Backorder Processing in SAP S/4HANA: Improving Inventory Management

“The only constant is change”

Do you struggle to efficiently allocate new inventory or adjust your current inventory? Are you unable to meet important delivery agreements? Or do you struggle with planning limited inventory? Then it is time to get acquainted with Backorder Processing in SAP S/4HANA. With this tool, you not only determine when and to whom you allocate your inventory, but you also gain more control over the processing of your orders.

Unexpected twists

Suppose your organization is booming - sales orders are record-breaking and you are shipping products faster than ever. But on the other hand, your inventory is shrinking faster than expected, and it is becoming increasingly challenging to confirm your deliveries. To make matters worse, you encounter unexpected twists such as suppliers being late, sales orders being canceled, production orders taking longer than expected, or customers suddenly ordering even more products. As a result, you run the risk of not being able to deliver your products.

Flexible and on-time delivery

With Backorder Processing (BOP), you can quickly and easily respond to these kinds of changes. Because with BOP, you gain flexibility and you can prioritize specific requirements. That one (important) customer who places an order at the last minute can still be confirmed directly for example. The concept of Backorder Processing is not new. In SAP ECC, this was done manually with the help of transaction codes. But with SAP S/4HANA, scheduling a backorder run has simplified and has become more user-friendly.

How it works? I'll explain it to you in 5 steps - using SAP Fiori apps.

Step 1. Configure BOP Segment (F2158)

In this step, you indicate which criteria you want to include. For example, you only select sales orders from a certain distribution channel or a certain order type.

Step 2. Configure Custom BOP Sorting (F2983)

In this (optional) step, you can create a custom sorting. For example, you can choose to prioritize a list of specific customers.

Step 3. Configure BOP Variant (F2160)

Here you determine which BOP segment falls under a certain confirmation strategy. By default, there are 5 confirmation strategies, ranked from high to low, available. These are: win, gain, redistribute, fill delete, and lose.

Win: Confirm as requested. These could be rush orders and orders from specific customer(s).

Gain: Improve, if possible. These could be all sales orders with priority 1, plus a selection of customers.

Redistribute: Might gain, might lose. These could be sales orders with the delivery date of this week.

Fill Delete: If required. These could be internal stock bookings.

Lose: Delete all confirmations. These could be orders with a credit block.

Next, you can check whether your configuration has the desired effect through a simulation.

Step 4. Schedule BOP Run (F2665)

After configuring the BOP variant, you can plan your BOP run based on the previously created variant. Also, you can determine whether you want to schedule the run periodically or execute it once.

Step 5. Monitor BOP Run (F2159)

Here you will find the final result of the BOP run.

In the monitor, you will find the change in 'confirmed orders'. Main highlights here are the columns 'Requirements Fully Confirmed On-Time' and 'Requirements Fully Confirmed'. The result of the BOP run depends on the previously chosen BOP segment or the BOP variant. As a result, the BOP run result can be different for every organization.

More flexibility, more efficiency

With Backorder Processing in SAP S/4HANA, you can assign your inventory as-you-wish and respond to changes in inventory and customer requests. In addition, you can prioritize specific customers or products, and the tool streamlines the process of managing backlogged orders. All in all, win-win.