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The term “backorder” is common across most industries. They are also the bane of most customer
service organizations who are often caught in between struggling processes and angry customers. In
this two part series, I’ll discuss how to recognize a backorder issue, approaches to
identify sources, and how SAP can help?
WHAT IS A BACKORDER?
In its simplest de nition, a backorder occurs when there is insuf cient inventory to cover a sales order
item’s demand. It usually involves apologizing to the customer and providing a future date when the
product will be available to ship. Though it’s simple enough to de ne, it can be quite challenging to
identify and x the root cause of the shortage.
I was recently supporting a client who was struggling to meet customer demand after a challenging
implementation. [Disclaimer/CYA: I was not a member of the implementation team.] Orders were owing
nicely into the system, but product was trickling out. The customer service personnel found themselves
trying to prioritize customer orders and manually allocate material to them — often unsuccessfully.
Making matters worse, many of the items sold were kits consisting of several items and, in most cases,
one of those items was out of stock preventing the whole kit from being shipped.
One or two of the SAP standard backorder tools were implemented and running, but hadn’t been fully
thought-out or explained to the client. Unfortunately, the conclusion drawn by those involved in this
process was that SAP was not working. Of course, this couldn’t be further from the truth. SAP was
working, the business process was not.
Generally, when a backorder issue is identi ed two main concerns come to the
forefront: satisfying upset customers, and getting things back on track. To help organize your efforts, it
can be helpful to address the following questions:
Which products are affected? Hopefully, not many. Finding the scope of your product shortage will
help you start pulling together vested individuals — Product Managers, Buyers, Warehouse
personnel — to get a resolution identi ed quickly.
Which customers are affected? This can help you get your arms around the size and scope of the
issue and prioritize shipments in the short-term.
What is causing the shortage and how do I x it? This is at the heart of the problem. In many cases, a
Backorder is a symptom — not a problem — and it requires digging in and understanding the whole
supply chain to nd a resolution.
Some of these are very big questions — particularly that last one — and I won’t be able to address them
in detail. What I would like to focus on in this article is outlining a general business process and
explaining how SAP can help.
V_RA
like to
process and click the “Backorders” button.
4. There appears to be some functionality included on the “Backorder Processing – Overview” screen to
adjust material con rmations manually, but only for con rmations meeting certain circumstances.
There is also the ability to view details on ‘Pegged Requirements’ as well as the ‘Order Report’ —
which is an MD04 screen.
V.21
There are many ways to go about this process, but considering I’m an SD consultant the best place to
start is with the Sales Order and work backwards. Here is one approach for digging deeper:
1. Once backordered materials are identi ed, compile a sample list of Sales Order lines that are
affected.
2. Using the Change Log for each order, do some research and paint a picture of what’s happening to
your order lines. The Environment –> Changes menu path is easily accessible from the Sales Order
Overview screen. One recommendation is to include a speci c line item in your selection screen,
select the “Additional info” checkbox, and sort the list by “Time of change”. This will present a
chronological listing of changes for you to analyze. What you’re looking for are clues that may help to
identify when the issue started.
3. Next, I would analyze the Stock/Requirements list using transaction MD04. This will give you
visibility into the demand and supply for your items. It’s at this point in time where you should start
to get a general idea of where the problem is. In most cases, you will see a disproportionately low
amount of supply. Some things to look for:
Missing or unconverted planned orders
Un-received production orders or purchase orders
Mis-matched supply and demand — demand is pulling from an incorrect Storage Location
4. From here, you have to follow the breadcrumbs and see where they lead. For instance, if planned
orders are not being converted you need to follow-up with the MRP planners to see who, if anyone, is
monitoring that product. If production orders are un-received, nd out why. Keep in mind that there
could be multiple root causes contributing to the issue — incorrectly executed processes and bad
data are a couple of perennial favorites.
I will also recommend that once a solution is identi ed that it be fully implemented. In addition to
designing or developing the solution, proper communication and documentation should be made.
Unfortunately, these are frequently overlooked. Having a formalized training plan — or, at minimum, a
robust communication plan — can assure that everyone has been noti ed about the process. Proper
documentation assures that processes and data standards are accessible and clearly understood. It can
be time consuming to do this, but frequently pays dividends down the road.
PART 1 WRAP UP
I didn’t originally intend for this to be a multi-part series but I realized that there was a LOT of ground to
cover with this topic. It started to feel like that it may never get published at all if I don’t get at least part
of it rolling.
In this rst article we de ned backorders and identi ed a few ways to determine whether you’re
wrestling with a problem. I also mentioned a few approaches for analyzing your backordered items to
help nd a root cause for the shortage. Finally, I covered the importance of solving the issues as a team
and properly documenting and communicating any actions taken to resolve the issues. In the next
article, I will cover some of the functions in SAP that help manage backorders.
BACKORDERS SAP V_V2
10 THOUGHTS ON “SAP: EXPLORING BACKORDERS (PART 1)”
Meintje
FEBRUARY 28, 2016 AT 4:31 AM
michael
FEBRUARY 29, 2016 AT 10:02 AM
Sumit jaitly
JANUARY 18, 2017 AT 5:29 AM
Hi Michael,
Great work here to help beginners with the Back order process. Could you please get the second
part out as soon as possible covering rescheduling as well.
Regards,
SJ
michael
FEBRUARY 6, 2017 AT 4:44 PM
Sumit,
I have a draft article going for Part 2. I’ll see what I can do to expedite publishing, but my schedule
has not been favorable as of late.
Michael
RV Rao
APRIL 6, 2017 AT 2:16 PM
Hay,
Great article, Availability check and its related areas are always confusing and challenging to many
..many SAP guys.
Thanks for a great one in this area.
Please share more on this area and many..many SAP guys will be
thankful to you.
michael
APRIL 6, 2017 AT 4:26 PM
Thanks, RV. I’ve got a follow-up to this article almost ready to publish. Stay tuned.
Cristian
FEBRUARY 7, 2019 AT 7:51 AM
Excellent article.
Do you know if there is any way to combine backorders from different orders in one single delivery?
Cristian
michael
FEBRUARY 7, 2019 AT 11:00 AM
Cristian: Thank you for the comment. Yours is a good question. Unfortunately, I am unaware of
any backorder-speci c delivery combination functionality. There are some general delivery
combination functions that already exist. You can search online for these, but it will most likely
include selecting an delivery combination attribute on your customer and making sure speci c
copy controls are in place between your sales order and delivery. Good luck. Please let me me
know if you nd anything that works. -Michael
Kasia
MARCH 21, 2019 AT 6:00 AM
Hello, I’m the bigginer in SAP SD so don’t be astonished by my question :-). I’m reading about V.15
and while executing this t-code I can’t nd List Variant 1, 2, 3. Where is this ? Thank you in advance.
michael
MARCH 21, 2019 AT 11:55 AM
Thanks for the comment, Kasia. The List Variant is at the bottom of the V.15 screen. …the very last
eld. -Michael
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