Back-to-Back Orders in Oracle Order Management

An Oracle White Paper July 2002 Revised December 2002

Back-to-Back Orders in Oracle Order Management


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 ‘Backto-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.

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 isn’t 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.

To satisfy this business need, we have modeled a process called ‘supply-to-order’ which includes both the familiar ‘assemble-to-order’ process 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 shippable options of a PTO model be fulfilled via back-to-back orders by checking the ‘assemble-to-order’ item attribute of those components.

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 don’t set up sourcing 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 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.

• • • • •


To satisfy the above business needs, Oracle Order Management and Configure-toOrder 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 the PO, 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.

The following must be done to use Back-to-Back orders in Oracle Order Management.
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.


Entering orders using ‘supply-to-order’ items is easy and straightforward. Here are the steps: 1. 2. Enter the item on the Sales Order line as usual. 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. 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: <order number>’, 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 Process


Once 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. 3.

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. 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.

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 Inventory’s 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 onhand 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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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.

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.

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 OM’s debug facilities.

Back-to-back orders for ATO items were 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 this feature. 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.

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 2002 Author: Charlene Chandonia Oracle Corporation World Headquarters 500 Oracle Parkway Redwood Shores, CA 94065 U.S.A. Worldwide Inquiries: Phone: +1.650.506.7000 Fax: +1.650.506.7200 Web: This document is provided for informational purposes only and the information herein is subject to change without notice. Please report any errors herein to Oracle 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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