How to setup Backorder Processing (BOP) in a dynamic business environment

Backorder Processing (BOP) helps you confirm products to customer requirements by prioritizing them based on your business requirements. BOP is available through Basic Available-to-Promise Processing (‏2LN‏) in the SAP S/4HANA Cloud, public edition, and Advanced Available-to-Promise Processing (‏1JW‏) in the SAP S/4HANA Cloud, private edition. In this blog, I want to share some ideas for setting up BOP in a dynamic business environment.

The process of setting up Backorder Processing (BOP) is reasonably straightforward. You define BOP Segments and assign them to BOP Variants with appropriate Confirmation Strategies, then Schedule and Monitor BOP runs. However, the criteria for selecting and prioritizing the order requirements, and the strategies for confirming them depend on individual business requirements. The BOP Segments and BOP Variants need to be designed efficiently so they can cope with the dynamic nature of business today. You would not want to change them frequently with constantly changing business scenarios.

Here are some ideas for designing BOP Segments and BOP Variants for different dynamic business scenarios.

Customer runs a Promotion:

You may have customers who run regular promotions for different products over different periods. Or you may have customers who run promotions occasionally with some specific products. In either case, you need to give the highest priority to satisfy their requirements only during the promotion.

Since the promotion status for any customer/product combination is dynamic and temporary, you would like to maintain it easily without changing the BOP setup.

Below is an example setup to achieve this.

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Configure Delivery Priority

Configure a specific Delivery Priority ‘Promotion’ to identify Sales Order items under promotion.

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Maintain Delivery Priority in Customer Material info record

Maintain appropriate Customer Material info record with Delivery Priority ‘Promotion’, which is copied into the Sales Order item, to indicate the promotion status. Once the promotion ends, this indicator can be reset. This gives the flexibility of dynamically maintaining the products that customers put on promotion.

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Configure BOP Segment for Delivery Priority Promotion

Set up a BOP Segment to select the promotion-relevant requirements.

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Configure BOP Variant for Delivery Priority Promotion

Now set up a BOP Variant with this BOP Segment assigned to an appropriate Confirmation Strategy, for example, Win.

Premium Customers may change:

You may be in a business where the importance or priority of a customer changes over time. A customer who is important today, may not be as important in a few months and another customer may become important. If the BOP Segments are set up with specific customers, they need to be updated every time there is a change in customer priority.

Below is an example BOP setup that does not need to be updated with this dynamic scenario.

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Maintain Delivery Priority in Business Partner

Maintain premium customers with the Delivery Priority ‘High’ in Business Partner master data, which is copied into the Sales Order item. This allows easy maintenance of customer priority.

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Configure BOP Segment for Delivery Priority High

Set up a BOP Segment using the Delivery Priority ‘High’ to select the requirements of your premium customers.

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Configure BOP Variant for Delivery Priority High

Now set up the BOP Variant with this BOP Segment assigned to an appropriate Confirmation Strategy, for example, Gain.

Ad hoc changes in Delivery Priority:

You may have a situation where a particular order requirement becomes a high priority. For example, a regular customer orders 100 EA of a product with a special request to deliver 20 EA urgently. You can create the Sales Order with a separate item for the urgent qty 20 EA and assign Delivery Priority ‘High’.

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Maintain Delivery Priority in Sales Order

In this scenario, this priority requirement automatically gets selected in the BOP Segment defined for premium customers, ie, for Delivery Priority ‘High’, as detailed in the previous scenario.

Ad hoc Delivery Block:

Due to the dynamic nature of your business, you may need to block the deliveries of some Sales Orders. And in case of stock shortage, you would like to release previously confirmed stock from this order to other orders. You can achieve it through a BOP setup described below.

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Configure BOP Segment for Delivery Block

Create a BOP Segment with Delivery Block as the selection condition. In this example, the condition is defined as ‘is not empty’, which will select all Sales Orders with any type of Delivery Block. Should you need to be specific about the type of Delivery Block, you can specify them.

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Configure BOP Variant for Delivery Block

Assign the BOP Segment to Confirmation Strategy Lose in the BOP Variant.

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Maintain Delivery Block in Sales Order

When a Sales Order is blocked for delivery, it will be selected for releasing previously confirmed qty during Backorder processing.

Consideration for Confirmation Strategies Win and Gain:

When you use the Confirmation Strategy Win, the system tries to confirm the full requirement qty. If full qty is not available, an exception is raised, and the Sales Order is not updated with currently possible confirmation. The system behaves in the same way when you use the Confirmation Strategy Gain and the previously confirmed qty cannot be retained. To update the Sales Orders, you will need to use a Fallback Variant with an appropriate Confirmation Strategy to address those exceptions.

Let us look at an example. A premium customer ordered 100 EA of a product. At the time of order creation, there was enough stock to cover the requirement and hence 100 EA was confirmed. Later due to an accident 40 EA got damaged. So now only 60 EA are available. During the BOP run, with the Gain strategy, the system raises an exception – since it cannot retain the previously confirmed qty of 100 EA– and it does not change the previously confirmed qty of 100 EA in the Sales Order.

Therefore, for BOP variants with Win or Gain confirmation strategies, it is critical to specify a Fallback Variant with a different Confirmation Strategy, for example, Improve. With this setup, if there is an exception for the requirements with Win or Gain strategy, the Fallback Variant is triggered and the Sales Order confirmation qty is updated with the latest availability situation.

Below is an example setup.

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Maintain Exception Behaviour in BOP Variant

In this example BOP Variant, the BOP segment for customer promotion requirements is assigned to the Win strategy, and the BOP segment for premium customer requirements is assigned to the Gain strategy. In case of an exception, only the failed material-plant combination will be stopped for processing.

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Maintain Fallback Variant and Behaviour in BOP Variant

The Fallback Variant will be triggered for the failed material-plant combinations only.

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Maintain Fallback Variant

In the Fallback Variant, those failed promotion and premium requirements will be processed with Confirmation Strategy Improve.

Further information:

SAP Help – Confirmation Strategies

SAP Help – Configuration Options for Exception Handling

Blog – Backorder Processing in advanced ATP

Blog – Innovations in Backorder processing in S/4 HANA

Microlearning – Configure Backorder Processing (BOP) Segment & Sorting – SAP S/4HANA Cloud Supply Chain

Microlearning – How to Configure Backorder Processing (BOP) Variant – SAP S/4HANA Cloud Supply Chain

Microlearning – How to Handle and Monitor Backorder Processing Exceptions – SAP S/4HANA Cloud Supply Chain

In closing, I hope these examples will help you in deciding on the Backorder Processing setup suitable for your organization. I encourage you to follow the Intelligent Adoption & Consumption community page for more such use cases.

Please feel free to leave comments or suggestions to improve.