Back to Back Order Process

Author: Date written: Declaration: I hereby declare that this document is based on my personal experiences. To the best of my knowledge, this document does not contain any material that infringes the copyrights of any other individual or organization including the customers of Infosys. Project Details Project code: EDLCHNSZ Projects involved: Self Learning S/W Environment: Oracle Applications 11i Project Type: Self Learning Target readers All Scope: The scope of this document is to help users/implementers to have sound knowledge on Back to back functionality. Overview The internal requestor orders products that you do not typically stock or 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 (SellSource-Ship) business model as well as for other demand channels. We call this process back-to-back orders or procure-to-order. Back to Back process helps you 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 up sourcing rules, indicate that the item is a buy item rather than a make item. Raja Ramamoorthy 18 Aug 2009

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 to take 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.

The Back To Back Order from Supplier process dealt with in this document has 3 major entities:

The Requestor who orders the item(s)

The Order Processing Company, who takes the orders, and will fulfill the order by requesting a vendor to supply the item,. The Supplier, who receives the Purchase Order from the Order Processing Company, and ships the item to the Order Processing Company,.

Back To Back Order Flow

Internal Requestor Places the Order (IRISO)

Internal Requestor OPC Ships to Internal requestor OPC places order with Supplier

Order Processing Company (OPC)

Supplier Supplies the Goods

Supplier

Setups Steps: 1. The below mentioned Item Attributes should be enabled: Customer Orderable Assemble-to-Order Purchasable Enter List Price Build in WIP Make/buy flag on the General Planning Navigation: Inventory Window Items Master Items Window Customer Orderable and Assemble-to-Order should be enabled on the Order Management tab.

Note: The Assemble-to-Order attribute is actually called Replenish to Order in the database. The same flag also controls Procure-to-Order. Purchasable on the Purchasing tab and enter List Price

Build in WIP on the WIP Tab.

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.

2. 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. 3. You must 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.

Process Steps: Enter and approve the internal requisition Create internal orders and import the order Progress the order to automatically create a requisition for the order Create a PO to source the items from a supplier and send the same to the supplier Physically receive the ordered items (on the PO) into the inventory Pick Release and Ship Confirm the sales order Requestor receives the shipped goods in Inventory or Expense if the type of transfer is in transit. If the type of transfer is direct, shipping by the shipping organization automatically creates a logical receipt in the destination organization without any manual intervention. 1. Creation and Approval of Internal requisition:

2. Create internal orders and import the order

3. View Internal Sales Order

http://download.oracle.com/docs/cd/A60725_05/html/comnls/us/po/ireqov03 .htm Purchasing uses location associations to create internal sales orders from internal requisitions for a given deliverto location. When you associate a customer and customer site with a location and then enter an internal requisition with that location as the deliverto point, Purchasing uses the associated customer and customer site on the internal sales order that it creates. The associated customer site becomes the shipto site for Order Managements ship confirmation. In case of IR-ISO across 2 operating units, the internal customer ship-to sites have to be defined in both the operating units (source and destination) along with their location association when iProcurement is used to create internal requisitions. If internal requisitions are created from Core Purchasing then this setup is required only in the source operating unit. The import process creates the internal sales order in Booked status. The order line status after booking becomes Supply Eligible. The order needs to be manually progressed to the next stage where the supply gets created. This can be done by doing Progress Order. During this step the data from the order lines is populated in the requisitions interface table. 4. Internal Sales Order Processing

The order line status after booking becomes Supply Eligible. The order needs to be manually progressed to the next stage where the supply gets created. This can be done by doing Progress Order. During this step the data from the order lines is populated in the requisitions interface table. Alternatively, user can run the concurrent request Autocreate Purchase Requisitions to create the supply for the order line. Notes: 1. This concurrent request should be made selfincompatible to avoid duplication in creation of supplies. 2. This concurrent request should ideally be run after Reserve Orders to ensure that the order lines are first reserved from existing on-hand before ordering the balance from suppliers. 5. Order Processing Reservation on Requisition

Create Requisition After the Requisition Import program is run, the order line status becomes PO-ReqCreated. The requisition number can be seen in the Item Reservation window. This reservation is a soft reservation. If the order line is unreserved then the link of the order line to the purchase requisition is broken. In this case, order line status changes back to Supply Eligible and the whole process has to be repeated. The next step is to create a PO from the requisition so that the same can be sent to the supplier. The PO can be Autocreated from the requisition. 6. Order Processing Reservation on PO PO Creation The PO can be autocreated from the requisition. After the PO gets created, the order line status becomes PO-Created and the demand gets pegged to the PO. This reservation is a soft reservation. If the order line is unreserved then the link of the order line to the purchase order is broken. In this case, order line status changes back to Supply Eligible and the whole process has to be repeated. Next items in the PO are received following the standard receipt process. This is an actual receipt that happens in inventory.

The reservation for the sales order shifts to the PO

7. Order Processing Reservation on Inventory

PO Receipt

Physical receipt of goods in the inventory is completed. After the items are received in inventory the order line status becomes PO-Received and then Awaiting Shipping. The reservation now shifts from the PO to inventory. This reservation is a soft reservation. If the order line is unreserved then order line status changes back to Supply Eligible and the whole process has to be repeated. However in this case, we can reserve the line against on-hand inventory again instead of creating a new purchase requisition. The process of pick release and shipping is same for both Customer Sales Order and Internal Sales Order. Received Inventory should be reserved for corresponding internal SO 8. Ship inventory reserved for SO The next process after receiving the goods against the PO will be reservation of the received goods against the internal sales order. The Shipping documents are generated to ship the goods against the original internal requisition. 9. Receive against original IR: And finally the reserved Inventory for the sales order is pegged to meet the demand raised by the internal requisition. The receiving of goods for the internal requisition takes place in the purchasing Summary: Enter and approve the internal requisition Create internal sales orders and import the order Progress the order to automatically create a purchase requisition for the internal sales order demand Create a PO against the purchase requisition to source the items from a supplier. Physically receive the ordered items (on the PO) from the supplier into the inventory of the order processing organization. Reserve the received goods from supplier against the Internal sales order Now process the internal sales order Pick Release and Ship Confirm the internal sales order Requestor receives the shipped goods in Inventory or Expense if the type of transfer is in transit. If the type of transfer is direct, shipping by the shipping organization automatically creates a logical receipt in the destination organization without any manual intervention.