning reports.
Run the Requisition Import concurrent program.
This step can be setup to run automatically at
predetermined intervals!
Oracle use one interface table to pass information
from MRP, Inventory, or an external source to
Purchasing: PO_REQUISITIONS_INTERFACE.
Once it is in this table then the concurrent process
Requisition Import processes the data in the
interface table and generates a Requisition by
inserting row(s) in the following tables:
PO_REQUISITION_HEADERS(_ALL),
PO_REQUISITION_LINES(_ALL), and
PO_REQ_DISTRIBUTIONS(_ALL).
2. Create Internal Sales Order
Create Internal Sales Order. Create Internal Sales
Order.
This step can be setup to run automatically at
predetermined intervals!
3. Import Internal Sales Order
Import Internal Sales Order into Order Entry via the
OrderImport.
This step can be setup to run automatically at
predetermined intervals!
4. (Modify Internal Sales Order)
OE: / Order Schedule

OE: Orders-Schedule-Schedule Orders

Optionally modify Internal Sales Order Schedule.
However, only the Schedule Date, Schedule
Status, Quantity Reserved, Freight Carrier,
Shipment Priority, Ship Set Number, and Ship-to
Contact can be changed on an Internal Sales
Order.

network is setup between DEN and DAL with the

use of Intransit because of the lead time involved (4
days), and the FOB Point is set to Receipt at the
DAL organization. This FOB setting determines
which Organization InterOrganization Accounting
transactions get recorded, such as Inter-org
receivables, Inter-org payables, Inter-org Purchase
Price variance, and any Transfer Inventory valuation
charges.

5. Pick Release Order

Pick Released Orders according to predetermined
criteria, usually Schedule Date.
This step can be setup to run automatically at
predetermined intervals!
NOTE: If a Source Subinventory has been
identified in the Internal Requisition and if
OE:Autobackorder profile is Yes, and if there is
insufficient quantity within the specified
Subinventory then a shortage will be created, even
if there is sufficient quantity in another
subinventory; if OE: Autobackorder is set to No
then OE will not pick release the order until ALL of
the sufficient quantity is available.
6. Confirm Shipments
OE: / Nav Ship Confirm
OE: Shipping-Confirm-Pick Slip OR
OE: Shipping-Confirm-Batch

1. An internal requisition for 100 pieces is created

for the item at the DAL organization, which
automatically generates an internal sales order.
No accounting transactions generated
2. Pick and ship the internal sales order, thus
moving the material to Intransit.
DEN INVENTORY

INTRANSIT INV.

3. Receive the internal sales order into DAL

organization.
INTRANSIT INV.

DAL INVENTORY

INTERORG PAY

INTERORG. RECV

Confirm Sales Order Shipment. This either moves

material to Intransit or directly to the Receiving
Org/Subinv.
Also, an Arrival Date must be input, or use the
default of todays date, before the Close Pick Slip.
7. Receive into Receiving Organization
PO: / Nav Receipts Enter
INV: / Nav Receipts Enter
PO: Receiving-Receipts OR
INV: Transactions-Receiving-Receipts
Receive Internal Sales Order via Direct Delivery
into a Subinventory. The SOURCE TYPE must be
Internal.

INTERORG. PPV

Accounting Transactions Example

Single Set of Books
A item is created as an internal requisitioned item at
the DAL organization with its source being the DEN
organization. The standard cost at the DEN
organization is $10.00 while the standard cost at the
DAL organization is $12.00. The Inter-organization

Where are the Accounts coming from?

ORG INVENTORY =
INTRANSIT INV. =
INTERORG RECV =
INTERORG PAY =

Subinventory Accounts
InterOrg Shipping Network
InterOrg Shipping Network
InterOrg Shipping Network

INTERORG PPV =
InterOrg Shipping Network
TRANSFER FEES = InterOrg Shipping Network

INTRANSIT INV.

BUF INVENTORY

Multiple Set of Books

There is no distinct difference in accounting
transactions when crossing from one Set of Books
to another.
A item is at the BUF organization [SOB #1] with its
source being the ATL organization [SOB #2]. The
standard cost at the ATL organization is $10.00
while the standard cost at the BUF organization is
$12.00. The Inter-organization network is setup
between ATL and BUF with a Transfer Type of
Intransit and a FOB Point of Shipment from ATL.
1. An internal requisition for 100 pieces is created
for the item at the ATL organization, which
automatically generates an internal sales order.
No accounting transactions generated
2. Pick and ship the internal sales order, thus
moving the material from ATL to Intransit.
{Or an Inter-organization Transfer Transaction
moves 100 from ATL to Intransit.}
ATL INVENTORY

INTERORG PAY

INTRANSIT INV.

Conclusions
Internal Orders do provide three major advantages
over using a straight Inter-organization Transfer:
1. An Internal Requisition can be automatically
generated from any planning method based on an
items sourcing rules. 2. The appropriate shipping
paperwork including waybill tracking can be
generated. 3. Complete Supply/Demand visibility
in both the shipping and receiving Organizations.
There is not that much additional setup required
since most of the setup steps required for Internal
Orders would be required within Inventory, Order
Entry, and Purchasing anyway.
Therefore it will depend on the business
requirements whether to utilize Internal Orders or
use Inter-organization Transfer. However, if either
or both methods are to be used throughout the
company there needs to be a detailed examination
of how to setup the various options within Oracle to
best utilize the functionality of Oracle. And as
always ensure that all possible scenarios are
completely tested.

INTERORG. RECV

About the Author

INTERORG. PPV

3. Receive the internal sales order {or the Interorganization Transfer} into BUF organization.

Dale Peterson is an Independent Manufacturing

Consultant that has worked in manufacturing or
consulting for over 20 years, including the last 4 years
exclusively with Oracle Applications. He has
implemented multiple software systems including Oracle
five times. He is currently consulting on a large 10.7
manufacturing implementation with multi-national and
multiple organizational implications. He is an active
participant on the OraApps List Server.

Appendix A - ITEM ATTRIBUTE SETTINGS

ITEM ATTRIBUTES IN THE ITEM VALIDATION ORGANIZATION
GRP ITEM ATTRIBUTE

REQUIRED VALUE

COMMENTS

IN
PU
PU
OE
OE
OE
OE

Yes
Yes
Yes
No
Yes
Yes
Yes

Cannot be an expense item

To be able to create Internal Requisition
To be able to create Internal Requisition
Cannot internally transfer an ATO item
To be able to create Internal Req/Order
To be able to create Internal Req/Order
To be able to demand Internal Order

Inventory Item
Purchased Item
Purchasable
Assemble to Order
Internal Orders Enabled
Internal Ordered Item
OE Transactable

ITEM ATTRIBUTES IN THE SHIPPING ORGANIZATION

GRP ITEM ATTRIBUTE

REQUIRED VALUE

COMMENTS

IN
IN
IN
PU
PU
OE
OE
OE
OE
OE
OE

Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes

Cannot be an expense item

To be able to stock and ship item
To be able to transact and ship item
To be able to receive Internal Order
To be able to create Internal Requisition
Cannot internally transfer an ATO item
To be able to create Internal Order
To be able to create Internal Order
To be able to demand Internal Order
To be able to ship item
User-defined picking method

Inventory Item
Stockable
Transactable
Purchased Item
Purchasable
Assemble to Order
Internal Orders Enabled
Internal Ordered Item
OE Transactable
Shippable
Picking Rule (optional)

ITEM ATTRIBUTES IN THE RECEIVING ORGANIZATION

GRP ITEM ATTRIBUTE

REQUIRED VALUE

COMMENTS

IN
IN
IN
PU
PU
GP
GP

Inventory Item
Stockable
Transactable
Purchased Item
Inspection Required
Make or Buy
Source Type

Yes
Yes
Yes
Yes
Yes
Buy
Inventory

GP
GP

Source Organization
Source Subinventory

Org. Name
Subinventory Name

Cannot be an expense item

To be able to stock and receive item
To be able to transact and receive item
To be able to receive Internal Order
If item is to be inspected prior to stocking
If creating Requisitions through MRP
If automatically creating Requisitions
Only required if Organization or
Subinventory is not sourced as Inventory
If automatically creating Requisitions
If automatically creating Requisitions