Sourcing

A supply chain consists of suppliers and customers, or sites acting as suppliers or customers. All such trading partners within a supply chain have the same goal: to satisfy the end customer. One node in a supply chain can sometimes act as a customer and sometimes as a supplier. Some nodes might specialize in manufacturing or stock keeping, while others are experts in order taking.

In order to provide for a supply chain to work efficient from start to end, the different trading partners need information - not only information about the own node, but also information about other nodes in the chain. In order to make a correct decision, a lot of information is needed. However, the following chapters will deal with information that can answer the question: which supplier is most suited to fulfill the customer's request? When a user works with this question, it is called to source. The most important information used in IFS Applications' sourcing functionality is availability, dates, and lead times.

In IFS Applications sourcing can be done:

Automatically, using a sourcing rule
Manually

In both cases, the system calculates availability, dates, and lead times in the same way, and it uses the same data.

When sourcing, the possible supply codes are the following:

DOP Order: The customer order line will be supplied from in-house manufacturing. When the customer order is released, a pegged DOP header will be created to which shop orders and/or purchase orders eventually will be connected.
Shop Order: The customer order line will be supplied from in-house manufacturing. When the customer order is released a pegged shop order is created automatically.
Inventory Order: The customer order line will be supplied from your site's inventory.
Internal Purchase Transit: The customer order line will be supplied from an internal supplier. When the customer order is released, a purchase order is created automatically. The goods will be delivered via the order-taking site.
Internal Purchase Direct: The customer order line will be supplied from an internal supplier. When the customer order is released, a purchase order is created automatically. The goods will be delivered directly to the customer.
Purchase Order Transit: The customer order line will be supplied from an external supplier. When the customer order is released, a purchase requisition is created automatically. The goods will be delivered via the order-taking site.
Purchase Order Direct: The customer order line will be supplied from an external supplier. When the customer order is released, a purchase requisition is created automatically. The goods will be delivered directly to the customer.
Production Schedule: The customer order line will be supplied from in-house manufacturing. This supply code can be selected only if the sales part defined is an inventory part associated with at least one production line at a site with a positive schedule percentage. Upon release of the customer order, production schedules are generated loading the lines for the part according to the line percentages, and the line's default scheduling method defined for the part.

When working with sourcing and multiple sites, it is important to know that if two sites do business with each other, these sites must have the same parts defined, and those parts must have the same part numbers. If the exact part number do not exist at both sites, the system will not be able to find the part at the supply site when analyzing the availability, or when trying to create a matching customer order at the supply site. To be more specific, the purchase part number at the demand site must have the same part number as the sales part at the supply site. If the sales part is an inventory part at the supply site, the purchase part number at the demand site must be the same part number as the inventory part at the supply site. Furthermore, to make the inventory valuation work correctly, it is not recommended that you have parts set up as inventory parts at the demand site and non-inventory parts at the supply site, or vice versa. In other words, the sales part type should be the same when sites act within the same legal unit.

When the sourcing takes place, the system uses the total lead time and the availability check. Note that the availability check is only activated if the inventory part at appropriate site has the availability check box selected. The total lead time is dependent on whether the delivery from the supplier will be a transit delivery or a direct delivery; i.e. it is dependent on the supply code. It is also dependent on the ship via code set for the transportation. The total lead time consists of several different lead time parameters originating from different places in the application. However, the most important lead time data is to be found in the supply chain data. You can read more about different lead time parameters and when they are used in the About Lead Time.

When the total lead time is calculated for a supply code where goods should be delivered from a supply site, it is predicted that the goods should be picked from the supply site's inventory. In other words, the sourcing functionality will not consider possibilities to source the internal customer order further at supply site.

Automatic Sourcing

Automatic sourcing is when the system uses a sourcing rule to automatically select the most suitable source to supply the customer's demand. Sourcing rules are defined as basic data in IFS Applications. The sales part must be set up to use a sourcing rule, and a sourcing rule should be connected to the sales part alone (inventory as well as non-inventory), to the sales part and the customer, or to the sales part and customer address. If you have connected a sourcing rule to a sales part, as well as a customer and a customer's address, the automatic sourcing will fetch the correct sourcing rule in the following order:

From the sales part and the customer's address.
From the sales part and the customer.
From the sales part.

A sourcing rule consists of a source set and sourcing objectives. The source set is a set of all sourcing alternatives. Sourcing alternatives can be external suppliers, internal suppliers, in-house manufacturing, or company inventory. The automatic sourcing will select the best alternative from this set. The best alternative will determine the supply code and, when appropriate, the supplier on the customer order line. The sourcing objectives consist of a sequence of criteria that the automatic sourcing will use when more than one sourcing alternative is suited to supply the customer order line. The following algorithm is used when the automatic sourcing selects the best sourcing alternative:

From the source set, find all sourcing alternatives that can deliver the whole sales quantity in time.
If more than one sourcing alternative is found in step 1, use the criteria in the sourcing objective to narrow down the possible alternatives.
If more than one sourcing alternative remains after step 2, pick the first alternative.
If no sourcing alternative was found in step 1, find the alternative from the source set that can deliver the whole order quantity earliest.
If more than one sourcing alternative can deliver on the same earliest possible delivery date, use the criteria in the sourcing objective to narrow down the possible alternatives.
If more than one sourcing alternative remains after step 5, pick the first alternative.

Note: If no sourcing objectives are set up to separate the sourcing alternatives the algorithm will instead use the priority when selecting the best sourcing alternative. If more than one sourcing alternatives have the same priority, the first alternative will be picked.

Example Availability Check: The customer orders 100 and wants to receive the goods on date B. The total lead time is X. The inventory part at the appropriate site (order-taking site or supply site) has the availability checkbox selected. Consequently, the automatic sourcing process checks the availability on date A (B minus X). On A, only 75 are available, thus the calculation checks the availability forwards and finds 100 on date A1. The earliest possible delivery date is B1 (A1 plus X).

The sourcing objectives are used when the automatic sourcing have found more than one sourcing alternative. The sourcing objective narrows down the total number of possible alternatives. The different criteria function as follows:

Highest priority: This criterion type uses the criterion of priority to select the best sourcing alternative from among the remaining sourcing alternatives. The alternative with the highest priority will be selected. If several alternatives have the same priority, the next criterion in the sequence will be used to narrow down the selection.
Shortest distance: This criterion type calculates the total distance for each of the remaining sourcing alternatives in the source set. The distance is dependent on whether the delivery is a transit delivery or a direct delivery. For a transit delivery, two distances are involved. Thus the distance between the supplier and you is added to the distance between you and the final customer. For a direct delivery, only one distance is involved: the distance between the supplier and the final customer. The alternative with the shortest total distance is chosen as the best sourcing alternative. If several alternatives have the same distance, the next criterion in the sequence will be used to narrow down the selection.
Least expected additional cost: This criterion type calculates the total expected additional cost for each of the remaining sourcing alternatives within the source set. The cost is dependent on whether the delivery is a transit delivery or a direct delivery. For a transit delivery, two distances are involved. Thus, the cost for the distance between the supplier and you is added to the cost of the distance between you and the final customer. For a direct delivery, only one distance is involved. Consequently, only the cost for the distance between the supplier and the final customer is considered. The alternative with the least expected additional cost is chosen as the best sourcing alternative. If several alternatives have the same cost, the next criterion in the sequence will be used to further narrow down the selection. The expected additional cost is recalculated using base currency to make the costs comparable.
Shortest total shipping time (shortest total lead time): This criterion type calculates the total shipping time for each of the remaining sourcing alternatives within the source set. The total shipping time is dependent on whether the delivery will be a transit delivery or a direct delivery. Several different lead time components are summarized to retrieve the correct total shipping time. The alternative with the shortest total shipping time is chosen as the best sourcing alternative. If several alternatives have the same total shipping time, the next criterion in the sequence will be used to narrow down the selection. Note, that this criteria only summarizes lead times, it does not consider different calendars (work days/holidays) or routes. It is simply a summarization of lead time parameters.
Ignore supply code Inventory Order when not on time: This criterion type is only valid if none of the remaining sourcing alternatives can deliver on time. If one, or more, of the remaining sourcing alternatives can deliver on time, the automatic sourcing algorithm will directly move on to the next criterion in the sequence to narrow down the selection. However, if none of the remaining sourcing alternatives can deliver on time, this criterion type will ignore sourcing alternatives using supply code Inventory Order (if such an alternative exists). In other words, this criterion type will only pass on pegged orders to the next criterion in the sequence.

Note that there are no logical restrictions or controls when sourcing rules are defined or when sourcing rules are connected to sales parts, sales part/customers or sales part/customer addresses. Instead these controls take place within the automatic sourcing calculation. For instance, a sourcing rule suggesting shop order as a supply code, will not be activated by the automatic sourcing if the sales part on customer order line is defined as a purchased part in the inventory part record. If the automatic sourcing cannot find an appropriate alternative, you will receive a message that says 'No sourcing alternatives found.' This message will be created by the following controls:

Supply chain data must be defined for the appropriate relations in the supply chain parameter windows or in the supply chain matrixes. So, for a transit alternative, supply chain data must exist for both distances; from the supplier to order taking site, and from the order taking site to customer. Note that this also means that a customer order line with a single occurrence address will not be handled by the automatic sourcing.
Only suppliers (internal or external) connected to the purchase part on the customer order line can end up as a supplier on the customer order line.
Only inventory parts with a Manufactured or Manufactured (recipe) part type can receive a Shop Order supply code.
The available supplier type (internal or external) must match the defined supplier selection method or supply code in the used sourcing rule.

You can run an automatic sourcing only if a connection to a sourcing rule exists. The automatic sourcing is activated in the following ways:

Directly when entering a new customer order line in the Customer Order window. The sales part must have sourcing option Use Sourcing Rule.
If the customer order line has a Not Decided supply code:
- From the Customer Order window, right-click and click Sourcing, Source Order Lines Automatically.
- From the Source Order Lines window, right-click and click Source Order Lines Automatically.
- From the Source Order Lines Automatically dialog box.

On the customer order line, you can view the result from the automatic sourcing by right-clicking and clicking Sourcing, View Automatic Sourcing Candidates. The candidates shown in the dialog box are the sourcing alternatives that were equally good; they were separated through the sourcing objectives, i.e., the criteria. The Selected check box is selected on the chosen alternatives. For instance: five sourcing alternatives out of seven can deliver the whole sales quantity in time. All five will be shown in the dialog. However, two of the alternatives have the same total shipping time (we assume that only shipping time is used as a criterion). These two will have the Selected check box selected. The automatic sourcing process will pick the first alternative of the two to supply the customer.

When sourcing automatically the system will never suggest a DOP Order or Production Schedule supply code.

Note that it is always possible to change the supply code and the supplier suggested by the automatic sourcing.

Manual Sourcing

In Source Order Lines Manually, you can see the different sourcing alternatives and manually choose the most appropriate alternative. You can choose several alternatives to supply one single order line, i.e., the sales quantity can be split to several sourcing alternatives. Note, when the customer order line originates from an internal purchase order, it is only possible to choose one sourcing alternative. The customer order line must have a Not Decided supply code to be shown in the manual sourcing client. In this window you cannot create sourced lines with a DOP Order or Production Schedule supply code. Neither can you source CTO-parts.

In the tab header in this client, the data in order to source from the site's inventory is shown. For this alternative, you can choose supply code Inventory Order or Shop Order. In the first child table, all suppliers are shown that are connected to the purchase part on the customer order line. All alternatives are shown with Transit as the default delivery mode. If an external supplier is chosen, the supply code will be Purchase Order Transit or Purchase Order Direct on the customer order line depending on whether the delivery mode is transit or direct. If an internal supplier is chosen, the supply code will be Internal Purchase Transit or Internal Purchase Direct on the customer order line depending on whether the delivery mode is transit or direct. In the second child table, the sourced lines are shown. You can delete these records and re-source. To ensure that the available quantity also will be available at a later stage, you can make supply chain reservations from the second child table.

You work mainly in the tab header and in the first child table. The following fields can be updated to find a better sourcing possibility: Wanted Delivery Date, Delivery Mode (only in first child table), and Supplier Ship Via (called Ship Via in tab header). When these fields are updated, the information is re-fetched and recalculated. Supplier Ship Via and Delivery Mode will have an effect on the total shipping time displayed as X in the example below. If you want to change data on the customer order line (for example, change sales quantity), this can be done in the window header or on the customer order line in the Customer Order window.

Example: The customer orders 100 and wants to receive the goods on date B. The total lead time is X (called total shipping time in the client). The inventory part at the appropriate site (order-taking site or supply site) has the availability checkbox selected. Consequently, the manual sourcing checks the availability on date A (B minus X). On A only 75 are available, thus the calculation checks the availability forwards and finds 100 on date A1. The earliest possible delivery date is B1 (A1 plus X). The fields that provide the information described in the example, are the following:

Supply Site Due Date (A)
Wanted Delivery Date (B)
Today's Date (C)
Supply Site EP Due Date (A1)
Earliest Possible Delivery Date (B1)
Total Delivery Lead Time (=Total Shipping Time) (X)
Desired Time to Delivery (Y1)
Min Time to Delivery (Y2)

It is only relevant to show ATP on date A not on date A1. Consequently, note that ATP = 75 is shown in the manual sourcing window; 100 is the customer's ordered quantity. Also note that the sourced quantity and ATP is always calculated and shown in the inventory unit of measure.

As long as the customer order line is not yet completely sourced, i.e., sourced quantity differs from revised quantity, you cannot release that customer order line. However, you can release the order as a whole, which means that the order head will receive a Released status and the rest of the customer order lines will be released. The customer order line that is not yet completely sourced, can be released at a later stage by right-clicking, pointing to Sourcing, and then clicking Release Source Line. When a sourced order line is being released, each source line originating from the same customer order line receives a separate customer order line, and, when appropriate, correct orders are created (shop order, purchase order, etc.). Even after a customer order is released (as long as the customer order header status is less than Delivered), you can enter new order lines with a Not Decided supply code and source them manually via Source Order Lines Manually.

Sourced lines that originates from an order line have the originating order line's delivery number defined on its customer order line. This is shown in the field Originating Del No.

For each customer, you can define whether the external printouts sent to the customer should show all order lines originating from one order line or if the documents should summarize these order lines. The default value is defined in a check box in the Customer window, and this value is copied into the customer order and shown on the Document Information tab. You can change the value on the customer order. So far, it is only on order confirmation that will be summarized.

You can reach the manual sourcing client from the following windows:

From the Customer Order window, right-click and click Sourcing, Source Order Lines Manually.
From the Source Order Lines window, right-click and click Source Order Lines Manually.
From the navigator by choosing Source Order Lines Manually.

Note that you can always override suggested supply code and suggested supplier on a customer order line, as long as the customer order header status is Planned. However, some restrictions exist if inventory reservations have been made. Also remember that if the customer order line does not have any sourced lines, you can always choose to source automatically.