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.