Availability Check, Transfer of Requirements, and Backorders
Promising accurate and reliable dates for delivery to your customers is a key element of the order fulfillment process in today’s competitive environment. In the SAP ERP software, the availability check functionality provides this accuracy and reliability. In this chapter, we will discuss the availability check functionality in detail including its relationship to transfer of requirements, backorder processing and order rescheduling. During these discussions, we will also walk you through the required customization settings for these functions and, as always, provide Galaxy Musical Instruments case studies to further clarify the topics.
Meaning and Relationship
The schedule line in a sales order contains information about the quantities of a material ordered by the customer and the corresponding delivery date requested by the customer for delivering the material. In the SAP ERP world, the delivery date quoted by the customer is called the customer-requested delivery date. When taken together with the delivery quantity requested by customer for such a date, the term used is material requirement. Material requirement–related information is vital to the MRP department’s ability to make production/ procurement-related decisions. In the SAP system, this information is transferred to MRP using the transfer of requirements (TOR).You can transfer requirements either individually or collectively. An individual requirement transfers the material demand for each schedule line to MRP, whereas a collective requirement transfers summarized data on a daily or weekly basis to MRP. Accordingly, you can trace back an individual requirement to the order from which it originated, while the same is not possible in a collective requirement.
An availability check (AC), on the other hand, is the functionality that helps you confirm the schedule line in an order and thus facilitate the customer’s order confirmation/ promise process. When carried out in the context of a sales order, the AC process checks the stock availability for the material in the delivering plant / warehouse. If sufficient quantities are available to meet the customer-requested delivery date, the AC then confirms the customer-requested delivery date on the schedule line. In situations where the requested delivery date cannot be met because of a shortage of stock, the AC is also capable of proposing a future date when the delivery quantities can be confirmed for an order. While calculating, the availability check also considers various lead times such as procurement/production lead time, plant/warehouse processing time (including aspects such as pick/pack, load /unload, transportation planning time, and goods issue /receipt time), and shipment transit time. This helps you make accurate and reliable calculations about the delivery dates that you can promise to the customer. This also provides a visibility into manufacturing / procurement capacity, warehouse processing capacity, and transportation capacity.
The TOR functionality is a prerequisite for carrying out the availability check. You can configure TOR to work without an availability check but not the other way around. This is really beneficial in scenarios where you don’t want the availability check to happen for the material but want the requirement to be transferred to MRP for production/procurement decision making. There is no hard-and-fast rule for what materials should be included for both the availability check and the transfer of requirements, what should be included only for the transfer of requirements, or what materials should be excluded from both the transfer of requirements and the availability check. The decision depends upon the business requirements and the way MRP strategies are used to handle such requirements. Therefore, it is always best that you work closely with your PP and MM counterparts when configuring the transfer of requirements and the availability check in the SAP ERP software. A few common examples of where the availability check is generally switched off are KANBANrelevant materials, bulk materials, slow-moving inventory materials, and so on, where you control the procurement/production-related decisions using other planning strategies and methods available in the MM/PP application of the SAP ERP software.
Types of Availability Check
There are three types of availability checks:
Check against available- to-promise quantities
Check against product allocation
Check against planning
Check Based on Available-to-Promise Quantities
Here the check is performed against available-to-promise (ATP) quantities. This check considers the currently available stock and also the stock that will be available in the near future for availability check calculations. In equation form, this can be depicted as follows:
Check against ATP = Available stock + Future receipts – Future issues where Available stock refers to the stock available in hand at the delivering plant/warehouse.
Future receipts represent all the inward movement of goods that can add stock in the delivering plant/warehouse. Purchase order, production order and stock transfer order are a few examples of documents that trigger inward movement of stock. Future issues are all the outward movement of goods that can lead to the consumption of stock from the delivering plant/warehouse. Sales orders, deliveries, stock transfer orders, and assembly orders are a few examples of documents that trigger outward movement of stock. Production order, assembly order, and stock transfer order play dual roles, because they are responsible for the addition as well as consumption of stock. This type of check is performed dynamically for each transaction. In SAP SD, you can perform this check with or without replenishment lead time (RLT), which is the time to refill/replenish the inventory of the delivering plant.
Check Based on Product Allocation
Unlike the check based on ATP, in which allocation happens on a first-come, first served basis, here you set up a maximum limit for the material quantity a customer can place order for. This check helps with the allocation of products to certain customers/regions so as to control the overall distribution. This is really helpful in scenarios such as new product launches, high-demand/hot sale products with limited
supply, and products with higher lead times for production for which you want to restrict the stock quantity per customer so as to control the distribution of such products to the customer.
Check Based on Planning
Here the check is performed against independent requirements that are generated from demand-planning applications such as SAP APO-DP. These requirements are generally created for anonymous markets and are not customer-specific.
How the Availability Check Process Works
The availability check process confirms the delivery date on the schedule line in an order. To confirm this date, the system uses the material availability date (MAD) as the basis. This is the date on which the requested quantities for the material should be available to meet the customer-requested delivery date. The system determines the material availability date by calculating backward from the customer-requested delivery date and subtracting the delivering plant/warehouse processing time (pick/ pack time, lead time for transportation planning, loading time) and transit time. This process is called backward scheduling.
The system then checks whether sufficient quantities of the requested material are available for this material availability date so as to make the delivery as per the customer-requested delivery date. If the requested quantities are not available as of the material availability date, the system performs another search in the future, taking into consideration the planned receipts and issues (if allowed in customization).
It then redetermines the material availability date as the date in the future on which the sufficient quantities of the requested material will be available. Once the system determines the material availability date on which the requested quantities of material are available or will be available, it starts calculating forward and adding the time for pick/pack, transportation planning, loading, and transit to the material availability date and proposes or confirms the final date thus calculated as the confirmed schedule line date on the order. This process is called forward scheduling. In equation form, this backward/forward scheduling can be represented as follows: Schedule line confirmation = Material availability date + Pick/pack time + Lead time for transportation planning + Loading time + Transit time
Complete Delivery and Availability Check
As you can see, the customer placed an order on the 9th with a requested delivery date of the 14th. The available stock in the warehouse was 50 units with a planned receipt for another 50 units by the 10th. The warehouse processing time for the pick, pack, load, and goods issue activities takes a total of one day, and two days are needed for shipping time. The system first starts calculating backward from the 14th and determines the material availability date as the 11th. Because sufficient stocks will be available on this date (50 available on the 9th and 50 expected to be received into unrestricted stock by the 10th), the system performs forward scheduling from the material availability date, adding the warehouse processing time of one day and the shipping time of two days, and thereby confirms the schedule line for the 14th for 100 units.
Availability check in a complete delivery scenario
another variation of the same example, wherein the material availability date is already past because the customer ordered on the 9th with a requested delivery date of the 11th. The system performs backward scheduling and determines the material availability date as the 8th, which has already passed, and therefore it considers the current date, the 9th, as the material availability date. Sufficient quantities are not available on this date, and therefore the system redetermines the material availability date as the 10th, to which the system then adds three days of warehouse processing and shipping time and proposes the 13th as the confirmation date for the schedule line.
Availability check in a complete delivery scenario with material availability date already past
Partial Delivery and Availability Check
The scenario that you just saw was an example of the scenario wherein the customer will accept delivery for the goods in full only. What if the customer agrees to partial delivery? this very question by showing the influence of a partial delivery scenario on the availability check results. You can maintain the indicator to allow partial deliveries and the allowed number of partial deliveries directly in the sales document’s “Shipping tab” or in the “Shipping tab” of the customer master sales data view. When you create a sales order, the partial delivery indicator defaults from the customer master data to the sales document. You can change this value in the sales document (if required).
Availability check in a partial delivery scenario
Now, if all other factors remain unchanged and if the customer agrees to partial delivery. As you can see from the figure, since the customer agrees to a partial delivery of goods, the system confirmed two schedule lines for two different dates. Against the requested delivery date of the 11th, 50 units were available on the 9th, and the receipt of the balance(50) is planned for the 10th. Adding three days for the pick, pack, post goods issue(PGI), and shipment time to these two availability dates, the system proposes the confirmation date as the 12th and the 13th.
One-Time Delivery and Availability Check
Another variation is also possible, wherein the customer agrees to take a one-time delivery of goods. In that scenario, the system confirms the quantities of the materials that are available for the customer-requested delivery date and cancels the balance of the order.
Availability check in a one-time delivery scenario
Availability Check with Replenishment Lead Time
In the SAP SD application, you can perform an availability check with or without replenishment lead time. As mentioned earlier, the RLT is the lead time to refill/ replenish the inventory in the delivering plant/warehouse. In the case of in-house production, the RLT takes into consideration the production time. For external procurement, the RLT takes into consideration the goods receipt (GR) time.
Let’s reconsider our example with an RLT of two days. As you can see, one more order is received on the 9th for 120 quantities, and delivery is requested by the 14th. The system starts calculating backward and determines the MAD as the 11th. On this date, the system takes a look at the current situation and sees that the stock is not available (the stock in hand of 50 units and the 50 expected to be received are already consumed by 100 units in the order). Since there is no stock and an RLT is built into the availability check, the system starts calculating the time to replenish the stock from the current date and determines that the stock will be available by the 11th, which is the MAD. Therefore, the system will confirm the date of the 14th for the order.
Availability check with replenishment lead time
the RLT is not considered. An order is received on the 9th for 60 units with a requested delivery date of the 14th. Another stock receipt is expected on the 12th. The system starts calculating backward and calculates the 11th as MAD. On this date, the stock quantity is not available, but a quantity of 50 will be available by the 12th, so the MAD for these 50 units is taken as the 12th, giving the 15th as the confirmation date. The balance (10 units) cannot be confirmed, because without a lead time, the system cannot say when the quantities will be available in stock, and thus the balance quantity falls into backorder status.
Availability check without replenishment lead time
A common example of when you don’t need RLT is consignment stock processing. In that case, you perform anavailability check against the special stock, and thus there is no need for RLT.