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Wednesday, February 4, 2009

Back-to-Back Order Cycle

In today’s 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 at all 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.


Key Business Drivers
  • Lower inventory cycle time and cost
  • Link supply to specific demand
  • Can offer a variety of product to customer
  • Used heavily in contract manufacturing environment where the product is standardized and the company plans to focus more on product design rather than manufacturing.



  1. Create a B2B item :
    • In the Order Management tab, check the Assemble to Order flag (ATO).
    • In the Purchasing tab, enter a value in the List Price field (in this demo it is 100).
    • In the Work in Process tab, make sure the Build in WIP flag is checked.
    • In the General Planning tab, set the Make or Buy flag to Buy.
    • Save, and assign to Organization M1
Note: the ATO item attribute is checked as the B2B process utilizes the ATO process of the workflow. However, the item is not manufactured in WIP, and instead is a 'Buy' item that is replenished by a supply order in PO. Hence the item may also be called an ATO Buy item




  1. Assign the item to the price list
  1. Make sure the following periods are open:
    1. Inventory Accounting Periods
    2. Purchasing Periods
    3. GL Period
  1. Create a sales order with Order Type Mixed and enter the B2B item in the lines for any quantity.
  • Keep Source Type=Internal. (If it is External then it will be a Drop Ship order)
  1. Book the order. Note down the Order Number. Booking will progress the order line to workflow activity “Create Supply Order – Eligible”.
  • The line status will move to Supply Eligible (flow_status_code SUPPLY_ELIGIBLE)
  1. Place cursor on the line and go to Actions > Progress Order. Select Create Supply Order - Eligible to progress the workflow of the line.

    This will insert the data into Requisition Interface table as well as progress order line workflow to SHIP_LINE activity.
  • The line status will now show PO-ReqRequested (flow_status_code PO_REQ_REQUESTED)
  • OM has inserted a record in the PO requisitions interface table.
  • Check reservation status: Go to Tools > Scheduling > Reservation Details > 'Supply' tab. Right now it is Inventory as Requisition is not yet created.
  1. Go to Purchasing > Reports > Run and run the concurrent program Requisition Import with the Import Source parameter = CTO (or blank). Leave the other parameters as default. The concurrent program can also be run from OM > Orders, Returns > Requisition Import


  • The line status of the sales order line will now show PO-ReqCreated (flow_status_code PO_REQ_CREATED)

  • Creation of requisistion also create data in MTL_RESERVATION table, with supply_source_line_id = requisition_line_id and demand_soure_type = requisition.
  • Check Reservation status: Go to Tools > Scheduling > Reservation Details > 'Supply' tab. As the requisition has created now the supply for reservation changes
  1. Go to Purchasing > Requisitions > Requisition Summary.
  • In the Find Requisitions window, enter requisition number found in the previous step and click on Find.
  • Verify that the status is Approved Requisition must have status APPROVED as we ran Req. Import with Requisition approval initiation= Yes
  1. Go to Purchasing > Autocreate.
  • From Edit > Clear > Record, clear any query criteria that may be defaulted.
  • Enter requisition number and click Find.
  • Check the checkbox to the left of the line, and click on Automatic.
  • Enter the Supplier and Supplier site such as the following and click on Create
  1. The Purchase Order form will automatically open with the PO that got created.
  • Click on the Approve button.
  • Click on the OK button in the Approval Documents window to approve the PO.
  • Note down the PO number, and verify that the status is Approved
For More details also Refer: Requisition to Pay Cycle
  • The line status of the sales order line will now show PO-Created (flow_status_code PO_CREATED).

  • Once PO got approved MTL_RESERVATION table got updated with supply_source_line_id = PO_LINE_ID and demand_soure_type = PO 
  • Check Reservation status: Verify that the order line is reserved against the PO.
  1. Go to Purchasing > Receiving > Receipts.
  • Enter Purchase Order number and click on Find.
  • In the Receipts window, check the checkbox to the left of the line and enter
    1. Destination Type : Inventory
    2. Subinventory : FGI
    3. Save the receipt.
  1. Go to Purchasing > Receiving > Receiving Transactions Summary.
  • Enter the Purchase Order number and click on Find.
  • Click on the Transactions button.
  • Verify a Receive and Delivery transaction. This means that the B2B item has been received into Inventory.
  • The line status of the sales order line will now show Awaiting Shipping (flow_status_code = AWAITING_SHIPPING)
  • Check Reservation status: As the material is now in FGI sub-inventory, supply changes to Inventory.
  • Check Shipping status of Order on shipping Transaction Form.
  1. Pick Release the Sales Order
 
 .

  • Make sure all the concurrent program gets completed successfully.
  • Check Shipping status of Order on shipping transaction form.
  • Check Line Status on Order.
  1. Now the Line is eligible for Shipping Activity. Ship Confirm the Order and verify the line status.
  1. Go ahead with invoicing the Order Line/s.
  2. In this case there will be two invoices.
    1. One in AR which will be issues against Sales Order
    2. One in AP which will be issued against Purchase Order / Receipt.
Managing Changes in Purchasing
  • Changes to a requisition (other than requisition cancellation) will NOT be reflected in the reservation to the sales order. Therefore, it is recommended that users never change a requisition with source type CTO. 
  • If the PO is canceled without canceling the requisition, the reservation is transferred back to the requisition. If both are canceled, the reservation is removed. In the latter case, you can run the autocreate purchase requisition batch program to create a new requisition for sales order.
  • If a partial PO quantity canceled, or the PO qty is reduced, then the reservation quantity is reduced accordingly. Again, run the autocreate purchase requisition batch program to create a new requisition for the outstanding quantity.
  • Receive an Assembly: When a purchase order has been reserved to the sales order, the inventory will be automatically reserved against the sales order when you receive the purchase order.
  • Once a sales order reservation to the PO has been removed (either automatically or manually), it cannot be manually re-reserved. You can manually reserve on-hand stock to the sales order or the autocreate purchase requisition batch program can pick it up again and create a new supply order along with a new reservation.



If for some business reason customer needs to cancel the PO and requisition, in such a case Cancellation of PO result in deletion of the complete record from MTL_RESERVATION table and also B2B order line workflow rewind back to “Create Supply Order – Eligible” workflow activity , also flow status code on OE_ORDER_LINES_ALL updated back to "Supply Eligible"
Now if user cancel the requisition and once again progress the workflow it result in creation of new requisition ( via requisition import) and now record in mtl_reservation table.


Also refer a White paper on Back 2 Back order. Metalink Doc ID 396951.1


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46 comments:

  1. Devendra thanks for a nice and article.

    Can we say that the Back-to-Back Order Cycles uses Drop ship org functionality.

    Regards
    Mahadev

    ReplyDelete
  2. Thanks for your comment...
    Mahadev could you please elaborate what do you mean by "Back-to-Back Order Cycles uses Drop ship org functionality". Are you asking about the workflow?

    ReplyDelete
  3. Devendra,

    I tried posting twice earlier but it just couldn't go.

    Since in Back-to-Back Order Cycles the Inventory is not held by the Organization and since the Drop Ship Org functionality also doesn't hold inventory I was wondering whether we can say that Back-to-Back Order Cycles use Drop Ship Org.

    Many thanks again for the write-ups. Can you please also post something on Intracompany/Intercompany/COGS using screen shots in OM/INV/AR/AP/GL in your articulate style.

    Regards
    Mahadev

    ReplyDelete
  4. Hi Mahadev
    1. In drop-ship, no actual shipping activity is done from our end. It is done by supplier only. Physically material does not come to us.

    2. In B2B, supplier ships material to us and then we ship it to customer. So in B2B we do hold inventory for very small duration (from receipt to shipping). B2B is generally used when ‘you don’t want to disclose your customers to your supplier’
    OR
    ‘some items to make and some you purchase but want to ship at one shot e.g. you manufacture LAPTOP and purchase charger. In this case you will use B2B for charger as and when demand comes for LAPTOP’
    OR
    ‘you want to do inspection in your premises before it goes to customer’ and so on… there are many other reasons.

    3. B2B and Drop-ship are the flows or say concepts used in demand driven businesses. But these are not same.
    Hope I answered your question.

    Some other post you asked for will be published… but I don’t when as I prepare it when I get time… 
    I will try my best to make as many documents as I can with good content...

    ReplyDelete
  5. Devendra,

    Perfect. Thanks for the amazing insight into these concepts.

    Kind Regards
    Mahadev

    ReplyDelete
  6. Hi Devendra,

    Iam still unclear on why we need to check ATO flag in inventory.

    Regards,
    karthik

    ReplyDelete
  7. Hi Devendra,

    Can you please elaborate on the ATO flag.

    Regards,
    Sandeep V

    ReplyDelete
  8. Hi Sandeep,
    The explaination given by Oracle on Metalink is that "B2B process utilizes the ATO process of the workflow".
    So to make that line follow ATO flow we need to check the flag.
    Even I don't understand it in depth.

    Thanks
    Devendra

    ReplyDelete
  9. Hi,
    I have setup all the required attributes for B2B but when i booked the order it is not in supply eligible status.

    ReplyDelete
  10. In what status your line is in?

    -Devendra

    ReplyDelete
  11. After setting up the MRP:sourcing profile option..now i can see the supply eligible status but when i pogress this order..it should be PO REQREQUESTED STATUS but it is in EXT REQREQUESTED...PLEASE help me

    ReplyDelete
  12. Have you tried for req. import? Also please check the workflow activities, it will help you to check where exactly lines is stucked
    What is the status of reservation in Item Reservation?

    ReplyDelete
  13. Hi Dev,

    In Back to Back order, as soon as i progress the order, it trigerrs AutoCreate Final Assembly Orders and Assemble To Order Mass Load Report instead of POReqRequested.

    What would be the reason?

    Regards,

    Saravanan

    ReplyDelete
  14. Hi Saravanan,
    For normal ATO item in B2B cycle, the eligible activity is not the one which you specified.
    I am not sure why you are geting so. I think you need to check item attributes, please check the BOM type... and some more attributes.

    Thanks
    Devendra

    ReplyDelete
  15. I cheked the item revision...this is resevable as well as subinv is also resevable.

    ReplyDelete
  16. I also cheked the wokflow...it is stucked at "CREATE ATO SUPPLY" when i zoomed in it is going with this flow....check supply type---->buy ato item flowTHEN END....

    ReplyDelete
  17. Very Nice Document

    Regards,
    Ashish Wakale

    ReplyDelete
  18. Hi Dev,

    On back to back process, out of 2 SO line if i picked and shipped one line, so the system will automatically unreserve the against the second line? (because my second line changed to supply eligible and i already received the material)

    Regards
    Madhu

    ReplyDelete
  19. Hi Mahadev,

    In Back to Back process, out of 2 so lines if i complete the process (pick & ship) against the line 1 so the second line reservation automatically gets unreserved? (becuase on so line 2 status showing supply eligible however i have already received the material)

    REgards
    Madhu

    ReplyDelete
  20. Hi Madhu,
    These two lines acts independently, and even if you complete process for line-1, still you need to do PO receipt and shipping process for line two as well.
    In your case line two showing status 'Supply Eligible' and the most possible reason is you must have created Req and PO only for line-1 and not for line-2. These both lines should be posted to Purchasing as requisition. Or you have you done 'Return to Vendor' for line-2 after doing receipt?
    But as long as your question goes... on shipment of line-1, there should be NO effect on reservation or status of line-2.

    Thanks
    Devendra

    ReplyDelete
  21. Hi Dev

    When i tried B2B cycle.The line status is "awaiting supply" instead of "supply eligible" .This happens only for ceratin items and some other times works fine..i compared the item setups but could not find which item attribute actually triggers this problem.Can u please help

    ReplyDelete
  22. Hi Michelle,
    I think the items for which the flow is not working must be 'Internal Orders Enabled', although I am not sure please check this.
    Also I would suggest you to please go through on Metalink document "Back-to-Back Orders in Oracle Order Management [ID 396951.1]".

    Thanks
    Devendra

    ReplyDelete
  23. Its nice document about Back to Back orders.

    Thanks
    Mohan

    ReplyDelete
  24. excellent devendra, goodwork keep it up hope to see many documents in near future,

    I have recently completed my oracle functional distrubtion module, can u help me with some real time issues and the interview questions. I Am having interviews schudled next week and what are the major areas that i have to concentrate.

    Thanks
    V.Anil Kumar

    ReplyDelete
  25. Kamesh here.

    thanks a lot for the nice document. When i'm trying the same, the order line is going to 'Awaiting Supply' status. Could you please let me know from which item template you copied the attributes while creating the new item.

    Thanks a lot.

    ReplyDelete
  26. It is nice work regarding the B2B functional concept.Please elaborate the differences in 11i and R12 "Back-To-Back order cycle".Thanks.

    ReplyDelete
  27. Could you please provide your view regarding below issue.
    Background: I have created one B2B Sales Order.
    Sales Order: SO1
    Item: Item1
    Quantity: 10
    UOM: Pieces/Pcs

    Item is lot controlled.

    I have completed all the process of receiving and delivered to Inventory.

    Now i want to Return some of the Quantity say 5 Pcs to Supplier.

    What is the standard Procedure for that?

    P.S.
    Reservations are made against SO at the time of Receipt. So Received 10 Pcs are reserved against SO.

    Provide you view.

    ReplyDelete
  28. I need tried this scenario so need to replicate it. Have you tried doing Return to Supplier (RTS) based on the receipt? Did you get any error or warning message ?
    Standard process shall be remove the reservation and then to RTS.

    Thanks
    Devendra

    ReplyDelete
  29. Hi Devendra,
    Thanks for posting the wonderful article.

    This article is perfect except for 1 key Item Attribute Setup which you have mentioned in the post but does not show up in the steps.

    Item Attribute "Make" or "Buy" (in General Planning Tab) determines the behavior of the workflow.

    If the attribute is set to "BUY" it will trigger Purchase Requisition and if the attribute is "MAKE" it will create WIP Job. (answer to Saravanan's query above). Sometimes this goes unnotices as the default Item attribute while defining the items is set to BUY.

    For above queries from Karthik and Sandeep -
    ATO flag (Assemble to Order) needs to be checked because it determines the workflow activity in conjunction with attribute MAKE or BUY. The attribute ATO itself explains that the Item is Assemble to Order but the attribute Make or Buy suggest whether to make the item (Create Discrete Job) or to buy from supplier (Create Purchase Requisition)

    Hope this helps

    ReplyDelete
  30. Hi Sachin,
    Thanks a lot for your comment.
    I should have taken a screen shot of MAKE or BUY attribute to highlight it.

    Devendra

    ReplyDelete
  31. Thanks Dev for the excellent doc...

    ReplyDelete
  32. #just couldn’t leave your website before telling you that we really enjoyed the quality information you offer to your visitors… Will be back often to check up on new posts.

    ReplyDelete
  33. Hi DEV It's Rohit,i think you remember...........
    Your all posts are very useful to me........it resolves my lots of confusions about OM.

    Thanx,,,,,,,,,

    and whats going on n whr u nw days...........?

    ReplyDelete
  34. Devendra,

    Order lines are in "Awaiting Supply" status. Unable to get the "Supply Eligble" status.

    All setups are matching exactly to what you mentioned.

    1. Used Purcased Item template to create the item
    2. OM tab: ATO flag is Enabled.
    3. WIP tab: WIP flag is Enabled
    4. Genal planning tab - Item type = Buy.

    I looked at the order line workflow..Used the Generic Line workflow for ATO Item.

    "Check Supply Type" node is returning a value = "Planning". This is causing the issue. I could not get any document that talks about Check Supply type yeiling a value as "Planning" as output. I was expecting it to give "Buy" as the result. Just to add I verified the Planning Method in General Planning tab - It is non Planned. I even tried setting the Planning method in MPS/MRP planning to "Non Planned", unchecked the Create supply check box.. still behaving the same..

    ReplyDelete
  35. Thank you!! It really helped me!

    ReplyDelete
  36. Hi Devendra,
    Article seems to be great but unfortunately my browser is not able to download the pics. Could you please check if the images are deleted from the server.
    Thanks,
    Sujay

    ReplyDelete
  37. Hi sujay,
    Thanks for pointing it out... I will load images soon by that time please use below link

    https://docs.google.com/document/d/1Fxsydsl2NNDOU5H6eOc4IjQhubczFu9VFbWyDWTZOuM/edit?pli=1

    ReplyDelete
  38. Hi,

    If there is no Automatic Document Creation (ASL, Sourcing rule, Sourcing Rule Assignement), then the B2B process will create WiP JOB. This is the requirement for the ATO flag is Enabled.

    Thanks
    Subramanyam Jayaram
    +91-888 680 1966

    ReplyDelete
  39. Thank you for this site. It is so helpful.

    ReplyDelete
  40. This document is good.
    But anybody in the forum explain us the cause to this issue.
    Document has been enough praised an that too rightly.
    But time we move on and get na answer to the below questions.

    1."In Back to Back order, as soon as i progress the order, it trigerrs AutoCreate Final Assembly Orders and Assemble To Order Mass Load Report instead of POReqRequested."

    What would be the reason?

    2."When i tried B2B cycle.The line status is "awaiting supply" instead of "supply eligible" .This happens only for ceratin items and some other times works fine..i compared the item setups but could not find which item attribute actually triggers this problem.Can u please help"

    ReplyDelete
  41. Hi Devendra, I have very urgent issues. For back to back for configured items, when requisition is getting created, different prices are coming in star items. In some cases, requisition price is picked from the list price that is okay but in some cases, we don't have clue from where it is coming...Is it possible it can come from rollup cost. But then what are the cases when it will be picked from rollup or listprice? Please answer Thanks for your cooperation...

    ReplyDelete
  42. Dear devendra, i am new to oracle. in the B2B process, can i use my exisint on-hand inventory or can i block my on-hand inventory to the b2b sales orders??pl reply. thanks

    ReplyDelete
  43. Hi, If the stock received against a PO which is created through Back to Back sales order, the stock will be reserved against the particular B2B sales order.

    In case if customer cancels the order, can it be made as free stock and reserved to some other sales order? If so how is the process? Pls help

    ReplyDelete
  44. If the stock received against a PO which is created through Back to Back sales order, the stock will be reserved against the particular B2B sales order. In case if customer cancels the order, can it be made as free stock and reserved to some other sales order?

    ReplyDelete
  45. Hi, If the stock received against a PO which is created through Back to Back sales order, the stock will be reserved against the particular B2B sales order.

    In case if customer cancels the order, can it be made as free stock and reserved to some other sales order? If so how is the process? Pls help

    ReplyDelete
  46. Hi, If the stock received against a PO which is created through Back to Back sales order, the stock will be reserved against the particular B2B sales order.

    In case if customer cancels the order, can it be made as free stock and reserved to some other sales order? If so how is the process? Pls help

    ReplyDelete

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