CTO – Configure to Order

On Hand and Transfer Considerations

ORACLE WHITE PAPER | MARCH 2018
Table of Contents

Introduction 3
Configure to Order Functional Flow 3
Setup 10
Items 11

Item Specifications 12

Model Structures 16

Collections 17

Promising and Sourcing 18

Availability to Promise 18

Sourcing 20

Troubleshooting 24
FAQ 25
Conclusion 26

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Table of Figures
Figure 1: CTO Functional Flow ___________________________________________________ 4
Figure 2: Check Availability of ATO Model and Options ________________________________ 5
Figure 3: Release Planning Recommendations ______________________________________ 6
Figure 4: Supply Order Access from Sales Order - Transfer ____________________________ 6
Figure 5: Supply Order Access from Sales Order - ATP ________________________________ 7
Figure 6: Supply Order 'Transfer' Flow _____________________________________________ 8
Figure 7: Supply Order 'Transfer' Execution Documents _______________________________ 8
Figure 8: Supply Order 'ATP' Flow ________________________________________________ 9
Figure 9: Planning View of On Hand and Transfer Orders ______________________________ 9
Figure 10: Internal Shipping of Transfer Order ______________________________________ 10
Figure 11: Model Item Specifications - Manufacturing ________________________________ 12
Figure 12: Model Item Specifications: Sales and Order Management ____________________ 13
Figure 13: Model Item Specifications – Planning ____________________________________ 14
Figure 14: Model Item Categories ________________________________________________ 15
Figure 15: Model Item Structure _________________________________________________ 16
Figure 16: Collections - Items and Work Definitions __________________________________ 17
Figure 17: Refresh Repository ___________________________________________________ 18
Figure 18: Availability to Promise Rules - Criteria ____________________________________ 19
Figure 19: Availability to Promise Rules - Assignment ________________________________ 20
Figure 20: Sourcing Rules - Buy _________________________________________________ 21
Figure 21: Sourcing Rules - Option and Option Class Exclusions with Make Rule __________ 22
Figure 22: Sourcing assignment: Make (local) rule ___________________________________ 23
Figure 23: Sourcing assignment - Buy (global) rule __________________________________ 24
Figure 24: Planning - Supplies and Demands _______________________________________ 25

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Introduction
Configure to Order (CTO) is the process of ordering and fulfilling configured products. “Configured products” is an
umbrella term for pick to order (PTO) models, assemble-to-order (ATO) models and hybrid configurations (PTO and
ATO combined). Pick to order models consist of already manufactured products that are ready to be shipped either
from in-house inventories or sourced from suppliers’ warehouses. ATO models are always either procured or made
to order. Hybrid configurations are models that have both pick to order components and assemble to order
components.

This document serves as an adjunct to the previously released “CTO – Configure to Order: A Guide to Key
Application Setups”, which covered the manufacturing and procurement flows. This document will cover the
handling of on hand quantities that result from oversupply or returns and their use in warehouse shipment, also
termed ‘ATP’ (available to promise) and transfer orders. Stocking of configuration items is not treated in this
document because, as of this writing, configuration items cannot be used in sales orders. However, specific
configurations can be planned and planning support is available for creating supply of specific configurations in an
extended back-to-back scenario.

Note: Setups covered in the aforementioned whitepaper will not be repeated here except to note any extensions or
differences. This document will also focus only on on-hand and transfer considerations for ATO models as the PTO
models were fully covered previously.

Configure to Order Functional Flow

A model structure defines the list of options and option classes that customers can select when ordering a product
that can be configured. A model structure also can specify mandatory components or included items that are
required for each configuration of the model. One does not order or build the model itself, one orders and builds
configurations of the model. For the purposes of this document, a model structure is assemble-to-order.

A configured item is the result of the choices that a customer makes at run time in configuring an assemble-to-order
(ATO) product. The unique final assembly based on order choices is modeled as a unique item. The configured
products, also referred as configured items, are either procured or made to order. Warehouses rarely stock every
set of options of an ATO model. Instead, they source the specific configuration required by a sales order after the
order is received. Sourcing choices include:
» Purchasing the configured item from a supplier (drop-ship or back-to-back delivery)

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 » Manufacturing the item to the specifications on the sales order (back-to-back delivery)
» Identifying the item as present in stock in the warehouse (ATP – Available To Promise)
» Transferring the item from the warehouse where it is available to the warehouse where it is requested
This document will focus on the second two sourcing choices.

Figure 1: CTO Functional Flow

A more complete picture of the sequence of processing at runtime is presented in the figure above. This now
includes the less frequent cases where stock is present on warehouse shelves or stock is ordered from warehouses
that do not ordinarily make or buy the ordered configurations. The processing is described in the following
sequence of operations, again with the focus only on ATO items and back-to-back processing for this document:
1. A sales order is configured and submitted in Oracle Order Management Cloud. CTO orders can be
created in the Order Management UI or imported.

2. For ATO items or a PTO item with at least one ATO component, Oracle Fusion Supply Chain
Orchestration checks the configuration to see if the corresponding configured item for the ATO component
was created previously. If not, Supply Chain Orchestration sends a request to Oracle Fusion Product
Model to create a new configured item.

3. Then, Oracle Fusion Global Order Promising generates a supply recommendation and schedule.
a. Promise assemble-to-order (ATO), pick-to-order (PTO), and hybrids (ATO within PTO).

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 b. Consider model, option class, and option lead times when determining lead time for the
configured item.
c. Consider resource capacity and availability for manufactured configured items when promising.
d. Consider existing availability of matching configured items before promising an order.
e. Consider option-specific and option class-specific sourcing exclusions.
f. Generate supply recommendations for configured items marked back-to-back.
g. Support drop ship promising of configured items.
When one checks availability in Order Management Cloud, one sees details of the order promise as
seen in the screenshot below of the Check Availability page. The multi-level lines for the model
appear. Global Order Promising also shows you the lines for the mandatory components that are
associated with the model, which are not visible in Order Management. As in any other order, one
can change input attributes of the sales order on the Check Availability page to simulate order
promising. However, one can edit attributes only at the model level. If similar configurations already
exist, then the names of these configurations are passed to Global Order Promising by Order
Management Cloud and are seen in the Configuration Item field. Global Order Promising tries to
consume supply for these configuration items before trying to promise using capable to promise
(CTP) functionality.

Figure 2: Check Availability of ATO Model and Options

4. Oracle Supply Chain Planning Cloud uses the sales order data in planning for component availability.
Planning recommendations are released and supply requests created through a scheduled process.

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 Figure 3: Release Planning Recommendations

5. For back-to-back shipment, a supply request is created.

Figure 4: Supply Order Access from Sales Order - Transfer

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 Figure 5: Supply Order Access from Sales Order - ATP

6. Supply Chain Orchestration then creates the supply request documents for the configured item and
delivers them to the appropriate application,
a. Oracle Fusion Inventory Management (Back-to-back Transfer) or
b. Goods Available status returned to Order Management if on hand quantity is found (Back-to-
back ATP). Note that there are no execution documents for this option because the supply
already exists.
c. Users can view the supply order details and information regarding the related supply request
documents by clicking on the Supply Order Number link on the sales order.

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 Figure 6: Supply Order 'Transfer' Flow

Figure 7: Supply Order 'Transfer' Execution Documents

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 Figure 8: Supply Order 'ATP' Flow

Figure 9: Planning View of On Hand and Transfer Orders

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 7. Supply Creation
a. Inventory Management ships the item to the new inventory location where it is received into the
warehouse.

Figure 10: Internal Shipping of Transfer Order

8. Shipping to Customer: The details of the configured product are printed on the packing slip and
commercial invoice throughout the receiving, inventory, and shipping processes. This helps avoid
confusion when shipping configured products because the contents of the shipment are indicated on the
documents. ASNs that are sent by suppliers, third-party logistics providers, and internal material transfer
shipping organizations are used and supported for configured items.

9. Invoicing: Configured item details are also available on the invoice, allowing the customer to view details
related to charges.

Setup
The following are the core Cloud applications that support the CTO functional flow presented in the previous section.
Not all of these applications have required setup activities. Some do not require setup at all and for some, setup
activities are optional, depending upon the functional run time requirements. The applications presented in bold are
the focus of this document. The other setup considerations have been covered previously.
» Oracle Supply Chain Management Cloud

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 » Product Model
» Configurator
» Pricing
» Supply Chain Planning (includes Global Order Promising)
» Order Management
» Supply Chain Orchestration
» Global Order Promising
» Common Work Setup (Manufacturing)
» Purchasing
» Inventory Management (Shipping & Receiving)
» Cost Management
» Oracle Financials Cloud
» Receivables

The following section provides more detail about required and optional setup activities, starting with an ordered
checklist to provide an overview and to place the setup activities within the appropriate applications.
1. Items (Setup Manager/Product Model/Configurator)
a. Item classes
b. Component items
c. Option classes
d. Models
e. Model structures
f. Configurator
2. Work Definition (manufactured items only – Manufacturing)
a. Release 11 – 1 hierarchy level of model
b. Separate work definition for each included ATO or assembly that is a manufactured item
3. Collect Items, Item Structures, Work Definitions; Refresh Repository (Planning)

4. ATP & Sourcing – items must be collected first (GOP)

a. ATP
i. Supply chain (component) availability
ii. Model, components, category
b. Sourcing
i. Make – local, manufacturing org
ii. Buy – global or local
iii. Exclusions based on options or option classes
c. Sourcing Assignment
d. Refresh Repository
5. Blanket Purchase Agreement (Purchasing)
6. Pricing – model and components for order management (Pricing)
7. Submit sales order to create configuration item (Order Management)

Note that one can add additional setup for costing details, add more elaborate configurator rules for display, and so
on. Shipping and invoicing setups are no different than for standard products. Forecasting and planning can take
component availability into consideration as well as margin and lead time tradeoffs.

Items
Before creating an ATO or PTO model, all of the component standard options and option classes should be
available so that the model structure can be assembled easily. Option class structures are created in a similar

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manner to models. It is just the initial item creation template that differs. The item class that will also be used for the
model should also be created before the model itself is created, but since there are specific aspects that affect the
behavior of the model, they will be described here.

Note that items must exist in all orgs that will be used for shipping.

Item Specifications

Figure 11: Model Item Specifications - Manufacturing

The figure above provides the details of the general and manufacturing specifications for an ATO model. The
following are the important parameters to set:
» Structure Item Type: Model
» Autocreated Configuration: No
» Pick Components: No
» Assemble to Order: Yes
» Build in WIP = Y (if the item is to be manufactured)

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 Figure 12: Model Item Specifications: Sales and Order Management

The sales and order management specifications for an ATO model item are shown in the figure above. The item
must be shippable, orderable and invoiced. Unless a drop shipment flow is used for an ATO model, the Back-to-
Back Enabled flag must be set to Yes.

Note that even for ATO items that will be used for transfer orders, the Transfer Orders Enabled Flag should be set to
No.

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 Figure 13: Model Item Specifications – Planning

The primary specification to set at the model level if one intends to use forecasting for ATO items and their
components is Forecast Control, which should be set to Consume then Explode. To cause the model, option
classes, options and components to appear in Planning Central, then in PIM on the item attribute Planning section,
under MRP/MPS Planning, set Planning Method = MRP Planning or MPS Planning at each level.

The planning percentages for the option class and the options are maintained on the item structure and can be seen
in the figure in the section below on creating model structures. Planning uses these percentages which it gets from
the organization-specific item structure or bill of material.
Users can create and process organization-specific forecasts for ATO models in Oracle Planning Central Cloud.
» Generate statistical forecasts for ATO models: Use shipment and booking history to forecast.
» Consume model forecasts: Sales orders for configured products consume model forecasts.
» Explode remaining model forecast: Generate production forecasts for option classes and options.
» Create supply for organization-specific forecasts: Source components and subassemblies using
standard planning sourcing rules.

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 Figure 14: Model Item Categories

The figure above shows the categories to which the model item is assigned. For ATO models, when the
configuration item is created at run time, the standard categories assigned to the model will be copied to the newly
created configured item. It is important to ensure that if a catalog is configured for single assignment that the item
not be set up multiple category assignment or an error will occur during configured item generation at run time. The
configured item will usually be created, but additional downstream processing may fail. Corresponding errors can
be found in the SCO CTO tab (see troubleshooting).

Catalog information is also used to facilitate promising for newly created configuration items. When assigning
categories to the model, ensure that one of the catalogs is assigned to the Global Order Promising profile “Catalog
for Sourcing Assignments.” A callout to the Vision Slimline category, for example, says to ensure that models are
assigned to an ATP rule using this category. This way each configured item does not have to be assigned
individually to an ATP rule.

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Model Structures

Figure 15: Model Item Structure

Mandatory components, options and options classes are added to the model on the Structures tab of the Item
definition. It is important to have all of these components created in advance so that they can be added to the
model structure easily. Otherwise, model creation will be interrupted so that the missing component can be created.

Only one level can be added, so the structure is essentially built from the bottom up with lower level components
built first and then inserted into their assemblies (standard items) and option classes (models). For example, in the
figure above, the highlighted option class and its standard item components would be added as a single unit using
the Select and Add action.

Option classes are created in the same manner as models, except that they start with a different template. Refer to
the Product Model documentation for more details. Multiple levels of nesting of assemblies (for standard items) and
multiple levels of ATO models and option classes (for ATO models) are supported. PTO models containing ATO
component are also supported.

To the far right of the figure you can see the Planning Percent column. This attribute was mentioned previously and
is used to identify what percentage of the each selection in the option class should be used for forecasting. In the
highlighted example, there are two possibilities, one weighted at 70% and one at 30%. Note that the values must
sum to 100%.

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Collections
At run time, Global Order Promising provides real time availability-to-promise and sourcing decisions while a sales
order is being placed. It also allows the user to explore trade-off scenarios to increase margin and/or customer
responsiveness in delivery decisions. To do this, an extremely well-tuned engine containing the most up-to-date
supply and demand data is required.

Through data collections, the application takes data from various other Oracle Cloud modules into Oracle Supply
Chain Planning Cloud and Global Order Promising. Global Order Promising collects the following types of data:
» Static: Such as structures, routings, suppliers, and transit times
» Dynamic: On-hand supply and purchase orders also are collected from other Cloud modules.
The data contained within this engine must be refreshed periodically because it is an in-memory engine. During the
initial setup, several rounds of targeted collections are run to bring in organizations, items, and other business data
so that they will be in the correct context with their reference keys. As new items are added, they and their
structures must be collected, along with their work definitions if they are to be manufactured. The Net Change
setting, as shown in the figure below, is sufficient for the newly added items as the previously added items have not
changed.

For ATP and transfer recommendations, it is important to make sure that periodic collections of on hand and
demand data are run. The fact that items are received into inventory or that sales orders are submitted for fulfillment
cannot be considered by planning or promising unless the data are collected and the data store is refreshed.

Figure 16: Collections - Items and Work Definitions

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New configured items that are created during sales order processing are not automatically refreshed within Global
Order Promising. Therefore, at an established frequency, they must be collected as well.

Figure 17: Refresh Repository

Finally, any time that collections have been run or that promising or sourcing rules have been created or updated,
the order promising server data must be refreshed. Data that are collected into Supply Chain Planning are
refreshed in Global Order Promising only when the Global Order Promising server is restarted using the “Perform
order promising server data refresh” scheduled process. The Global Order Promising architecture ensures
continuity of order promising, even when its data are being refreshed.

Promising and Sourcing

Global Order Promising promises orders that are received from Order Management Cloud using supply chain
network data and supplies that are collected into the application using collections programs, as specified in the
previous section. Order promising is based on rules that are created within Supply Chain Planning Cloud.

All data are collected into the Supply Chain Planning data repository. The Supply Chain Planning data repository
also stores setups made within Global Order Promising, such as sourcing, available-to-promise, and supply
allocation rules. Promising and sourcing work together to define what can be made available to a customer within
the requested timeframe of a sales order.

Availability to Promise
Global Order Promising enables companies to promise sales orders in different modes:

» By assuming infinite availability for items that are not constrained

» Based on lead times for items that have a very reliable supply chain
» By looking at detailed supply availability

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 Figure 18: Availability to Promise Rules - Criteria

ATP rules must be set up and assigned to models, option classes, and options before the items configured from the
models can be fulfilled. The recommended Promising Mode for CTO is ‘Supply chain availability search’. This
setting informs the availability engine that it should take supplies of components into consideration when promising
the availability of configured items. For manufactured ATO models, to allow Global Order Promising to consider
components and resources when promising an order, enable the ATP rule criterion called Search Components and
Resources.

The time fence specifies the point beyond which the configuration can be considered generally available. It is often
set to a lead time in excess of what is customary to allow for smooth processing of advance orders.

At run time, depending on which option classes and options are selected for a model, Global Order Promising
dynamically determines the lead time that is associated with the model and all of its applicable components
(selected and mandatory). To determine lead time, Global Order Promising traverses various paths within the item
structure and determines the longest path to determine the lead time associated with the model. Global Order
Promising considers the fixed and variable lead times that were modeled for items across the model structure. The
lead time that is associated with the model influences order promising behavior. For example, if a sales order for a
model is requested today, and there are no existing supplies, then Global Order Promising ensures that the sales
order is promised only on or after the model lead time.

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 Figure 19: Availability to Promise Rules - Assignment

All components of the model must have an ATP assignment at some hierarchical level. ATP rules for models should
be assigned at the category level, which enables configured items to be recognized by the same ATP rule
assignment. The other levels are: Item, Organization, Item and organization

When configured items are created at run time, they are also automatically associated with the same categories to
which the model items belong. During item setup the model and thus configured items should be associated with a
category within the same catalog that Global Order Promising uses through the Catalog for Sourcing Assignments
profile attribute. Associate the model item with a category in this catalog, and use the same category to assign the
ATP rule to models (and thus to configured items). This setup ensures that when you create configured items,
Global Order Promising recognizes them after they are collected, without requiring them to be assigned explicitly to
an ATP rule.

Sourcing
Sourcing rules provide the information required to determine where and under what circumstances a model and its
components can be made available to a customer. Sourcing types include buy, make, and transfer. If an on hand
or transfer scenario is to be considered for shipping, then a ‘transfer from’ sourcing rule should be set up for the
model for related to the warehouse where the inventory can be found for internal or external shipping.

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 Figure 20: Sourcing Rules - Buy

If the sourcing type is ‘Buy from’ or ‘Transfer from’, the Organization Assignment type for the rule can be either
Global or Local. Note that the supplier must also be provided if the sourcing type is ‘Buy from’. If there is more than
one supplier, then a separate sourcing rule must be set up for each supplier.

Global sourcing rules define from where sales orders will be fulfilled or shipped. Global sourcing rules are not
defined at any specific organization. They contain only transfer or buy sources. The buy sources correspond to drop
ship suppliers. Local sourcing rules define how additional supply can be created at an internal organization. Local
sourcing rules are created at an org, by definition. They contain transfer, buy, and make sources.

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 Figure 21: Sourcing Rules - Option and Option Class Exclusions with Make Rule

The incremental functionality when defining sourcing for CTO is the ability to define exclusions for options and
option classes. This is presented here in the context of a ‘Make at’ sourcing type, but it can also be used with a ‘Buy
from ‘ sourcing type. Global Order Promising respects sourcing exclusions when promising a sales order. As in the
above example of the Edit Sourcing Rule page and Manage Exclude for Option and Option Classes window, you
can specify sourcing to allow manufacturing and transfer of the model from a particular organization (002) in all
cases, except when the model has the Vision Tablet Accessories (ATO) option class selected. Use this window to
specify exclusions either at the option class or option level.

Note that this is a local sourcing rule. Only by setting the Organization Assignment Type to Local at the top of the
screen does the Type ‘Make at’ become available in the pick list for the actual sourcing rule.

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 Figure 22: Sourcing assignment: Make (local) rule

In general, sourcing rules can be reused and can be assigned at multiple hierarchical levels, as shown in the figure
above. Global Order Promising considers the sourcing rule associated with the most granular assignment level and
fulfills sales orders only from sources corresponding to this sourcing rule. Ensure that there is at least one sourcing
rule assigned at the global level, however. Supported assignment levels:

» Global
» Region
» Demand Class
» Customer
» Customer/Site
» Category
» Category-Region
» Item
» Category-Demand Class
» Category-Customer
» Category-Customer/Site
» Item-Region
» Item-Demand Class
» Item-Customer
» Item-Customer/Site

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 Figure 23: Sourcing assignment - Buy (global) rule

Troubleshooting

1. Symptom: On-hand quantities of a specific configuration exist in inventory, but GOP is not making ATP
recommendations.
Explanation: The promising engine is only aware of the on hand quantities that have been collected and
refreshed into the in-memory data store.
Resolution: Collect On Hand from the requisite warehouse and refresh the data store using the scheduled
process, Refresh and Start the Order Promising Engine.

2. Symptom: I am testing my ‘Make’ (or ‘Buy’) setup, but GOP keeps giving ATP recommendations.
Explanation: This often happens in a testing environment where flows are not completed or the OP engine
is not refreshed. The GOP engine has identified on hand quantities of the item and will preferentially use
these quantities for sourcing until the quantities are exhausted.
Resolution: Check and ‘right’ the inventory quantities, then run collections and refresh the promising
server.

3. Symptom: Supply order is not created

Explanation: A number of scenarios can result in the lack of a supply order. All of these are similar to
those seen in back-to-back fulfillment scenarios with standard products. If one has access to interface
table records, more information can be gathered, but issues can be resolved even without this access.
The most common causes are the following:
a. Scheduled process to release planning recommendations has not been run
b. Issue with GOP rules; e.g., conflicting or missing sourcing rules
c. Component supply not available in requested timeframe
d. Issue with work definition so GOP cannot produce ‘Make’ recommendation
e. Collections not run
Resolution: Identify and correct the root cause. In most cases, planning recommendations will have to be
(re)released, which, if successful, will trigger the creation of the supply order.

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FAQ
1. Question: Where is the structure of configuration item stored?
Answer: The configured item itself is stored in Product Model as a standard item with no structure. This is
to avoid duplication of structural elements on these tables. Supply Chain Orchestration (SCO) stores the
customer selections, the sales structure, which include the transactional item attributes (TIAs) that are
enabled for configuration matching on its ‘match’ tables. SCO regenerates this structure on request for
internal applications. The complete instance structure, which also includes mandatory items is also
generated on request using the stored data plus structure information from the model.

2. Question: Can a configured item be selected in Order Management?

Answer: No. ‘Configure to Order’ means just that. The assumption is that the configured item will be
made or purchased based on the selections on the order. However, there are scenarios, such as returns
and change orders after manufacturing or purchasing are complete that result in on hand stock that are
then available for purchase. The configured item record is just a placeholder for the item that can be used
as a reference (see previous answer).

3. Question: Can a supply order be automatically triggered if there is not enough supply to fulfill a transfer
order for a CTO item?
Answer: No. Supply orders are not automatically triggered for standard items or for CTO items in the case
of shipping from alternate locations. However, if the demand is collected, and a plan is created, planning
can be used to create the supply orders to generated the needed supply.
In Figure 23, you can see the Supplies and Demands view as identified in a specific plan containing a CTO
item. The sourcing recommendation result of the sales order to be shipped from warehouse M2 is a
transfer order from warehouse M1. However, Planning has recognized a lack of supply in M1 and has a
planned order ready for the item. When the plan is run, a new sourcing recommendation will be made to
acquire this additional supply, resulting in a work order or a purchase order (make or buy decision). Once
the supply deficiency in M1 is fulfilled, the items will be transferred to M2 so that they can be shipped to the
customer.

Figure 24: Planning - Supplies and Demands

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 4. Question: What additional setup is required to allow the use of On Hand items in sourcing?
Answer: On hand quantities must be collected on a routine basis to ensure that the GOP engine has
accurate counts. GOP will automatically assign sourcing to non-reserved items already existing in the
warehouse (ATP – available to promise) rather than making a make, buy, or transfer recommendation.
GOP can split the recommendation if there is only partial quantity to fulfill the request.

Conclusion
Assemble-to-order configured items, if they are located in warehouses, can be fulfilled through on hand and transfer
supply orders. Two step supply creation can be supported if Planning is used. There is flexibility in setup to allow
for different sourcing strategies.

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CTO – Configure to Order

April 2017
Author: Leah Reed
Contributing Authors: Yuana Kumala, Milind Phadke, Michael Cummings, Manjula Evans, Rod Sernett, Ram Menon

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