Overview: Obligation and Shipment Creation

Obligation and shipment creation are essential concepts for sales orders, branch transfers, and manufacturing orders.

This topic has these subtopics:

Sales Orders

One-Step Manufacturing

Obligation

Obligation is an inventory concept that is intended to help you to control quantities. When you obligate items for a sales order or branch transfer, you reserve that quantity for that order. Obligated inventory cannot be used for another order. Similarly, you must obligate components for a manufacturing order.

Sales Orders

When you enter a sales order, the system records an inventory commitment for the quantity of items ordered. Committed inventory does not have to be on hand or available.

Obligation assigns specific items from on-hand inventory to a sales order. For controlled items, you can reserve a specific serial number, lot number, or warehouse and bin location for an order. Obligated items cannot be used for another order.

Only obligated lines/quantities may be included on a shipment.

Floor stock items cannot be obligated. Should you need to sell an item that has only floor stock inventory, use the Material Issues and Adjustments (IMI) program to transfer the required quantity to on-hand inventory.

Obligation Methods

The Obligation method program option in the Sales Order Maintenance (OE) program determines whether the order entry operator or the system obligates standard items for an order. There are four obligation methods: automatic, local, manual, and none. These methods do not apply to configured products.

Automatic or Local

If you want the system to obligate for you, set the Obligation method option to Automatic - all branches or Auto - local branch only. Both obligate the quantity ordered from your local branch without input from you.

The difference between these options is what displays when you click the Obligate button to override the obligation. If you select Automatic - all branches the program displays the quantity available at each branch in your inventory group. If you select Auto - local branch only the program displays the quantity available only at your login branch.

If you selected Y for the Manage negative inventory option in the System Options Maintenance (XM) program (Inventory Control Options), the system can obligate items ordered even though they are not currently in inventory, under the assumption that these items will be available in the future. However, the system does not obligate a serial number controlled item if the quantity the customer ordered is not in inventory. For a lot controlled item, the system assigns a temporary Lot Control lot number until you receive the item and assign a lot number.

The Method for auto-obligation option the System Options Maintenance (XM) program (Inventory Control Options) determines the items the system obligates: lowest control number first, FIFO (oldest receipt first), LIFO (newest receipt first).

Other system options that govern auto-obligation rules are in Order Processing options:

Lot picking method: Determines if the system will try to find a lot where the full quantity can be picked whether or not split lots are allowed for the order/customer. If a full lot cannot be picked, and split lots are allowed, it will pick from multiple smaller lots.
Allow partial auto-obligation: If the full quantity cannot be obligated, this option will determine if a partial quantity is obligated or the line will be skipped.

If a customer that does not accept split lots, the system obligates the first lot with sufficient inventory based on your setting for the auto-allocation option. If the item is also warehouse/bin controlled, the system checks the item's primary warehouse and bin location. However, if that quantity is insufficient, the system obligates the first lot with enough available inventory.

The system obligates from the warehouse/bin location entered the Primary whse and Primary bin loc fields in an item's record in the Branch Item Maintenance (IMB) program if you selected A (always) or D (default) for the Use primary loc field in a customer's record in the Customer Maintenance (CM) program.

Manual

If you want to control obligation, set your Obligation method option to Manual obligation. You will select the items ordered from inventory, including specific serial numbers, lot numbers, and warehouse/bin locations.

When you obligate manually, the system displays the quantity on hand and available in each branch in your inventory group. You can select the quantity ordered on a single line from multiple branches. If you select another branch, the system creates a transfer or transfer requisition.

None

If you set your Obligation method to No obligation, you can run the Order Shipment Selection (OSS) or Sales Order Auto Processing (OAP) program to obligate items. These programs also create shipments for the orders and use the auto-obligation rules

This table compares these programs with the Sales Order Maintenance program.

Task

Sales Order Maintenance (OE)

Order Shipment Selection (OSS)

Sales Order Auto Processing (OAP)

Obligate standard items

Obligate while entering a sales order, based on your Obligation method program option or click Obligate.

Click Sel for the lines or orders you want to obligate.

Automatically obligates orders that meet your selection criteria.

What happens to obligated items if you do not create a shipment immediately?

They remain obligated.

If you do not click Process orders, they remain obligated.

If you select a line in OSS to obligate, and then wish to remove that obligation, you can click the line again to deselect (un-select?? it.) But if the line was obligated elsewhere (OE) then deselecting it in OSS will not remove the obligation.

If you select Reverse partials? because you want to ship only complete orders, the program releases obligation when it cannot ship an order complete.

If you leave Reverse partials? blank and the Ship partial orders? field in the Customer Maintenance (CM) program is blank (the customer does not accept multiple shipments), obligated items remain obligated.

RF Processing

You can also obligate items during the RF sales order picking process. A XM RF option controls if the obligation is completed when the order is selected for picking or as the order lines are actually picked. Another XM RF option controls where the RF operation can alter an existing control number for shipment. If the item/ control numbers you scan are not yet obligated to the order, they are obligated first and then put on a shipment.

Note
RFOSS replaces the OSS program when you use RF sales order picking. This process obligates stock based on your options, but will not create the shipment.

Configured Products

The components of configured kit products must be obligated before you can ship them. You can obligate them with the Sales Order Maintenance program by selecting the line and clicking Configured.

Alternatively, you can use the Order Shipment Selection (OSS) or Sales Order Auto Processing (OAP) program to obligate the components of a configured product that you ship as a kit (unassembled).

If you build the finished item from the selected components, you must use the Sales Order Maintenance (OE) program to configure the components and create either a manufacturing requisition or order. The parent item will be automatically obligated when the manufacturing order is received to stock.

Branch Transfers

When you create a transfer for a controlled item, the Branch Transfer Maintenance (ITM) program prompts Component [number] is a controlled item. Would you like the system to auto-select these for you? If you click Yes, the program obligates the quantity ordered. If you click No, you can select the specific control number or warehouse/bin location you want to transfer.

You can also use the Transfer Auto Processing (ITAP) program to obligate items. This table compares the two programs:

Task	Branch Transfer Maintenance (ITM)	Transfer Auto Processing (ITAP)
Obligate items	Automatically obligates uncontrolled items; obligates controlled items when you click Yes.	Automatically obligates orders that meet your selection criteria.
What happens to obligated items if a shipment is not created immediately?	They remain obligated.	If you select Reverse partials?, the program releases obligation when it cannot ship complete.

Manufacturing Orders

Obligation assigns specific components from on-hand inventory to a manufacturing order. Obligated components cannot be used for another order.

For controlled items, you can select specific serial numbers, lot number, or warehouse and bin location. If you do want to use automatic obligation for controlled components, select Y for the MIM controlled items auto-obligate? option for your manufacturing branch in the System Options Maintenance (XM) program (Manufacturing Options). When you click Obligate in the Manufacturing Order Maintenance (MIM) program, the system selects both uncontrolled and controlled components for you.

The program you use depends on how you work: whether you typically pick all required components, partially pick sets of components, or pick selected components. This table compares the programs that you can use to obligate components:

Task	Manufacturing Order Maintenance (MIM)	Material Usage Maintenance (MUA)	Picking Confirmation (MPK) or Secured Picking (SMPK)	Manufacturing Order Picking Selection (MSS)	Manufacturing Order Auto Processing (MAP)
Obligate all required components	Click Obligate.	Not available.	Not available.	Click Sel for the order(s) you want to obligate.	Automatically obligates orders that meet your selection criteria.
Obligate component sets	Not available.	Not available.	Click Partial and enter the quantity.	Select an order, click Modify, and enter the quantity.	Not available.
Obligate a component	Click Component, select the component, and click Obligate.	Click Component, select the component, and click Obligate.	Click Component, select the component, and click Obligate.	Not available.	Not available.

None of these methods obligate and pick floor stock or yield components, nor do they process components marked as 'pick per receipt'. The system back flushes the picking of these items as the items are received to stock. Component can also be back flushed by the reporting of operation completions. See Overview: Component Back Flushing.

Shipment Creation

You must create a shipment before you can confirm it. For manufacturing orders, you create a shipment of components from your stockroom to your shop floor.

Partial Shipments

When partial shipment is not allowed for a sales order, shipment selection is based on the earliest line expected ship date of all lines of the order listed. When one line is selected or de-selected in OSS or MSS all lines for the order are selected.

Sales Orders

You cannot create a shipment for an order if:

The item has not been obligated. See Obligation.
A sales order is on hold, either because it exceeds the customer's credit or order limit, or because you have placed it on hold with the Sales Order Maintenance (OE) program.
Lines of a sales order have a future date in the Expected ship field.
The order is considered an international order if not all the items have an export declaration code.
The sales order line has not been approved (and approval is required).

Ideally you would create one shipment per order, but if items are not available in sufficient quantity, you can create multiple shipments.

This table compares the programs you can use to create and confirm shipments for sales orders:

Task	Sales Order Maintenance (OE)	Sales Shipment Confirmation (OC) or Secured Confirmation (SOC)	Order Shipment Selection (OSS)	Sales Order Auto Processing (OAP)	Bill of Lading Maintenance (BLM)
Create a shipment	Click Create ship.	Enter NEW in the Shipment number field.	Automatically creates when you process records.	Automatically creates.	Not available.
Confirm shipment	Not available.	Click Confirm.	Not available.	Not available.	Click Confirm and then Shipments or Bill lading to confirm both the BOL and shipments. You can also assign a BOL to a shipment for later confirmation in OC or BLM.

If you selected the Create shipment when supply received? option in the System Options Maintenance (XM) program (Order Processing Options), the system creates a shipment when you receive items from the other branch, your vendor, or into finished goods that are supply for a sales order.

If you delete a shipment (OC, MPK, or ITC) the obligation for that order is removed.

You can also create shipments automatically during the RF picking process. When you complete the order in the RF process, a shipment is created and automatically confirmed.

Branch Transfers

Task	Branch Transfer Maintenance (ITM)	Branch Transfer Confirmation (ITS) or Secured Transfer Confirmation (SITS)	Transfer Auto Processing (ITAP)	Bill of Lading Maintenance (BLM)
Create a shipment	Click Create ship on the transfer header.	Enter NEW in the Shipment number field,	Automatically creates.	Not available.
Confirm shipment	Not available.	Click Confirm.		Click Confirm and then Shipments or Bill lading to confirm both the BOL and shipments. You can also assign a BOL to a shipment for later confirmation in OC or BLM.

Manufacturing Orders

After you obligate components, you need to create a shipment from your stockroom to your shop floor.

If you obligate all required components, you create one shipment per order. If you obligate component sets or selected components, you can create multiple shipments.

This table compares the programs that you can use to create a shipment and confirm picking and whether you can pick more or less that the quantity required:

Task	Manufacturing Order Maintenance (MIM)	Material Usage Maintenance (MUA)	Picking Confirmation (MPK) or Secured Picking (SMPK)	Manufacturing Order Picking Selection (MSS)	Manufacturing Order Auto Processing (MAP)
Create a shipment	Click Pick. Shipment is created and confirmed.	Click Pick. Shipment is created and confirmed.	Enter NEW for Shipment number and click OK.	Creates when you click Process orders.	Automatically creates and confirms shipments.
Confirm picking			Click Confirm.
Over pick	Yes	Yes	Yes	Not possible.	Not possible.
Under pick	Yes	Yes	Yes	Yes, but leaves order open.	Not possible.

Note
In addition, receiving may also automatically pick (backflush) components if you have the Process excess/short components option for your manufacturing branch in the System Options Maintenance (XM) program (Manufacturing Options) set to Y or A.

One-Step Manufacturing

If you select the One-step mfg? field for a parent item in the Branch Item Maintenance (IMB) program, the system obligates components, creates a shipment, and confirms picking in one step. You cannot use one-step release for configured products, cascading orders, or bulk movement items.