Oracle Back 2 Back Order Process White Paper

5/28/2018 Oracle Back 2 Back Order Process White Paper

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Back-to-Back Orders in OracleOrder Management

An Oracle White Paper

July 2002

Revised December 2002


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Back-to-Back Orders in Oracle Order Management

EXECUTIVE OVERVIEW

In todays environment where lead times are often only a matter of 24 hours,

many companies want to create a specific supply order linked to each customer

order and they want these supply order created as soon as the customer orders

have been booked. These companies want to have the supply order hard

pegged to the customer order that it is supplying, and once the supply reaches

the warehouse they do not want it inadvertently taken by another order or

demand.They also need visibility to where the Sales Order line is in the process atall times, so they can answer customer service inquiries.We call this process Back-to-back orders, indicating that the Sales Order and the supplying Purchase Order

are very closely linked, often where one PO is tied to one Sales Order. This paper

shows you how you can model this process using Oracle Order Management and

Oracle Configure-to-Order workflows.

INTRODUCTION

Often customers order products that you do not typically stock but that you do not

manufacture either. You may want to purchase that item specifically for this order,

have the supplier ship it to you, and then combine it with other items you may have

purchased or stocked to create one shipment to the customer. This is a common

scenario for Wholesale Distributors who use the S3(Sell-Source-Ship) business

model as well as for other demand channels. We call this process back-to-back

orders or procure-to-order.

Keys to making this business process work are automating the Purchasing

document creation, having accurate status of where the line is in the process, and

pegging (or hard reservation) of the supply to the demand, so that the inventory

isnt shipped to other customers once it is received.

This paper attempts to explain how this business process has been implemented in

Order Management using Configure-to-Order workflows, and offers some insight

into putting it to use.

WHAT IS SUPPLY-TO-ORDER?

To satisfy this business need, we have modeled a process called supply-to-order

which includes boththe familiar assemble-to-orderprocess in which a specific

work order is created to build the item and procure-to-order(or back-to-back

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orders) whereby a specific purchase order is created to fulfill the sales order

demand.

Supply-to-order items are either standard items or (with OM Family Pack H)

models that have the assemble-to-order item attribute turned on. It is this

attribute that launches the ATO workflows that deliver this feature. PTO models

by definition cannot be supply-to-order, since turning on the assemble-to-order

attribute would make them an ATO model. But you can have the shippableoptions of a PTO model be fulfilled via back-to-back orders by checking the

assemble-to-order item attribute of those components.

BUSINESS NEEDS

Oracle Order Management and the Oracle eBusiness suite provide you with the

features you need to meet and exceed your requirements around back-to-back

orders. With release 11i7, you can:

Designate the items you want to procure each time they are customer-ordered

as supply-to-order.

Set up a buy from sourcing rule for those items or, if you dont set upsourcing rules, indicate that the item is a buy item rather than a make item .

Enter sales order lines for these items, and have the supply automatically

created via a requisition. No user decision-making is required to make this

happen.

Have the requisition converted into a Purchase Order or a release of a blanket

Purchase Order, and have the PO or release sent to the supplier.

View the requisition number or PO number and its status from the Sales

Order.

Accept changes to the Sales Order and have the ability to notify the buyer totake appropriate action on the associated PO.

Reserve the supply from the Requisition to the PO and finally to the Sales

Order once the PO is received.

Pick, ship and finally invoice the customer for the product.

MAJOR FEATURES

To satisfy the above business needs, Oracle Order Management and Configure-to-

Order have combined to deliver the back-to-back business flow with the following

set of features:

Auto Create Requisitions

An automatic process called Auto Create Requisition is available that creates the

requisition in Purchasing for the Sales Order line. This process takes information



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from the sales order line and puts it in the requisition import interface tables so that

a purchase requisition can be created. This process can be run as a scheduled or

on-request concurrent process, or can be initiated online from the Sales Order line

using Progress Order action.

Flow of Reservation Supply from Requisition to PO to Inventory

The supply for the reservation is first linked to the requisition, then moves to thePO, and finally to Inventory as the PO is received. Visibility to the supply for the

reservation is provided in the View Reservations form.

Use of Workflow to Automate Process Steps

A new branch has been added to the existing Create Supply workflow subprocess

in the seeded generic sales order line workflow. Previously, the Check Supply

activity had results of Build or Flow. A new result of Buy initiates the

autocreate purchase requisition processing. This new workflow functionality was

released in 11i7.

SET UPThe following must be done to use Back-to-Back orders in Oracle OrderManagement.

Define Items

Use the familiar Inventory Master Items form to define the items that you wish to

supply to order. The following item attributes must be specified:

Item must be marked as Customer Orderable on the Order Management

tab and Purchasable on the Purchasing tab.

Item must be marked as Assemble-to-Order on the Order Management

tab. (This attribute is actually called replenish to order in the database.There is an enhancement pending to change the prompt for this field on

the Master Items form, to reduce confusion now that this flag also

controls procure-to-order.)

Item must be marked as Build in WIP on the BOM tab. There is an

enhancement pending to remove the dependency of this attribute being

checked, but for now, you have to do this to make this process work.

Item must either have the make/buy flag on the General Planning tab set

to buy, or else have a sourcing rule saying that it is to be sourced from a

vendor.

Define Sourcing Rules

If you define a sourcing rule for your supply to order items, then the sourcing rule

must be of type buy from. Also, you may only define one single sourcing rule for

your item, or this process will not work.



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You must then add this sourcing rule to the assignment set which is specified as the

MRP default assignment set in the MRP: Default Sourcing Assignment Set

profile option.

You may not have a combination of buy from and make sourcing rules or more

than one sourcing rule in the assignment set for the same item. If you do that,

Auto Create Requisition will error out, and will put details about what the problem

was in the log file.

PROCESSING ORDERS USING BACK-TO-BACK ORDERS

Sales Order Process

Entering orders using supply-to-order items is easy and straightforward. Here are

the steps:

1. Enter the item on the Sales Order line as usual.

2. When the line is scheduled, the create supply subprocess of the workflow

will put the lines through the buy ATO item flow which contains the

autocreate purchase requisition activity. AutoCreate Requisition can be

run as a concurrent program or can be initiated for an individual order by

using the Progress Order action on the Sales Order if it is in status

Create Supply Line Eligible. As stated above, AutoCreate Requisition

takes information from the Sales Order line and loads the Requisition

Import interface tables.

3. Next, Requisition Import must be run to create the purchase requisition

tied to the sales order line. This can be done by manually submitting the

Requisition Import concurrent program, or you can schedule it to run

automatically.

Requisitions created by this process all have an interface source type of

CTO, so you can identify and segregate these requisitions if you desire.

The requisition column Note to Buyer is populated by the AutoCreate

Requisition process with a message Supply for sales order: , so you can see what order number this line is for. You can add

additional custom text to the note by editing the message dictionary for

'CTO Note to Buyer'. There are also message dictionary entries for 'CTO

Note to Receiver which can be populated with custom text.

Purchasing ProcessOnce the purchase requisition is created and identified as CTO, the regular

purchasing process takes place.

1. A Purchase Order can be created and approved and sent to the necessary

supplier, or else a release of a previously created Blanket PO can be used.



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2. In either case, once the PO or release is received, the items are recorded in

inventory and a reservation is automatically made to the sales order line.

3. Throughout this process, you can know what sales order generated this

PO or release by viewing the Note to Buyer, as indicated above.

The Sales Order can now be pick released, shipped and invoiced just like other

stocked items.

Sales Order Line Status

There are several new line statuses that have been introduced as part of this

functionality. These statuses help you track where the line is in the process. The

new statuses are:

PO Req Requested

PO Req Created

PO Created

PO Received

If you want to see the Requisition number or Purchase Order number created by

your Sales Order line, you must go to the Reservations Details form to find that

information.

RESERVATIONS

Key to making this functionality work for you is how the inventory reservation is

handled. This happens automatically, and can be traced from the sales order form

by using Tools->Scheduling->Reservation Details as well as by directly using

Inventorys Supply/Demand forms.

When Req Import processes, the purchase requisition is reserved to the sales order

line. If you view the Inventory Reservations form, supply tab, you will see the

reservation is linked to a requisition, and you will see the requisition number and

line number.

When the requisition becomes a PO or a blanket release, the reservation moves

with it. The Reservations form, supply tab, then shows the reservation is linked to

a PO or a blanket, and you will see the PO number or the PO and release number,

as well as the line number.

When the PO is received into inventory, the reservation is automatically transferred

into Inventory, and it now looks like any other reservation from a sales order to on-

hand stock.

Just as in the regular ATO process, if the user manually reserves the sales order line

to inventory, then the Create Supply workflow step will not do anything, and the

line will progress to Awaiting Shipping without flowing through the requisition

process.



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CHANGES OR CANCELLATIONS

So what happens if you need to make changes to the sales order line that is in the

back-to-back process? What if the order line is cancelled? Or what if you need to

make changes to the PO or the requisition?

If the sales order line is cancelled or the quantity is reduced, then the reservation is

reduced and a notification is automatically sent to the buyer explaining that there is

now a PO outstanding for a higher quantity than what is needed for the sales order.The buyer can then decide whether to cancel the PO line, or to buy the product

anyway and put it into inventory.

If the schedule date on the sales order line is changed, again a notification is sent to

the buyer, who can then decide to either change the date on the PO or cancel it or

do nothing. If the buyer decides to cancel the PO, then a new requisition will be

created the next time AutoCreate Requisition is run.

If the PO is cancelled or a partial quantity is cancelled, then the reservation is

cancelled or reduced appropriately. The next time AutoCreate Requisition is run, it

will create another requisition for the unreserved amount on the sales order.

MISCELLANEOUS TIDBITS AND TROUBLESHOOTING

How about Internal Orders?

Yes, you can put a supply-to-order item on an internal sales order, and it will

process the same as on external sales order.

What about Drop Ship?

How is this process different from Drop Shipments? In both cases, your sales

order line creates a requisition line that becomes a PO sent to your supplier. In a

drop shipment, however, you instruct your supplier to send the item or configured

item directly to your customer. The items never physically pass through your

warehouse, and therefore you do not pick, pack or ship them yourselves. In the

back-to-back scenario, you instruct your supplier to send you the goods, and then

you ship them on to your customer.

New Supply Type for Reservations

This functionality added a new Supply Type of External Requisition to inventory

reservations. It also added the ability to show the purchase order or requisition that

the reservation is made to in the Inventory Reservations form.

Debugging

The AutoCreate Requisition program and the new code in Requisition Import that

processes reservations use the OM debug system. This means you can generate a

debug file if you set the OM debug profile and the OM debug log directory profiles

and then run those programs.



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PO has its own debug profile which is used by Req Import to log messages, but any

messages regarding the reservations are logged using OMs debug facilities.

AVAILABILITY

Back-to-back orders for ATO itemswere implemented with Order Management

Family Pack G and Discrete Manufacturing Family Pack G for Release 11i. You

must also implement PO Family Pack G to get all the changes made for thisfeature. You do NOT need to fully license APS if you are using the B2B

functionality on standard ATO items.

Back-to-back orders for ATO models(and drop ship of models) are implemented

with Order Management Family Pack H and Discrete Manufacturing Family Pack

H. You are required to have APS if you are purchasing configurations, through the

B2B process or through APS. Without it, your planning and forecasting will be

incorrect.

CONCLUSION

Oracle Order Management combined with Configure-to-Order workflows lets you

create and fulfill back-to-back orders in a seamless hands-off fashion that meets the

needs of Wholesale Distribution and users with similar supply-to-order

requirements.



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Back-to-Back Orders in Oracle Order Management

July 2002

Revised December 2002Author: Charlene Chandonia

Oracle Corporation

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Redwood Shores, CA 94065

U.S.A.

Worldwide Inquiries:

Phone: +1.650.506.7000

Fax: +1.650.506.7200

Web: www.oracle.com

This document is provided for informational purposes

only and the information herein is subject to change

without notice. Please report any errors herein toOracle Corporation. Oracle Corporation does not

provide any warranties covering and specifically

disclaims any liability in connection with this document.

Oracle is a registered trademark, and Oracle Order Management is a

trademark(s) or registered trademark(s) of Oracle corporation.

All other names may be trademarks of their respective owners.

Copyright Oracle Corporation 2002

All Rights Reserved

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Oracle Back 2 Back Order Process White Paper