Understanding the Reservation, Backorder, and Shortage Processes
Reservation and backorder rules can automate many of the rules that required manual decisions. You can configure a set of rules at the line and order level to define at what point the demand line or order is ready to move forward in the fulfillment process. The rules are applied at the reservation and shipping stages of fulfillment. Reservation and backorder rules do not apply to work order demand lines from PeopleSoft Maintenance Management.
See The Order Fulfillment Process.
Reservations
The default setting of the Reserve Materials process and online reservations processes is to soft-reserve partial quantities for a demand line and hold the line in the unfulfilled state. The demand line can go through the Reserve Materials process multiple times and could soft-reserve more stock each time. The demand line will be set to the releasable state when the full quantity is soft-reserved and it is within reservation lead days. This default setting can be overridden by using:
Reservation and backorder rules.
The check boxes for Partial Qtys Can Ship, Cancel Backorder, and Partial Orders Can Ship.
Use the reservation rules to tell the system when to release a demand line or order to the releasable state. Using reservation rules, the system can:
Set the demand line or order to the releasable state.
Notify the proper user of an issue needing manual attention (such as a shortage situation).
Not reserve or promise available inventory stock to the demand line based on the rule. This changes the default setting of the reservation process.
Based on the criteria on the reservation rule, a demand line could be put to the releasable state even if all or part of the requested quantity cannot be reserved; for example, if the rule says Set to Releasable when 90 percent of the line is reserved. If this case, a shortage would be created, then the backorder rule would determine what should be done about the shortage. The reservation rules determine the demand line's shortage quantity to be used by the backorder rules.
Based on the criteria that you establish on the backorder rule, the Reserve Materials process or the online reservation processes can:
Create a backorder.
Cancel a backorder.
Hold the demand line and notify the proper user in order to let the user make a manual backorder decision.
Release the shortage to the releasable state. This essentially lets the shortage flow downstream so that the backorder decision can be made at shipping time rather than during the reservations process
The reservation and backorder rules for the reservation stage of fulfillment are invoked by the following:
The Reserve Materials process.
The Shortage Workbench.
The online reservation processes for sales orders in PeopleSoft Order Management.
The online reservations for stock requests using the Create/Update Stock Request component.
Shipping
Backorder rules are also be used at shipping time to determine what to do with shortages that were released to picking and shipping but by shipping time still cannot be fulfilled. Based on the criteria that you establish on the backorder rule, the shipping processes can:
Create a backorder.
Cancel a backorder.
Backorders can be created, based on the check boxes or the backorder rules, by the Reserve Materials process, the Shipping/Issues component, the Shortage Workbench, the Picking Confirmation process (for autoship orders), and shipments processed by the fulfillment engine. Backorders are also created for the unallocated portion of partially lot-allocated sales order lines.
If a backorder needs to be created for just part of a demand line then the demand line is split. The backordering process adds a demand line for the unfulfilled quantity; the only change in the demand key for the second demand line is the demand line number (line number 2).
The following check boxes on the Setup Fulfillment and Setup Item Fulfillment pages, still apply to backorders created by backorder rules:
Term |
Definition |
|---|---|
Auto Backorder Approval |
Select to enable the Reserve Materials process to process backorders without manual approval. This option enables the Reserve Materials process to create reservations for the backordered demand when sufficient stock is available. If you do not select this option, the system creates backorder demand lines with a status of Backorder, and you must approve them manually on the Update Unreserved Orders page or the Shortage Workbench before making a reservation. |
Create Adhoc Requisitions |
Select to enable the Reserve Materials process to create an ad hoc replenishment request when insufficient stock is available to fulfill the demand line. Ad hoc replenishment requests are also created by the Shortage Workbench if a previously fully reserved demand line is unreserved and the first backorder line is being created. Ad hoc replenishment requests can also be created by the Shipping/Issues component when short shipping a non-backorder demand line. Ad hoc replenishment requests are created only if a backorder is created. PeopleSoft Purchasing or a third-party purchasing application then processes the ad hoc replenishment request. If you do not select this check box, backorders do not create adhoc replenishment requests. |