When you receive fewer items than you ordered from a vendor, you create a backlog on the purchase order. These backlogs sit in your system with receipt dates in the past, and they disturb your MRP planning in the requisition worksheet. The planning engine reads the old data as if you are still expecting goods on a date that has already passed.
To fix this, you should update the expected receipt date on the open purchase order lines after talking to the vendor. A date in the past creates noise in the planning because you are not going to receive the item in the past.
You also need a clear strategy for who handles backlogs. Decide whether the warehouse deletes the remaining line on receipt, or the purchaser reviews the order and decides what to do. Almost every client has sales lines or purchase lines with dates in the past, so this is a common problem worth addressing.
What a purchase order backlog is
Sometimes you receive less than you ordered from your vendor. That leaves a remaining quantity on the purchase order, and that remaining quantity is a backlog. When we visit clients, many of them have backlogs sitting on purchase orders that are old, sometimes very old.
Take a purchase order with several lines as an example. Most of the quantity has been received, but you still have a quantity to receive of one or two units on some of the lines. The question is what should happen with those open lines.
How backlogs disturb MRP planning
Old backlog data makes a lot of noise in the MRP planning when you run the requisition worksheet. The expected receipt date on the line is in the past, and the planning engine treats it as an incoming receipt. Since you are not actually going to receive the item in the past, this old date distorts the planning results.
For each open line, you need to answer a few questions:
- Do you still need the item?
- Are you still expecting to receive it?
- Does the vendor expect to deliver it?
- What is the realistic expected receipt date?
Updating the expected receipt date
After talking to the vendor, change the expected receipt date on the line to a realistic future date. This removes the noise from the MRP planning, because the system then sees the receipt when it is actually going to happen rather than in the past.
Decide on a backlog strategy and ownership
It is important to have a clear strategy for handling backlogs and to decide who takes action. The options include:
- The warehouse people delete the remaining line after the goods have been received.
- The purchaser goes back into the purchase order, contacts the vendor, and decides what to do with the open quantity.
Whatever you choose, assign clear ownership so the backlogs get handled and do not pile up. In practice, almost every client has sales or purchase lines with dates in the past, so it pays to deal with this systematically.
Q&A
What is a backlog on a purchase order?
A backlog is the remaining quantity left open on a purchase order when you receive fewer items from the vendor than you ordered. The line stays open with the quantity you have not yet received.
Why do old purchase order backlogs cause problems in MRP planning?
The open lines carry an expected receipt date that is in the past. When you run the requisition worksheet, the planning engine reads these as incoming receipts even though the date has already passed. The result is misleading planning data.
How do you stop a backlog from disturbing the planning?
Talk to the vendor about whether you will still receive the items, then update the expected receipt date on the line to a realistic future date. This stops the planning engine from treating the receipt as something that happened in the past.
Who should be responsible for handling purchase order backlogs?
You need to decide and assign ownership. Either the warehouse deletes the remaining line after receiving the goods, or the purchaser reviews the purchase order, contacts the vendor, and decides what to do with the open quantity.