Product documentation
Backorder Strategies

Business value

A general requirement in order fulfillment is to ship as many sales lines as possible on time against minimal shipment costs.

The "fulfillment policy" was introduced in the Microsoft Dynamics 365 for Finance and Operations Fall release 2017, instead of the former "fulfillment percentage" on the customer record.

Challenges in standard :

 

In Order Entry Optimization the backorder strategy is integrated with Microsoft Dynamics 365 for Finance and Operations Warehouse management at the moment the sales order is released to the warehouse.

Wins:

 

Considerations:

Prerequisite

Backorder Strategies depends on the fullfillment policies of the Microsoft Dynamics 365 for Finance and Operations Warehouse management module.

Setup

Activate the ALF license

This will enable the Backorder Strategies functionalities.

 

Fulfillment policy

Warehouse managment > Setup > Release to warehouse > Fulfillment policies

Field Description Remark
Backorder strategy

Backorder allowed

Max one backorder

No backorder

Deliver in full

Backorder allowed: standard

Max one backorder: backorders are not released to the warehouse until fully reserved

No backorder: backorders can be deleted in an automatic batch, unless there is a reference to a purchase order, production order etc.

Deliver in full: order is not released to warehouse until fully reserved

Prevent partial delivery

Only release and ship full sales lines?

Default for new sales lines when this fulfillment policy is defined for the customer

Fulfillment rate

Value type

None, Price (=Value), Quantity

For Deliver in full, advice: Quantity

Violation message

Information, Warning, Error

Advice: Error

 

Customer

Sales and marketing > Customers > All customers > Fast tab Warehouse

Specify a fulfillment policy. If no fulfillment policy is selected, backorder allowed is used.

 

Intercompany customer

Sales and marketing > Customers > All customers > Ribbon tab General > Setup: Intercompany > Tab Sales order policies

Field Description Remark

Backorder strategy

Sync the backorder strategy from the existing original sales order to the existing direct delivery intercompany sales order. Note that independent of this setting, the backorder strategy is always initialized from the original sales order to the intercompany sales order (both direct delivery and non-direct delivery).

For direct IC deliveries, if the backorder strategy is synchronized, it can only be changed on the original sales order, not on the IC sales order.  

For indirect IC deliveries that are specific for a original sales order, it makes sense to combine the order as much as possible according to the requirements. This minimizes the handling in the receiving warehouse where the shipment will probably be crossdocked. If needed, change the backorder strategy on the IC sales order.

 

This setup can also be accessed from the IC vendor in the legal entity in which original sales orders are entered.

 

Procedure

Sales order

The backorder strategy is inherited from the customer’s fulfillment policy to the sales header, fast tab Delivery, and can be overwritten.

Fulfillment percentage is not inherited to the sales header and the fullfillment percentage on the customer's fulfillment policy remains active.

 Note

Exception: if fulfillment percentage on the customer’s policy is 100 %, but the backorder strategy on the sales order is manually changed to Backorder allowed, Max one backorder, or No backorder, the fulfillment percentage will be ignored.
   

 

The setting Prevent partial delivery is inherited from the Order fulfillment policy (or Default fulfillment policy of the customer) to the sales line, tab General, and can be overwritten on the sales line.

The user can override the fulfillment policy on the sales order. In that case, the backorder strategy on the sales order and the prevent partial delivery flag on the existing lines in this sales order will change automatically. 

 

Intercompany direct delivery sales orders

The backorder strategy on the original sales order is always initialized equally on the intercompany sales order.

If synchronization of backorder strategy is active, the backorder strategy can only be changed from the original sales order header and is updated automatically on the intercompany sales order. The backorder strategy on the intercompany sales order is non-editable.

 

Intercompany non-direct delivery sales orders

The backorder strategy on the original sales order is always initialized equally on the intercompany sales order. There is no automatic synchronization after the intercompany sales order is created.

 

Button Calculate, Confirmed delivery dates (optionally)

After the sales order with all lines is entered, use “Calculate, Confirmed delivery dates” to align the dates of the sales order lines.

 Note

The backorder strategy is not checked yet in the dialog calculate confirmed delivery dates. The user can decide to select a more appropriate strategy on the sales order header.
   

 

Automatic release to warehouse

Warehouse management > Release to warehouse > Automatic release of sales orders

This is the main go/no go point. If not reserved before, this process reserves on warehouse level (assuming that on the warehouse, the Reserve when orders are released by a batch job is active).

 Note

Exception "Keep reservations on release failure" in combination with Prevent partial delivery on line level: for technical reasons, lines that are partially reserved and fail because of partial delivery, will always keep their reservation, regardless of this parameter.
   

 

This matrix shows the conditions for release to warehouse, depending on the backorder strategy on the sales order.

Backorder strategy

Prevent partial

delivery 1)

on sales line level

(a.k.a. Line complete)

First release to warehouse

incl. fulfillment % validation 2) 

Second release

no fulfillment % validation

Third, fourth ... release

no fulfillment % validation

Backorder allowed No Standard Standard Standard
Backorder allowed Yes

Sales line full reservation 3)

Sales line full reservation 3) Sales line full reservation 3)
Max one backorder No Standard

Remaining sales lines

full reservation 5)

n.a.
Max one backorder Yes

Sales line full reservation 3)

 

Remaining sales lines

full reservation 5)

n.a.
Deliver in full Yes Full reservation 4) n.a. n.a.
No backorder No Standard Automatic cancellation n.a.
No backorder Yes

Sales line full reservation 3)

Automatic cancellation

 

1) Prevent partial delivery: each sales line must be delivered in full.

2) Fulfillment percentage is always checked in the first release unless customer has fulfillment 100 % but backorder strategy on sales order is not Deliver in full.

3) Sales line full reservation: No inventory transactions with Issue status On order or Ordered reserved exist on this sales line.

4) Full reservation: all sales lines reserved: No inventory transactions with Issue status On order or Ordered reserved exist on this sales order.

5) Remaining sales lines full reservation: All remaining sales lines reserved: No inventory transactions with Issue status On order or Ordered reserved exist on this sales order.

  

Release from sales order

Sales and marketing > Sales orders > All sales orders > Tab Warehouse management > Button Release to warehouse

Reserve the sales order lines upon entry, and release to warehouse from the individual sales order or sales order list page.

 

Manual release to warehouse screen

Warehouse management > Release to warehouse > Release sales orders to warehouse

Warehouse management > Release to warehouse > Release to warehouse (deprecated)

On these forms, the user can select a new fulfillment policy that overrides the fulfillment policy from the order. 

 Note

Bypass: the manual Release to warehouse screen does not check the backorder strategy.
   

 

Wave processing

Warehouse management > Outbound waves > Shipment waves > All waves

Automatic or manual. This is the second go/no go point. Items are now reserved on location level. However, if an item is not available on a pickable location, the standard checkmark “Fill enter order” can reverse the shipment if one of the shipment lines fails.

 Note

To avoid reservations on non-pickable locations: advise is to have all purchase put away work finished at the typical moments where waves are processed. Mostly there are fixed times on the day that certain waves are processed. 
   

 

Packing station and packing slip

Warehouse management > Packing and containerization > Pack

The backorder strategies are not checked on the packing station and when printing the packing slip. The disturbance of the process in case of a shortpick would cause more costs than the extra transport costs for an unforeseen backorder.

Exception Prevent partial delivery:

This is often a strict customer requirement. Only if Prevent partial delivery is set on the sales line, and the last container is closed, Microsoft Dynamics 365 for Finance and Operations checks that the setting on the sales line is not violated. But if so, the user decides whether to change the sales line setting or to reverse the picked line back to the warehouse location.

Thanks to the fact that Order Entry Optimization only releases order lines that comply with the prevent partial delivery setting, this situation should only occur in the event of an unexpected shortpick. The same check is executed again upon packing slip posting and printing. The reason is that the packing station is not a mandatory process step: it is possible to pick the goods, put them on a final shipping location, and post the packing slip.

 

Cancel backorders

Sales and marketing > Periodic tasks > Clean up > Cancel backorders

This functionality cancels remaining backorders with backorder strategy "No backorder".

Especially retail customers tend to order every time again. If the ordered items are not received, these customers re-order next time if the demand is still there.

Cancel backorders can run in batch every night, can delete the backorders for certain customers and sales orders automatically. The sales line functionality Update line, Deliver remainder, Cancel quantity is executed for all the sales order lines within the selection.

It is only after the cancel backorders batch job is run that the second release for the backorder strategy "No backorder" will be canceled. Even when the back order strategy is "No backorder," the second release is still possible if the cancel backorders batch job is not run.

Criteria:

In the dialog, the user can choose the required number of days after the originally planned shipping date. The specified until-shipping date is 1 day in the past (=yesterday) by default. It is possible to cancel until today (0 days in the past).

If backorders with future shipdates should already be cancelled, switch on "Ignore ship date".

The selection filter can not be changed by the user.

 Note

In the selection filter, some of the table fields are part of a socalled not-exist-join. The way these fields and criteria are displayed, might not be clear. To get a better understanding of the mutli level query that is used for filtering, open the button Filter, and go to the tab Joins.
   

 

Cancel backorders for item or customer

Sales and marketing > Periodic tasks > Clean up > Cancel backorders for item or customer

In the undesired event that a customer is heading for a bankruptcy etc., the remaining open sales orders must be cancelled. Or if a vendor announces that supplies of a particular item will be stopped, all open order lines for this item should be cancelled. This functionality is also an automated Update line, Deliver remainder, Cancel quantity.

For safety reasons, either one customer, or one item / item variant can be selected per run.

 

Backorder strategy for cross docking orders

The fulfillment policy and the connected backorder strategy are validated automatically when the sales order is released. In case the sales order depends on a marked purchase order that will be cross docked, and the backorder strategy is Deliver in full, this will cause a blocking error.

For these type of sales orders a batch job can be invoked to override the fulfillment policy on the sales order if:

the backorder strategy is Deliver in full or Max one backorder

the order has ordered reserved transactions

(optionally: the planned shipment date of the sales order is in a specific time window after the expected receipt of the purchase order).

 

Define a new fulfillment policy "Full + cross dock" or similar, backorder strategy = Backorder allowed.

On the fulfillment policy "Deliver in full", define the cross docking fulfillment policy, with on optional time window.

 

Sales and marketing > Periodic tasks > Update order fulfillment policy for cross dock orders

The sales order fulfillment policy will be updated if needed, and the sales order can be released to warehouse automatically or manually without an error.

 

Release notes

Feature Introduced in version
  • Code has been optimized based on Code Analysis Report findings

10041.24082900

Feature Introduced in version
  • Backorder strategy - apply alternative fulfillment policy when cross docking expected

10038.62.709

Feature Introduced in version
  • Extension fields BOS are added to SalesOrderHeaderV3

10036.60.707

Feature Introduced in version
  • Backorder strategy aligned with fulfillment policy on sales order

10034.58.706

Feature Introduced in version
  • Due to Microsoft hotfix for LCS issue 775928 the release to warehouse query (WHSAutoReleaseToWareHouse) did not retrieve the fields from the extension models anymore.

10032.56.705

Feature Introduced in version
  • Exclude service items from backorder strategy validation

10026.50.704

Feature Introduced in version
  • Backorder strategy is taken into account in Calculate confirmed delivery dates

10025.49.703