So I must admit I’m a bit conflicted about the best way to set this parameter. I like to leave it off, but other consultants I’ve worked with think that it should be on.
Inventory management > Setup > Inventory management parameters > General:
So what does it do? Well it lets you reserve from open supply orders as well as physical inventory. By supply orders I mean purchase orders, production orders, or transfer orders.
So the first thing you might notice is the on-hand display. With the parameter selected I see:
But with it off, the system shows:
Let’s leave ‘Reserved ordered items’ blank, and create a sales order for 20. If I have Automatic reservation enabled, when I create the sales order I’ll see:
Fair enough. I’m ordering 20 and there are only 11 in the warehouse, so the system’s asking me what I’d like to do.
Now let’s repeat that with the ‘Reserved ordered items’ ticked:
The system silently accepts the sales order, and when we look at the inventory transactions we’ll see:
We’ve reserved the 11 from Physical inventory, and the balance from the Open purchase order (‘Reserved ordered’).
Personally, I think that’s a bit weak – if you were thinking of using ‘Reserve ordered items’ you should also be looking a ATP (Available to promise) delivery date control. Lachlan Cash, in his most excellent blog has done a series of postings on ATP http://organicax.com/tag/atp/.
The situation’s slightly better if you switch off Automatic reservation and perform the reservation manually (Inventory > Reservation from the sales order line):
The system is showing me that I don’t have enough physical inventory – but again when I click on the ‘reserve lot’ button the system silently reserves against the open purchase order:
Of course, with the ‘Reserved ordered items’ parameter switch off the reservation will only reserve from available physical inventory:
But really in a busy customer service department who’s going to be reserving inventory manually?
As always, there are exceptions. If you create a purchase order (or a production order) from the sales order line, for instance:
Your sales order line and purchase/production inventory transactions are marked, and the sales order line inventory transaction shows ‘Reserved ordered’ regardless of the fact that in this case we have not selected the Inventory management parameter ‘Reserve ordered items’.
Lastly, when you receive the open supply order, the sales order line inventory transactions that have the status ‘Ordered reserved’ are automatically updated to ‘Physical reserved’.