Make to Order Scenario

[Former Member]

Hi,

1)In MTO, is there any return process for the material?

2)what happens if the customer cancels the order after the production is complete and the stock is posted to the customer's order?

Regards,

Ajit

[Former Member · Accepted solution]

Hi,

first up, there would be certain business rules govering how the agreements are executed. Now when the customer has ordered a material say for example a boiler costing 20 lakhs, and afer the production is complete the customer cannot say no to it. It would again fall into the agreement of the order... like incase the product doesnt meet the quality standards laid down, or the time of completion etc.. I guess this makes sense. Morever incase of MTO's there is certain amount advance which is collected to get started. All this is to ensure such cancellations or recover the losses to the possible extent.

All that said, we have the required movement types in SAP that we can post the MTO ie special stock to another sales order or even unrestricted. Similarly returns is handled the same way. But the problem comes the product cannot be anyone else apart from the customer who has ordered it. so the business agreements help either parties ie customer and company to resolve the issue.

regards

sadhu kishore

[Former Member · Accepted solution]

Hi Sadhu,

Thanks for the reply. I faced this in a interview recently. I said the same about the agreements, but the person wanted to know what if that happens.

Could you please advise me those movement types.

Regards,

Ajit

[Former Member · Accepted solution]

Ajit,

I don't think there will be a return scenario exists for make-to-order. Because this product will be configured purely based on customer's order. normally there will be terms and conditions between company and customer in MTO scenario. Normally the customer pays the money in advance ans and Sadhu explained, it may cover most of the procurement charges.

If customer cancels the order, according me, we may scrap the order stock and debit the customer for the balance amount.

Prase

[Former Member · Accepted solution]

HI all,

Thanks for the explanations.

Rgds,

Ajit