Warehouse Management

We will discuss here about how the cost group functionality works within WMS. It is a quite common discussion among warehouses when items are undergoing change in valuation or when non-WMS organizations upgrade to WMS.

What is Cost Group functionality?

A Cost Group is the set of accounts that hold on hand inventory. It segregates the accounting and the physical attributes of the inventory. Cost group feature in WMS provides you with a flexible way to track accounting attributes of stock in the warehouse without impacting its physical storage.

Cost Groups: Inventory vs WMS

Before the advent of Cost Groups, sub-inventories defined both the physical and accounting attributes of the material. In each warehouse zone, different accounts were maintained by creating separate sub-inventories, and pre-assigning locators to each sub-inventory. Any change in valuation (defective etc.) would result in a move of the item to a different sub-inventory. In non-WMS organization this would happen only by a physical move. Organizations running WMS has much more flexibility by using cost group feature:

• Efficient space utilization by eliminating the need for multiple sub-inventories and pre-assignment of each sub-inventory and locators to a unique account
• Change valuation separately from a physical movement, controlling access to both transactions separately. Hence, the warehouse operator just moves the items and another person with different access level manages the cost group transfer. In non-WMS organization, any operator can move stock and effect the financial transactions without checks.
• From a financial perspective, it eliminates the requirement to physically relocate the inventory with a different cost group just because of a different accounting treatment.

How are Cost Groups used in a WMS enabled organization?

WMS can automatically assign a cost group based on the cost group rules. Cost group rules can be configured to assign cost groups when a stock is received in the warehouse. Some of the item attributes that can be used to assign cost groups are:
• Supplier
• Lot Attributes such as Grade, Expiry Date
• Descriptive flexfield information
• Customer
• Item
• Location
• Item Category
• Item Status
• Item disposition (used, new, and refurbished)

Cost group rules are invoked when inbound such as receiving or WIP completions are carried out in the warehouse. It is worthwhile to note that Cost groups are just one distinguishing factor between 2 items in the sub inventory.

Example: Handling “Refurbished” items

Cost groups in WMS can be effectively used to segregate on-hand stock into different accounting buckets based on item attributes. For example when certain stock of an item is “refurbished” it can be segregated for accounting purposes with “normal” item. The “normal” and “refurbished” items can reside anywhere in the warehouse. WMS maintains full visibility to where the material for each cost group resides and when they are transacted, their cost groups are considered for valuation and accounting purposes.

Some Common Business Scenarios

1. Receiving from Multiple Suppliers into the Same Subinventory
2. Changing cost groups in a wholesale food distribution warehouse environment where item characteristics and category can change
3. Receiving item of different grade to same zone
4. Granting different access levels to different people to help regulate financial transactions

Cost Group Commingling

Since material belonging to different costs group is likely to be indistinguishable physically, WMS imposes the constraint that stock of the same item cannot be commingled in the same physical locator. In other words, “refurbished” items cannot reside in the same physical bin or locator as “normal” items unless the “refurbished” and “normal” items belong to two different license plate numbers (LPNs). WMS putaway rules automatically avoid commingling. In addition transactions such as miscellaneous receipts explicitly prohibit you from performing receipts that could potentially cause commingling.

GS1-128 (formally known as UCC/EAN-128) labels are the standards in today's consumer packaged goods, wholesale distribution and retail segments. It is therefore important to familiarize yourself with this label format and understand how to best use these in your WMS enabled warehouses.

As background information, the GS1-128 label is derived from Code 128, a simple symbology that translates numbers and characters into what's commonly known as "barcode". GS1-128 looks like a longer version of the typical barcode. It stores not only the serial number, but also the company and the application identifier. In essence, GS1-128 is an advanced barcode that provides the relevant business context in addition to identifying a product.
Here's an example:

Let’s take a closer look at the last set of numbers in the previous example. The label roughly breaks down into 4 sections, plus an application identifier.

It’s worthwhile to note that the Application Identifier field can refer to wide range of data contents. In the example shown, (00) implies the content is a License Plate Number(LPN). This number can also be used to identify zip code, expiration date, weight, container code and other information. Here’s the full list.

The 18-digit after Application Identifier is the LPN, also known as SSCC-18(Serialized Shipping Container Code). This number is 18 digitals long, and it is globally unique. SSCC-18 tells any operator what the product is and where it is from.

The versatility of GS1-128 is what makes it the standard labeling format in the world today. In the next post, we will be discussing how Oracle WMS can be used to generate GS1-128 label and Advanced Shipping Notices (ASN) in the customer’s inbound process.

In the last blog post we drilled deep into the GS1-128 labeling. In this post, we will go through the steps on how to setup WMS to enable GS1-128 printing.

1. LPN Setup: GS1-128 label requires an LPN to be generated as per SSCC standards. An SSCC-18 number is a unique 18-digit license plate number that is generated as per specific UCC standards. Therefore to generate GS1-128 label requires this 18 digit number to be generated.

2. Create GS1-128 label layout (see sample label) in a label designing software. In this example, the number following (00) is the SSCC-18 number. Whereas (00) is the application identifier. Please note that application identifier should appear in the human readable format as “(00)”. However in actual barcode the application identifier should be encoded as “00” (i.e. without brackets). The variable following the “00” is the 18-digit LPN number from WMS.

3. To auto-generate LPN using SSCC-18 standard, the following setup is needed in org parameters form:

4. Note: As per GS1/UCC standards, application identifier (00) is not part of the SSCC-18 data structure and need not be transmitted as a prefix for LPN in ASNs. However there are customers who require incoming ASN must have LPNs with 20-digit container reference. In this case the 20 digit number consists of 18 digit-SSCC number prefixed with SSCC application identifier “00”. Prefixing “00” to SSCC number will not change the check digit of SSCC. If a customer requires 20-digit container reference, a prefix of “00” can be added in either the label printing software or the prefix of “00” can be added to the extension digit. The setup in this case may look like:

Sometimes customers also enforce a range of container serials for certain warehouses e.g. W1 container serials start with 1, W2 with 2 etc. in such as case, the leading digit from the container serial can be removed and suffixed to LPN prefix:

This way, W1 will always generate LPNs in SSCC18 format that is distinct from W2.

5. Create a label format “UCC128” for type “Shipping Content”. Include fields such as LPN (SSCC-18), Ship to address, PO, Ship from address, etc. as shown in the figure above. You can make this the default label format for “Shipping Content” label.

6. Select a valid printer.

7. Assign “Shipping Content” label to business flow “pick drop” (you may use other business flows like packing workbench, ship confirm or pick load)