Manage over/under delivery for purchase orders
Variability in a company's performance and supplier performance can cause significant backorder administration to manage even small differences in quantities ordered and received.
The over delivery and under delivery functionality in Supply Chain Management can be used where the received or delivered quantity of an item fluctuates occasionally and it is not significantly sufficient to be managed as a backorder.
Over/under delivery
To avoid unnecessary backorder handling every time that an order is slightly over or under-delivered, you can configure Supply Chain Management so that such deliveries are accepted, if they are within predefined ranges from the originally ordered quantity. You can then close and fully invoice these orders.
This functionality will most likely be used for specific products that are delivered by weight, in bulk, or in linear feet. These types of products are also low in value and carrying costs, frequently ordered, and easily sourced. Examples of these items are screws, brackets, and pins.
Example:
The USMF company has run low on its stock of 6001, Box -corrugated, 16X18X40. The purchasing agent puts in an order with the vendor for 1000 pieces. Typically, there is a 1 to 2 percent variance on the number of lamp projectors that are received when the company orders from this vendor. However, they offer the best price. Because of the variance, USMF and the vendor have agreed to set up an over/under delivery variance to allow for a difference of 10 percent because it is not cost-effective for either company to create new orders or credit memos.
When the order arrives, it contains 1018 pieces. The order is accepted because it is in the range that is specified in the over/under delivery setup. Six months later, the stock is down to 500, so another order is made for 500 from the same vendor. This time, the order contains 492 pieces. Again, the order is accepted because it is in the range of over/under delivery setup.
Accept over/under delivery
On the Delivery tab, of the Procurement and sourcing parameters you can set up the parameters to allow you to enter over delivery, under delivery, or both.
If you select Accept overdelivery, you can receive more products through the product receipt or invoice update than the quantity that is ordered in the purchase line.
If you select Accept underdelivery, you can close out the backorder if you receive fewer products through the product receipt than the quantity that is ordered in the purchase line.
If you do not select Accept overdelivery or Accept underdelivery, you cannot close the purchase order from the product receipt.
When an order has multiple deliveries, you can receive or send less than the full order quantity.
Close a partly delivered order
If you do not select Accept overdelivery or Accept underdelivery, you have two ways to close a partly delivered purchase order and relieve the demand for backorder:
If part of the quantity is received, you can cancel the remaining quantity by going to Update line > Deliver remainder on the order line. Select Cancel quantity on the Delivery remainder page.
When you add an item to a purchase order, the specified percentages are defaulted to the order line. To make exceptions, you can override these values. When a new item is created, the default setting for the acceptable tolerance is zero percent.