An order is considered as a back order when all or part of an order quantity is not available for processing. While reasons can be many, one of the most common reason for such unavailability is an after fact commitment of the product to a more valuable customer.

Example – Company Alpha buys 500 shoes every year from Nike. So, on a given day Nike committed 500 shoes to Alpha to be delivered after 1 month. However, company Beta usually orders ten thousand shoes in batches of thousand every month and this month their order came after Alpha. Now, Nike can change their commitment to ensure that Beta gets their stock on time as they buy more and hence, are a more valuable customer.

BOP gives Nike the flexibility to take order from Beta though the quantity has already been committed to Alpha. Nike can change the commitment and assign it to Beta. Hence, Beta is happy. Does it hurt Alpha – No. It allows Nike to receive orders from Beta where they conceive that both orders can be fulfilled while stock is replenished in a foreseeable future. If Nike feels that it is not possible to fulfill Beta’s order, they will not take their order. They will still deliver to Alpha.

BOP is done in two ways –

Manual Backorder Processing

Automated in mass mode which uses rescheduling function – V_V2 and V_R2.

Manual BOP is done using V_RA which uses SD Documents and CO06 which uses materials.

 

~S