Reconciliation of Delivery Schedule Demands

Outcome

You know that the DS demands, which update the customer order lines during net schedule creation, are correct and include adjustments to recent deliveries unknown by the customer when the DS was created.

You can use a secure and fully automated DS process. This is done by selecting value 5 = Activate new schedule, in the '055 Next manual function' field in 'Delivery Schedule Type. Open' (RSS010).

You can view the preliminary reconciliation information on the validated DS item line in 'Delivery Schedule. Connect Demands' (RSS102/B) by toggling with F16 until the desired reconciliation panel is displayed. In this way you simulate the result of the net schedule creation before it is created.

Once the net schedule is created, you can view customer order lines with correct demand quantity by using a suitable sorting order and view in 'Customer Order. Open Line Toolbox' (OIS301/B).

The DS item line file (ORSITM) is updated with delivery note information used as the synchronizing point for the reconciliation. This synchronizing point, which is called delivery note for reconciliation, is valid if you use delivery note reconciliation.

The DS item line file (ORSITM) is updated with the customer's cumulative information used as the synchronizing point for the reconciliation. This is valid if you use cumulative reconciliation.

The new net schedule file (ORSNTN) will be updated with correct demand quantity based on the reconciliation balance calculation. ORSNTN is used as a work file for storage of the new net schedule, while the net schedule creation activity is in progress.

During the net schedule creation, the customer order line file (OOLINE) will be updated with correct demand quantity based on the reconciliation balance calculation.

Before you start

Make sure that the following fields are analyzed and defined in 'Settings - Partners' (RSS015). They are explained further later on in this document:
- '015 Reconciliation method'
- '020 Reconciliation level'
- '025 Reconciliation'
- '030 Cumulative type'
- '035 Cumulative level'
- '215 Change allocated orders'
- '520 Date type received for delivery notes'.

If you are going to use cumulative reconciliation, the starting conditions for Enabling Cumulatives must have been met.

Purpose

By reconciling the DS demands, you make certain that the DS demands will create and update the customer order lines with correct demand quantity during the net schedule creation activity. Since demand quantities on the customer order lines will be correct, the planned deliveries to the customer always will be allocated and dispatched according to the customer's current demand.

The customer sends a gross DS via EDI on Friday at lunchtime. The gross DS contains the customer's demands, which are not yet synchronized against the supplier's recent deliveries to the customer. The DS contains three demands for item A, 100 pieces as a backorder for Friday, 100 pieces for Monday and 100 pieces for Wednesday.
The supplier receives the DS and enters it in M3, without creating the net schedule.
A delivery for item A including 40 pieces is made from the supplier on Friday afternoon before the net schedule is created.
If the supplier now creates the net schedule without reconciliation, the result will lead to incorrect customer demands. The result will be 100 pieces Friday, 100 pieces Monday and 100 pieces Wednesday.
To get a correct net schedule, you have to create it with reconciliation. The demands will then be updated with 60 pieces Friday (100 - 40 delivered), 100 pieces Monday and 100 pieces for Wednesday.

By using reconciliation, you adjust the DS regarding deliveries unknown by the customer when the gross DS was created.

When

Reconciliation is used when the situation described in the example above (see the figure) can occur. It is also possible to calculate the reconciliation balance and update the net demand quantity manually in 'Delivery Schedule. Connect Demands' (RSS102/B). However, this alternative is not recommended as it is insecure and requires more manual work.

How

There are five different reconciliation methods to choose among. Usually, the customer makes this choice, which is determined by the possibility of supplying necessary reconciliation information. If information is supplied for several methods, the method with the best information quality should be selected. Each method is described separately further on in this document.

Furthermore reconciliation of a DS is divided into two separate steps:

Check and Update Reconciliation Information

This first step is performed during the validation activity and its purpose is to match information supplied by the customer in the DS, against the same kind of information in M3. Depending on the chosen reconciliation method, different kinds of information are required.

If no reconciliation information is supplied for an EDI schedule, or if the DS is created manually, step one has to be performed manually according to Create Delivery Schedule Demands Manually.
Calculate Reconciliation Balance and Adjust Demands

This last step is performed during the creation of the net schedule. First, the correct reconciliation balance is calculated. A positive balance indicates that deliveries from M3 have been made ahead of the planned delivery date and that the supplier is ahead of the schedule. Similarly, a negative balance indicates a backorder and that the supplier is behind the schedule.

Finally when the correct reconciliation balance is calculated, the demands in the new net schedule are adjusted. A positive balance will reduce future gross demands until the balance is zero while a negative balance will create a backorder.

Reconciliation Methods

The five possible reconciliation methods in M3 are:

Delivery note reconciliation
Cumulative reconciliation
Proactive sequence reconciliation
Reactive sequence reconciliation
Discrete reconciliation.

Of these five methods, delivery note reconciliation, cumulative reconciliation and discrete reconciliation are described in this document.

The proactive and reactive sequence reconciliation methods are used exclusively when JIT demands are managed through the JIT Call-Off Management process. Unlike the other reconciliation methods that manage backorders and overshipped quantities, the proactive and reactive sequence reconciliation methods manage replacement of JIT demands. Each JIT demand is identified through a controlling object, which is requested in the '065 Controlling object' field in 'Settings - Partners' (RSS015) and the replacement of JIT demands is based on this controlling object.

The proactive and reactive sequence reconciliation methods do not calculate any reconciliation balances and should be regarded as methods that link delivery schedules to JIT call-off management. For further information, see Processing a JIT Call-Off.

Method 1 - Delivery Note Reconciliation

Select this method if the customer has sent delivery note information in the DS. Delivery note information can be viewed in 'Delivery Schedule. Open Delivery Notes' (RSS105).

You start this program from 'Delivery Schedule. Connect Items' (RSS101) via option 15 = Delivery notes.

The purpose of delivery note reconciliation is to match the delivery notes the supplier has sent from M3 against the delivery notes that the customer has confirmed as received. When the customer receives a delivery note, it is returned with the next DS and thereby verified.

If the supplier has sent more deliveries than the customer has noted in the DS, this means that new deliveries are on their way. These deliveries are likely to be marked as backorder in the customer's DS, as the customer was unaware of the fact that the supplier had shipped them at the time the DS was created. Consequently, by performing reconciliation the supplier will adjust the customer gross demands into correct net demands.

Fields to Define in (RSS015) before Using Delivery Note Reconciliation


Field	Definitions to make
015 Reconciliation method	Select reconciliation method 1 = Delivery note.
020 Reconciliation level	This field should be defined in accordance with your requirements of the amount of information that has to be correct in the DS, when checking reconciliation information. For example: If the reconciliation level is set to 0, all received delivery notes and all quantities have to match. If the reconciliation level is set to 3, only one matching delivery note has to be found, but the quantity can differ.
025 Reconciliation	Define whether reconciliation should be used when the net schedule is created. Make sure that you set the second field to 1.
215 Change allocated orders	Define whether an allocated order line should be changeable during the reconciliation and net schedule processes. If an allocated order is not changeable, it will be managed as an order line on a picking list.
520 Date type received for delivery notes	Indicate the kind of date that the customer has sent as shipment date for the received delivery notes. It can either be the shipment date from M3 or the requested delivery date at the customer, which includes transportation lead-time.

Step One - Check and Update Reconciliation Information

First, all received delivery notes that can be viewed in 'Delivery Schedule. Open Delivery Notes' (RSS105) are checked against 'Delivery. Open Line Toolbox' (MWS411). The purpose of this check is to make sure that the current item alias exists as a delivery number in M3. In (RSS105/E) you can see whether the delivery note exists in 'Delivery. Open Line Toolbox' (MWS411). If the delivery note is found, the delivery number in 'Delivery. Open Toolbox' (MWS410) is updated with delivery status 95 = Received. The customer's receipt date and receipt time will also be updated in (MWS410).

Then the delivery note in 'Delivery Schedule. Open Delivery Notes' (RSS105) that exists in 'Delivery. Open Line Toolbox' (MWS411) and has the latest shipment date and time, is updated to be the delivery note for reconciliation. This is the synchronizing point for the reconciliation.

If value 0, 1, 2 or 3 is selected in the '020 Reconciliation level' field in (RSS015), a check is performed to make sure that the required information level is fulfilled. If not, the delivery note for reconciliation will be erased and the choice of delivery note for reconciliation has to be made manually in 'Delivery Schedule. Connect Demands' (RSS102/B).

Step Two - Calculate Reconciliation Balance and Adjust Demands

A prerequisite for performing this step is that a delivery note for reconciliation was found during step one. This rule will be overridden if the '020 Reconciliation level' field in (RSS015) is set to a value higher than 3. In that case, the net schedule will be processed without any calculation of the reconciliation balance.

The result of step two is primarily used when the net schedule is created.

Fields in (RSS102) that Are Calculated in Step Two


Calculated Field	Description
Our backorder	Indicates the sum of all demands in 'Customer Order. Open Line Toolbox' (OIS301) with departure date earlier than current date and time. If the '215 Change allocated orders' field in (RSS015) is set to 1, allocated order lines will be included.
Customer's backorder	Indicates the sum of all gross demands in (RSS102) with the 'Demand reason' field set to 3 = Backorder.
Deliveries after delivery note	Indicates the sum of M3 deliveries made later than the date and time of the delivery note updated as delivery note for reconciliation.
Picking list quantity	Indicates the sum of all order lines that currently are on a picking list. If the '215 Change allocated orders' field in (RSS015) is set to 0, allocated order lines will be included.
Receipt quantity	Indicates the quantity received on the delivery note for reconciliation.
Reconciliation balance	Indicates the reconciliation balance, which is calculated as the value in the 'Deliveries after delivery note' field plus the value in the 'Picking list quantity' field. This sum should be seen as the total of what the supplier has delivered after delivery note for reconciliation. The sum is then reduced by the value in the 'Customers backorder' field to find the correct backorder quantity. The result is the reconciliation balance.

Based on the calculated reconciliation balance, the net schedule creation will transform the gross schedule into a net schedule. If the reconciliation balance is positive, the demands in the gross schedule will be reduced. If the reconciliation balance is negative, a backorder will be created with the same number of units as in the reconciliation balance.

Example One - Positive Reconciliation Balance

The supplier has delivered 100 pieces after the delivery note for reconciliation. There are currently 75 pieces on a picking list and the customer states 110 pieces as backorder in the gross DS.

The balance will be calculated as (100 + 75) - 110 = +65. When the net schedule is created, 65 pieces will be reduced from the gross DS starting with the first demand until the reconciliation balance is zero.

Example Two - Negative Reconciliation Balance

The supplier has delivered 100 pieces after the delivery note for reconciliation and there are still 75 pieces on a picking list, while the customer states 200 pieces as backorder in the gross DS.

The balance will be calculated as (100 + 75) - 200 = -25. A backorder of 25 pieces will be created in the net schedule on the backorder date stated by the customer.

Method 2 - Cumulative Reconciliation

You choose this method if the customer sends cumulative information in the DS. Cumulative information can be viewed in 'Delivery Schedule. Open Cumulative Figures' (RSS104).

You start this program from 'Delivery Schedule. Connect Items' (RSS101) via option 14 = Cumulative.

The purpose of cumulative reconciliation is to match the supplier's cumulative figure with the customer's cumulative figure sent in the DS. Cumulative reconciliation is the reconciliation method that is most frequently used.

Cumulative figures are calculated from an agreed date. Whenever the supplier delivers goods, the delivery is added to the cumulative figures for that item. When the customer receives the delivery, the customer will add its cumulative figures. This is how the actual status regarding deliveries is determined.

If the supplier has a cumulative figure that is higher than the customer's, the supplier knows that there are new deliveries on the way to the customer. These deliveries are likely to be marked as a backorder in the next DS, as the customer did not know that the supplier had shipped them at the time the DS was created. By performing the reconciliation, the customer's gross demands will be adjusted into correct net demands.

Fields in (RSS015) to Define before Using Cumulative Reconciliation


Field	Definitions to make
015 Reconciliation method	Select reconciliation method 2 = Cumulative.
020 Reconciliation level	This field should be defined in accordance with your requirements of the amount of cumulative information that has to be correct in the DS.
025 Reconciliation	Define whether reconciliation should be used when the net schedule is created. Make sure that you set the second field to 1
030 Cumulative type	Indicate the cumulative type that is transmitted in the DS and should be used for reconciliation purposes. Cumulative type 01= Quantity actually received, is the most commonly used type.
035 Cumulative level	Indicate the cumulative level that should be used for reconciliation purposes. Cumulative level 11 (item alias, customer and address) is the most commonly used level.
215 Change allocated orders	Define whether an allocated order line should be changeable during the reconciliation and net schedule processes. If an allocated order is not changeable, it will be managed as an order line on a picking list.

Check and Update Reconciliation Information

First, a check is performed to make sure that the cumulative type selected in 'Settings-Partners' (RSS015) is entered in 'Delivery Schedule. Open Cumulative Figures' (RSS104).

If the cumulative type exists, the customer's cumulative quantity and the customers cumulative calculation date is updated to the DS item line. This indicates that it is possible to continue with the reconciliation processing.

Then a check is performed to control whether the combination customer and item number has been created in 'Item. Update Cumulative Quantities Delivered' (MMS072). If this is not the case, it will be created automatically for the current year and with year-to-year (Y2Y) cumulative calculation enabled. In addition, all valid cumulative types with their respective cumulative quantity will be updated in 'Item. Update Cumulative Quantities Delivered' (MMS073). The cumulative quantity information is summarized based on the stock transaction history for the current year.

If Y2Y is requested in (MMS072) and a a new year begins, then the records in (MMS073) will be recalculated based on all stock transactions for the new year up to the present date.
Calculate Reconciliation Balance and Adjust Demands

A prerequisite for performing this step is that a valid customer cumulative quantity was found during step one.

The result of step two is primarily used when the net schedule is created.

Fields in (RSS102) that Are Calculated in Step Two


Calculated Field	Description
Our backorder	Indicates the sum of all demands in 'Customer Order. Open Line Toolbox'(OIS301) with departure date earlier than current date and time. If the '215 Change allocated orders' field in (RSS015) is set to 1, allocated order lines will be included.
Customer's backorder	Indicates the sum of all gross demands in (RSS102) with the 'Demand reason' field set to 3 = Backorder. If no backorder demands are found in (RSS102), then 'Delivery Schedule. Open Cumulative Figures' (RSS104) is checked to see whether cumulative type 02 = Quantity scheduled received, and cumulative type 01 = Quantity actually received, are transmitted. If this is the case, then the customer's backorder quantity is calculated as the value in the 'Quantity scheduled received' field reduced by the value in the 'Quantity actually received' field. This is an alternate method of sending backorder information.
Delivered quantity	Indicates the sum of M3 deliveries that are unknown by the customer. The delivered quantity is calculated by reducing the value in the 'Our cumulative quantity' field by the value in the 'Customer's cumulative quantity' field.
Picking list quantity	Indicates the sum of all order lines that are currently on a picking list. If the '215 Change allocated orders' field in (RSS015) is set to 0, allocated order lines will be included.
Reconciliation balance	Indicates the reconciliation balance, which is calculated as the value in the 'Delivered quantity' field plus the value in the 'Picking list quantity' field. This sum should be seen as the total of deliveries unknown by the customer. This sum is then reduced by the value in the 'Customer backorder' field in order to find the correct backorder quantity. The result is the reconciliation balance.

Based on the calculated reconciliation balance, the net schedule creation will transform the gross DS into a net schedule. If the reconciliation balance is positive, the demands in the gross schedule will be reduced. If the reconciliation balance is negative, a backorder is created with the number of units in the reconciliation balance.

Example One - Positive Reconciliation Balance

The value in the 'Our cumulative' field is 100 pieces since the start of the year. The value in the 'Customer's cumulative quantity' field is 85 pieces, which means that a delivery of 15 pieces is on its way to the customer. Currently, there are 3 pieces on a picking list and the customer states 14 pieces as backorder in the gross DS.

The balance is calculated as (100 - 85) + 3 - 14 = 4. First the customer's backorder of 14 will be deleted. Then the 4 pieces will be reduced starting with the first gross demand until the reconciliation balance is zero.

Example Two - Negative Reconciliation Balance

The value in the 'Our cumulative' field is 100 pieces. The value in the 'Customer's cumulative quantity' field is 95 pieces, which means that a delivery of 5 pieces is on the way to the customer. On the current picking list there are 3 pieces. The customer states 15 pieces as backorder in the gross DS.

The balance is calculated as (100 - 95) + 3 - 15 = -7. A backorder of 7 pieces will be created in the net schedule on the backorder date stated by the customer.

Method 5 - Discrete Reconciliation

This method is only selected under special circumstances, such as if the customer has not sent any reconciliation information in the DS.

The purpose of discrete reconciliation is to match discrete demands against each other. Unlike the two previous methods, the discrete reconciliation method neither calculates any reconciliation balance with the purpose of creating backorder nor decreases future gross demands. Discrete reconciliation is used to allow an update of a discrete order line, with consideration to deliveries, in case the same demand is being processed several times.

The same demand implies that the new net demand should belong to the same facility, delivery schedule group, partner, customer order type, item alias, requested delivery date and requested delivery time as the current net demand. Furthermore, additional key information (such as customer number, address number) in the new and the current net demand has to be identical regarding the requirements defined in (RSS015/K) or in (RSS015/L).

If the same demand, according to the definition above, is found when a net schedule is created, it will be updated with the new demand quantity stated in the new net schedule. If the demand is partly or fully delivered, the difference between the new demand quantity and the delivered quantity will be updated as a quantity that remains to be delivered.

Fields to Define in (RSS015) before Using Discrete Reconciliation


Field	Definitions to make
015 Reconciliation method	Select reconciliation method 5 = Discrete.
215 Change allocated orders	Define whether you think an allocated order line should be allowed to change during the reconciliation and net schedule process. If an allocated order is considered not changeable, it will be managed as an order line on a picking list.

Example One - Increase of Demand quantity

A specific discrete demand has a current net schedule quantity of 100 pieces and the new net schedule contains 110 pieces as the new demand quantity. Of the original 100 pieces, 35 pieces have recently been delivered to the customer.

The new order quantity will be set to 110. The remaining quantity to deliver will be calculated as (110 - 35) = 75. These figures will be updated on the order line after the net schedule is created.

Example Two - Decrease of Demand quantity

The specific discrete demand has a current net schedule quantity of 100 pieces. The new net schedule contains 40 pieces as the new demand quantity. Of the original 100 pieces, 55 pieces have recently been delivered to the customer.

In this case the new order quantity will be set to 55, as this is what already has been delivered. The remaining quantity to deliver will be set to zero, as there is nothing more to deliver for this discrete demand. The decrease of 15 pieces, 40 on the new order and 55 delivered, has to be managed manually as this method only manages reconciliation inside the discrete demand.