ERPAG 5.1

Fulfillment-Backorders

How to apply supply chain in small business? End to end fulfillment-from order to delivery. Easily manage backorders – automatic back ordering.

 
Fulfillment - backorders
 
 
1. A brief historical story
 
At the end of the ’90s of the “last century” when sales through web shops were just at the beginning, one of our long-time customers (spare car parts store), integrated their webshop with the ERPAG application. Since they were traders of the “old school”, until then, they sold only from their own warehouse (POS sales), mostly the items they had in stock. On a case-by-case basis, they also sold items they had to order from other suppliers. Accidentally or intentionally, they published almost all price lists from other suppliers to their webshop. This type of sales was not in their focus, so they paid attention only when the customers who ordered it began to phone with the question: ‘when they could expect delivery’. Then they activated the synchronization of ERPAG with the Webshop and …
 
…. WOW …. over 2000 items have been ordered … and now what?
 
• Which products can I deliver immediately?
• Which items should I order?
• From whom should I order and at what price?
• How do I create purchase orders for the missing items?
• When can I expect that these items will come to my warehouse?
• When will I be able to deliver the Sales Order?
• How do I know what was ordered from the supplier and did not arrive?
• What to do when there is a need to order a larger quantity than on Sales Order (for example, the supplier determines the minimum purchase quantity)?
• Is it possible to create a manual purchase order independently of fulfillment?
• Is it possible to have more suppliers for the same item?
• What should I do if the supplier can not deliver the goods?
• What is the priority when one item is required on two or more sales orders?
• How do I prevent the received item from one of my orders not being sold to another customer?
• Packages from suppliers arrive on a random basis, how do I know to which purchase order it belongs to?
• Can I make a group order to get a better price from the supplier?
• Can the supplier directly send the goods to the customer (drop shipping)?
• Suppliers change prices from time to time. What’s the best way to update them?
• I have not been able to deliver one part of the quantity and my customer agrees to be delivered only what is available. How do I cancel part of Sales Order?
• How do I determine the minimum quantity I need for inventory for some of the items?
• We have items that we make with the “bill of materials”, which components do I need to get?
• We have multi-level BOM ie. sub-component, how does fulfillment in manufacturing work?
• We sell some of the items in a group, ie. we are forming a “kit”, is it supported in ERPAG?
 
Answers to these questions will be provided through this text.
 
 
2. What orders can I deliver immediately?
 
The ERPAG system has an automatic reservation system. When Sales Order is entered (whether it’s a manual entry, an import from XLS, or through integration with a webshop), each item from the Sales Order is compared with the current stock, and assigns (reserves) the available quantity to the corresponding item.
 
Fulfillment - backorders
A special “reserved quantity” column opens (where the quantity that is reserved for each item is displayed) and the Sales Order gets a corresponding status.
 
If all the quantity is reserved, then the status is “Available quantity” and this Sales Order can be fully packed and delivered.
 
Fulfillment - backorders
 
In the Sales Order list, it’s displayed as “Quantity status”.
 
Fulfillment - backorders
 
Orders that have “Quantity Status” – “Available quantity” can be fully delivered immediately, “Partial Quantity can be partially delivered” and “No Quantity” cannot be delivered.
 
When modifying the Sales Order (if the privileges allow it), comparisons and reservations are repeated each time. It may happen that if the quantity in the Sales Order changes, this document gets a different status.
 
3. Which items should I order?
 
Various software solutions solve this problem in different ways, one has a trigger point when the Purchase Order is entered, the second when the quantity falls below the minimum, with third ones it’s needed to make  a request for procurement, verify and go through very complex forms and procedures, witch the fourth it’s needed to enter each sales order and activate the option of purchasing etc.
 
Starting from the fact, ERPAG’s target group are small businesses that do not have a special person, let alone a procurement department, we had to devise the fastest and simplest way.
 
And this is one and the only list – Fulfillment
 
Fulfillment - backorders
 
Fulfillment - backorders
 
The list is automatically updated and displays the “snapshot” of the items needed to be purchased.
 
The “committed quantity” column indicates how much is on the Sales Orders. “Reserved quantity” is how much of our stock is allocated to Sales Orders. The “To order” column is the quantity that needs to be purchased.
 
4. From whom should I order and at what price?
 
Before Purchasing Orders are generated from the Fulfillment list, each item must be assigned with the supplier and its purchasing price. The settings are done directly in the item, in the “Fulfillment” section.
 
Fulfillment - backorders
 
Now, the “fulfillment” list has populated data with the suppliers and their prices.
 
Fulfillment - backorders
 
 
5. How do I create purchase orders for the missing items?
 
In the “fulfillment” list through the “bulk” option, the option to create a purchase order is activated.
 
Fulfillment - backorders
 
This list, like any other list, allows searching, filtering, sorting, and other manipulations that help us tailor the supply to specific needs. For example, if we want to make a purchase from only one supplier, we will do this by filtering the Supplier column.
 
Fulfillment - backorders
 
After creating a Purchase Order ERPAG will report how many successful purchase orders have been created, or possible errors.
 
Fulfillment - backorders
 
 
Created Purchase Orders are in a list where the others Purchase Orders are, they only have a special type so you could know the method of their creation.
 
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The list of “Products and services” is also changed.
 
Fulfillment - backorders
 
The “Awaiting quantity” column is updated because it represents the quantity that is on our Purchase Orders (the quantity that was ordered and did not arrive).
 
6. When can I expect that these items will come to my warehouse?
 
For each item, it is possible to set how many days are needed for the supplier to deliver the goods from the agreed Purchase Order.
 
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In the “fulfillment” list there are two columns (“shipping days”, “expected”) that provide information before creating Purchase Order
 
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Each document that is created through “fulfillment” has a date “expected” which is calculated depending on the “shipping days” from the item definition.
 
Fulfillment - backorders
 
Changing this date is possible at any moment. (For example – our supplier is late with the delivery).
 
 
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7. When will I be able to deliver the Sales Order?
 
As with Purchase order, there is an information “expected”, but the story is a little more complex.
 
Fulfillment - backorders
 
There are two data in the Sales Order – “Deadline” and “Expected” that can easily be mixed.
 
Fulfillment - backorders
 
Deadline is the date and time until we agreed to deliver the goods or services to the customer.
 
“Expected” represents an automatically calculated date when we expect the ordered goods (referring to this Sales Order) to be in our stock. Or, more simply, the date when we can pack the items (“Available Quantity”). This information will not exist if we have not made a purchase order or we can not pack the goods.
 
On each Sales Order item, we have the information when this item is expected to be available to us.
 
Fulfillment - backorders
 
“Expected” is the highest date from individual items.
 
When the “expected” date manually changes in the Purchase Order, it will automatically update the “expected” date in the Sales Order as well.
 
8. How do I know what was ordered from the supplier and did not arrive?
 
Each Purchase Order has its status.
 
Fulfillment - backorders
 
The “Entered”, “Approved” statuses indicate that the ordered goods have not been received.
 
The “Partially Received” status indicates that the goods have been partially received.
 
The status “Received” indicates that all goods from the Purchase Order have been received.
 
The statuses of “Invoiced, Completed, Void” can only arise after the complete receipt of goods, so that means that the goods are received.
 
Due to the possibility of partial receipt of goods, the most appropriate report is the report “Open Purchase Orders”. The report can be searched, grouped, filtered, etc.
 
Fulfillment - backorders

 

Fulfillment - backorders
 
 
9. What to do when there is a need to order a larger quantity than on Sales Order (for example, the supplier determines the minimum purchase quantity)?
 
In practice, it happens that suppliers require that, when ordering goods, there is a minimum quantity that needs to be ordered or they give you more favorable conditions when ordering a larger quantity. Also, a lot of companies order a little more items and leave them in stock because they expect to sell it to someone else.
 
The first way is to define “minimum purchase quantity” in the items.
 
Fulfillment - backorders
 
Thus it is obtained that if, for example, “To order” is the quantity of “3” fulfillment list, the Purchase Order will be “10”.
 
Fulfillment - backorders

 

Fulfillment - backorders
 
From that moment there are two cases, in both cases, ERPAG will not make the unnecessary ordering of goods.
 
a. Purchase Order was received and after that, a new Sales Order was made with the amount of “7”.
 
When entering a new Sales Order, an automatic reservation of the existing quantity will be made, so it will be possible to pack the goods and send it to the customer.
 
Fulfillment - backorders
 
b. The items from the Purchase Order order did not arrive and in the meantime, a new customer is demanding a new Sales Order with the quantity of “7”.
 
The current status of “committed” (from the Sales Order) amount is “3” and “awaiting” (from the Purchase Order that is not received) is “10”.
 
Fulfillment - backorders
 
When entering a new Sales Order, “awaiting” quantity will be assigned to items on the document.
 
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New quantity status on “Product and services” list.
 
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Since “committed” is not greater than “awaiting” the fulfillment will be empty, i.e. there will not be an unnecessary ordering of goods. When a “receive” of a purchase order is made, both Sales Orders will reserve the quantity and will be packed and delivered.
 
Fulfillment - backorders
 
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10. Is it possible to create a manual purchase order independently of fulfillment?
 
Yes, of course it is possible. In practice, it happens that it is not strictly “Order to order” (where we are purchasing to fulfill the Sales Orders) or “Order to stock” (where we are purchasing to stock the items), but it is more of an and/or situation. We will take an example where our supplier at some point gives more favorable conditions for the purchase of goods. The purchasing will be made with the assumption that we will sell those goods to someone in the future.
 
The “standard” purchase order is created, and after entering quantity in the “awaiting quantity” will be corrected.
 
Fulfillment - backorders

 

Fulfillment - backorders
 
In our case, we will take the example that the buyer appeared, and the items ordered from the supplier have not arrived yet.
 
Fulfillment - backorders
 
Following the Sales Order entry, ERPAG will assign “awaiting quantity” column in the document and the “Committed quantity” in the product and services” list will be corrected.
 
Fulfillment - backorders
 
Since on the SKU “0001” item, “Committed” quantity is greater than “Awaiting”, this item will appear in the “Fulfillment” list.
 
Fulfillment - backorders
 
Again, we will not be able to order more than needed.
 
If the Sales Order is made after receiving the Purchase Order, then a reservation of items will be made,
 
Fulfillment - backorders
 
and in the “Fulfillment” list will be only a missing quantity.
 
Fulfillment - backorders
 
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11. Is it possible to have more suppliers for the same item?
 
ERPAG also offers this flexibility; simply, when setting up items, the “Back Order” type is set to be “Multiple Suppliers”, then a separate table is displayed where multiple different suppliers can be entered, their priority, the purchase price, etc.
 
Fulfillment - backorders
 
The supplier with the highest priority (Priority = 1) will be the “default” supplier.
 
With the “fulfillment” list, such item is particularly prominent with the ability to change the supplier (“click” on the magnifying glass image)
 
Fulfillment - backorders

 

Fulfillment - backorders
 
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12. What should I do if the supplier can not deliver the goods?
 
The answer to this question depends on the company’s policy and relations with suppliers and customers. In our explanation, we will take the most frequent cases.
 
a. The Supplier cannot deliver the entire Purchase Order, so we are purchasing from another supplier.
 
There are several ways, the simplest is to change the supplier if the same items are completely ordered, the other is to delete or void Purchase Order and enter a new one. When deleting or voiding, ERPAG will reduce “awaiting quantity” and it will reappear in the fulfillment list. In these cases, it is very practical that there are more suppliers in the settings of the product, because then it is simply possible to change the supplier with one click and generate a new Purchase Order.
 
b. The wholesaler can deliver partial goods and the buyer agrees to receive a smaller quantity.
 
Again, it is the easiest way to correct the Purchase Order and Sales Order. But if the amount is partially received, then the change of the document will not be allowed, in which case we are going to split the document.
 
Fulfillment - backorders
 
This option will split the document, the old document will have the status “received” because only the items that were received in the inventory are left here.
 
Fulfillment - backorders
 
While the new document will have only items that are not received.
 
Fulfillment - backorders
 
On the new document, it is possible to do all manipulations as with the newly entered document (delete, change the supplier, change the price, etc.).
 
By the same principle, it is possible to do the split of the Sales Order as well.
 
Fulfillment - backorders
 
The old document will contain packed items, while the new one will contain the difference.
 
13. What is the priority when one item is required on two or more sales orders?

Priority is by date and time of Sales Order. The first entered Sales Order will reserve the amount by priority.



We will give an example when Item 0001 is required on two Sales Orders.

Fulfillment - backorders


“Committed quantity” will be distributed by the Sales Order date.

We will only “receive” 1 pcs, Purchase Order will have the status “partially received”.

Fulfillment - backorders


While the oldest Sales Order will have the status “available quantity”.

Fulfillment - backorders


The amount will be reserved.

Fulfillment - backorders


Practice would not be a practice unless it requires exceptions. One of the situations is that regardless of the amount reserved, there is a need to pack another Sales Order, for example, the buyer requires immediate delivery (in our case SO-000013). We call this operation “force quantity”.


When activating the “pack” option, a packing list is created with the reserved amount, since we don’t have the quantity for that Sales Order, the quantity to be submitted is “0”. The “On hand” column displays the quantity available to us in stock (including the reserved amount).

Fulfillment - backorders


By “retyping” the quantities and posting the packing list we perform “force quantity”.

Fulfillment - backorders


Sales Order SO-000013 has the status “packed” / “fulfilled” while SO-000012 gets the status “no quantity”.

Fulfillment - backorders


With this, we practically “stole” the quantity from one Sales Order and assigned it to another.


14. How do I prevent the received item from one of my orders not being sold to another customer?

One of the purposes of the automatic reservation system is to prevent unwanted sales to other customers.


Fulfillment - backorders

 

Fulfillment - backorders

 

Fulfillment - backorders


When the Sales Order is entered or there is a change in the amount of inventory, the inventory and open sales orders are automatically checked, and if the conditions are fulfilled, automatic reservation is made.

Fulfillment - backorders


When you activate the “pack” option in the packing list, only the reserved amount will be suggested.

Fulfillment - backorders


If there is no reservation, the suggested quantity will be “0”. As we explained in above, “force quantity” is still possible.


15. Packages from suppliers arrive on a random basis, how do I know to which purchase order it belongs to?

Unlike competitive software solutions, our design approach is to adapt the software to the practical needs of the users and not to customize the user’s procedures to the software. In large and complex systems, there is a particular workplace where the computer-seated operator receives supplier deliveries, while in small businesses (for which ERPAG is primarily intended) such a solution is too expensive and impractical. Usually, it happens that the courier service brings the package to the entrance (usually the hallway) and the person caught first receives the package. Since the best solution is to enter data where and when a business change occurs, the answer to that is Mobile App.


Fulfillment - backorders


ERPAG also has Apple iOS and Android version of the application (for more information, please visit our blog http://erpag51.blogspot.com/2018/06/mobile-app-ios-apple-android.html). By this, we have achieved that a person, whose job is not primarily working with the goods at the warehouse, takes the smart phone out of his pocket, scans the barcode using the camera (or manually enters the quantity) and makes the receipt of goods in stock.

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Fulfillment - backorders

 

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When the ERPAG Mobile Application opens, in the main menu, the Purchase Order Number that can be received is displayed. Activating the receive option opens a new list of all possible items that can be received. If the products have barcodes, they can be scanned through the camera, based on the barcode, ERPAG searches the base and increases the quantity of the received goods.

Fulfillment - backorders

 

Fulfillment - backorders


In one move it is possible to enter multiple receipts of different Purchase Order. With this is achieved, that if the courier leaves more packages to be entered subsequently, the documents get the appropriate status and the amount is entered into the inventory.

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Fulfillment - backorders


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16. Can I make a group order to get a better price from the supplier?

Yes. The “Fulfillment” list groups orders from all Sales Order.



In our case, we have “55 pcs” in Sales Order.

Fulfillment - backorders


In ERPAG, there is a built-in “Tier Quantity” system for calculating the purchase price. In the item settings, it is necessary to set “Back Order” to be “Multiple suppliers” and enter the same supplier twice, but with the other purchase price and “Tier Quantity”.

Fulfillment - backorders


With this, we have indicated that in our case in the “Fulfillment” list (and the generated Purchase Orders), the price will be $70.00 for quantities over 50 pcs or $80 for below the given quantity.

Fulfillment - backorders

 

Fulfillment - backorders




17. Can the supplier directly send the goods to the customer (drop shipping)?

Internet sales have led to an explosion of drop shipping methods of delivering goods. In short, why should a supplier send goods to us and after we send it to our customer, when it is more profitable for a supplier to send items directly to our customer.


Fulfillment - backorders


In ERPAG, it is sufficient to set “Back Order” to “Drop Shipping”. In a single Sales Order, it is allowed to have “regular items” and “drop shipping items”.

Fulfillment - backorders


In the “fulfillment” list, such articles will be specially labeled.

Fulfillment - backorders


A separate Purchase Order will be created for each delivery address.

Fulfillment - backorders


In the Purchase Order document, a panel with the delivery address will be displayed.

Fulfillment - backorders


Since “drop shipping” is specific in a way that the items do not come to our stock, when we “receive” the Purchase Order, ERPAG will consider that the goods are delivered to the customer and will form a “drop shipping” packing list. Just knowing whether the goods are delivered by the supplier to our customer or not, you will have to check with either the supplier or the customer.

Fulfillment - backorders

 

Fulfillment - backorders


The rest of the items are received and packed regularly.


18. Suppliers change prices from time to time. What’s the best way to update them?

Almost all suppliers have the option of delivering the price list in the “spreadsheet” format (MS Excel, etc.). The best way to update the price list is to open the vendor and use the “import data” option.


Fulfillment - backorders

 

Fulfillment - backorders


Where we simply import the data with a simple “copy / paste” option.


19. I have not been able to deliver one part of the quantity and my customer agrees to be delivered only what is available. How do I cancel part of Sales Order?

That’s why the “split document” option is used.



An example where it is possible to partially pack/deliver items.

Fulfillment - backorders


After activating the “pack” option where we only pack the available/reserved goods, and if the status is “partially packed”, the “split document” option will appear.

Fulfillment - backorders

 


After splitting the document, the existing document is being corrected and a new one is opened. The new document will have the same number as the old one.

Existing document (which can be delivered and invoiced):

Fulfillment - backorders


The new document (which we can remove):

Fulfillment - backorders


If we want to remove it from the list and potential “fulfillment” list, we can simply delete it or change the status to “rejected” depending on whether we want to have a “track” of the operation in the database.

Fulfillment - backorders




20. How do I determine the minimum quantity I need for inventory for some of the items?

When creating each item, it is possible to determine the minimum quantity we need in the stock.


Fulfillment - backorders


Automatically, in the “fulfillment” list, the missing quantities appear.

Fulfillment - backorders


It is possible to combine purchases for the minimum quantity and purchases according to the Sales Orders.

Fulfillment - backorders

 

Fulfillment - backorders

 

As soon as the Purchase Order is generated, no matter what quantity has arrived in our stock, ERPAG will calculate the incoming amount in order to avoid duplicate orders.
 
Note:
 
If we have multiple warehouses, the user interface will be changed to allow us to separately enter the minimum quantity for each warehouse separately.
 
Fulfillment - backorders
 
The “Fulfillment” list will be grouped by warehouses.
 
Fulfillment - backorders
 
 
21. We have items that we make with the “bill of materials”, which components do I need to get?
 
For our example, we will make a simple product, the “Back Order” option will be set to “bill of materials” and a section for entering components will appear.

Fulfillment - backorders


We will create a new Sales Order where we will also enter the BOM product and a “standard” one.


Fulfillment - backorders


A “standard” item will appear in an existing “fulfillment” list, while the item to be produced appears in the “fulfillment” list in the manufacturing section.


Fulfillment - backorders


The “Fulfillment” list from manufacturing has full functionality, only that instead of generating Purchase Orders generates Work Orders.


Fulfillment - backorders


Generated Work Orders:


Fulfillment - backorders

 

Fulfillment - backorders


After generating the Work Orders, the components will appear in the “fulfillment” list for ordering.


Fulfillment - backorders


“Committed” and “Awaiting” behave the same as with “standard” items. “Committed” is the amount required in “Input Items” in Work Orders, while “Awaiting” is the amount we expect from “Output Items”.


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If one item is requested both on a Sales Order and Work Order, the Sales order will reserve it by priority.


22. We have multi-level BOM ie. sub-component, how does fulfillment in manufacturing work?

Working with Multi-Level Bill of Materials (BOM) is a bit more complex operation. Here we will explain only the basic functionality related to “fulfillment”.



In our example, we will do the Bill of Materials modeling, where the item “0009” has components and one sub-component (“0007”).

Fulfillment - backorders


And, we will create a Sales Order with that item.

Fulfillment - backorders


The “Fulfillment” list will only have that item listed. There will be no “propagation” to all components. But when Work Orders are generated, two will be created.

Fulfillment - backorders

 

Fulfillment - backorders

 

Fulfillment - backorders


With this, we achieved to “propagate” the BOM to the components (i.e. raw materials). And the “fulfillment” list will show the necessary components for ordering.

Fulfillment - backorders




23. We sell some of the items in a group, ie. we are forming a “kit”, is it supported in ERPAG?

“Kitting” is supported in ERPAG. Since such a product has special behavior, it is specifically defined in the application.

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We will take a simple example, a Kit that contains two items.

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And we will put it in the Sales Order.

Fulfillment - backorders


Note: When the Sales Order is not in the edit mode (entering or altering the data), the display of the document is changed so that it shows the components within the kit.

Fulfillment - backorders


The “Fulfillment” list will contain only the components of the kit, since, in fact, they should be ordered.

Fulfillment - backorders


After generating the Purchase Order, in Sales Order, only the components of the kit will get their ‘awaiting quantity’ column.

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Fulfillment - backorders


Note: When we ‘pack’ the Sales Order, only the components are available for packing, i.e. “pulled” from stock.

Fulfillment - backorders


24. Summary

About 25 years of experience in developing inventory and manufacturing software (from MS DOS, through MS Windows to Cloud-Based and Mobile Apps), by listening to the practical requirements of our users, has enabled us to enrich the market with this simple and efficient solution. In conjunction with other options, ERPAG raises productivity in every area where it is implemented. With an affordable price, ERPAG allows small businesses to now have an “enterprise-grade” software solution that they could just imagine. Small business prices are not crucial, but they are important.


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Programming algorithms that we revolutionarily implemented, have enabled us to get the result in one single “fulfillment” list, in which the operator starts and ends everything. All the need for procurement of goods or production requirements is accumulated in that list, regardless of the basis on which the request was made. And all of this works simply, fluidly, precisely and as a single entity.


25. The future of the “Fulfillment”


Fulfillment - backorders


Cloud Computing and API connection for the first time now, allow us to easily and quickly exchange data.


There is one question that we did not support in this version of ERPAG, but we expect that we will have a solution in the near future.


• The buyer has ordered items from me, I don’t have them in my stock, and my suppliers do not have them either, where can I get them?


2018. ERPAG Inc

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