Tracking and Managing Outsourced Manufacturing

To build and operate value-chains that drive profitable growth, organizations need real-time visibility and insights into business processes in order to anticipate market requirements and risks, respond to volatile market conditions, and align operations across global networks. Providing that complete level of visibility to enterprises that outsource their manufacturing to contract manufacturers is Oracle Outsourced Manufacturing for Discrete Industries. Part of the Oracle E-Business Suite (EBS) Supply Chain Management family of applications, this solution helps manufacturers track and manage virtually all aspects of outsourced manufacturing business processes so that they can proactively mitigate risks and achieve customer commitments.

Mixed-Mode, Multi-Tiered Solution
The Oracle E-Business Suite Supply Chain Management family of applications integrates and automates key supply chain processes – from design, planning, and procurement to manufacturing and fulfillment – enabling organizations to power information-driven value chains. Organizations in the medical device and other discrete manufacturing industries can track key positions with subcontractors, regardless of whether they fully or partially outsource their manufacturing operations.

In addition, by providing real-time visibility into outsourced businesses processes, the new release enables customers to:

• Gain broad visibility into the overall health of the outsourced manufacturing
• View and analyze financial transac- tions related to subcontract orders
• Track quality issues related to supplied components and finished products
• Monitor sales/procurement activi- ties to help meet on-time delivery
• Collaborate with approved suppli- ers and contract manufacturers
• Analyze/negotiate service level agreements/pricing to optimize costs
• Mitigate risks related to inventory bottlenecks across manufacturing partners
   

EBS Outsourced Manufacturing Scenarios:

Chargeable (Shikyu) Outsourcing: In this model, the OEM retains the ownership of the components but makes a virtual sale of the components to the manufacturing partner (MP). The reason it is a virtual sale is that the MP does not pay for the components. The MP charges the OEM for value of the components plus the service provided. Since the OEM own the components, AP/AR netting is mandatory for OEM to pay the MP just for the service provided.

Buy/Sell Outsourcing: In this model, the OEM sells the components to the MP after an optional price markup and buys the finished product from the MP. The MP charges the OEM the total value of the components plus the service provided. There is an explicit selling and buying transaction between OEM and MP.

Full (Non-Chargeable) Outsourcing: The OEM retains the ownership of the components and ships them to the MP. The MP charges the OEM just for the service provided.

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