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Monitoring purchase order life cycles

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The purchase order (PO) lifecycle is a vital component of supply chain operations, encompassing all stages from the initial creation of a purchase order to its final fulfillment and payment. This lifecycle is essential for maintaining effective communication and coordination between buyers and suppliers, ensuring that all parties are aligned and informed throughout the process.

EDI 850 documents, which represent purchase orders, play a crucial role in this lifecycle. By facilitating the electronic exchange of order information, EDI 850 documents streamline the communication between organizations and their suppliers.

Consider a scenario where a manufacturing company places an order for essential raw materials using an EDI 850 document. If the supplier fails to acknowledge the purchase order in a timely manner or if any changes to the order, communicated through an EDI 860, are overlooked, it can lead to delays in production schedules. This situation may result in costly downtime for the manufacturing company.

This example helps users understand the potential business challenges of not properly monitoring the PO lifecycle and why active monitoring is critical for maintaining operational flow.

Prerequisites

The following software is required for this use case.

  • The Splunk platform. Mainly used for initial data processing, analysis and alerting.
  • Optional. Splunk ITSI. For further expanding the analytics, leverage the ITSI thresholding and anomaly detection capability.
  • Optional. PowerConnect for SAP Solutions. If the supply chain operational transactions needs to be integrated from SAP ERP, this app is necessary.

The following data types from supply chain operational transactions are required inputs for accomplishing this use case.

  • EDI X12, EDIFACT. Standard supply chain transactions data.
  • Optional. API Data. Supply chain transactions data gathered through APIs.
  • Optional. SAP iDocs. iDocs data collected using SAP Powerconnect for Splunk.

Purchase order lifecycle monitoring

Effective monitoring of the purchase order lifecycle ensures that suppliers receive, acknowledge, and respond to purchase orders promptly. This proactive approach minimizes the risk of errors or delays, enabling businesses to maintain efficient operations and uphold customer satisfaction. Failing to monitor the health of the purchase order lifecycle can result in several critical supply chain operations issues. For instance, a failure to acknowledge purchase orders might lead to supply chain bottlenecks or unfulfilled orders. Additionally, delays in supplier responses can disrupt production schedules and customer delivery timelines.

By leveraging electronic data interchange (EDI) as the analysis data source, organizations can gain valuable insights into their PO processes, leading to improved decision-making and operational efficiency.

These EDI transactions are especially useful for monitoring purchase order lifecycles:

  • Initial purchase order. Track the transmission and acknowledgment of purchase orders (EDI 850) by the supplier.
  • Order confirmation. Track the actual acknowledgment of purchase orders (EDI 855) by the supplier to the buyer.
  • Order changes. Monitor any modifications to the PO (such as EDI 860 for order changes) and ensure that the changes are acknowledged and correctly processed.

Creating KPIs for purchase order lifecycle monitoring

What to monitor

It's important to track a few key performance indicators (KPIs) to ensure effective PO lifecycle monitoring.

  • Acknowledgment of Purchase Orders. Track the timely receipt of functional acknowledgments (for example, EDI 997) from suppliers, ensuring that they acknowledge the orders.
  • Order Change Monitoring. Ensure that any order changes (EDI 860) are properly transmitted and acknowledged by the supplier.
  • Purchase Order Transmission Success Status. Confirm that all purchase orders (EDI 850) sent to suppliers are successfully transmitted and received.
  • Supplier Response Time. Monitor how quickly suppliers respond to the purchase orders and order changes.
  • Order Error Rates. Track any failed or rejected transactions during the purchase order process (for example, communication errors or data mismatches).
  • Supplier Hasn't Responded. Search for open purchase orders that haven’t been acknowledged by the supplier after receiving the order.

Building KPIs in the Splunk platform

This section explains the base for any search to build visual KPIs to track key EDI transmission metrics. As you click into each of linked searches in the section above, you'll see the following components.

To begin building the monitoring component for the purchase order lifecycle, start by creating a foundational analytics data cube for analysis. This foundation should include key EDI transactions: EDI 850 (Purchase Order Confirmation), EDI 855 (Purchase Order Acknowledgment), EDI 860 (Purchase Order Change), and EDI 997 (Transaction Acknowledgment). These are essential for tracking and analyzing the purchase order lifecycle effectively.

First, searching for events with sourcetype="edi:x12" will retrieve all EDI transactions, including both the actual transactions and their corresponding acknowledgments.

index=supply_chain_edi sourcetype="edi:x12" edi_code IN (860, 850, 997)
| table _time edi_ack_status edi_buyer edi_code edi_code_ack edi_cont_num edi_date edi_flag edi_requestor edi_responder edi_seller edi_sequence edi_time edi_tr_id edi_type

image10.png

Next, use the evalcommand to create a field called edi_ack_status_combo, which associates acknowledgment events with the corresponding EDI transactions. The result of this evaluation will look like 997-850-A, which indicates that 997 (the acknowledgment) corresponds to 850 (the Transportation Carrier Shipment Status Message).

Additionally, the edi_code_groupby field is evaluated to group the actual EDI request with its acknowledgment. In the example above, this would be 850. The purpose of this grouping is to combine the request and acknowledgment events, allowing for easier filtering and analysis. For instance, you can quickly search for requests that lack an acknowledgment.

index=supply_chain_edi sourcetype="edi:x12" edi_code IN (860, 850, 997)
| table _time edi_ack_status edi_buyer edi_code edi_code_ack edi_cont_num edi_date edi_flag edi_requestor edi_responder edi_seller edi_sequence edi_time edi_tr_id edi_type 
| eval edi_ack_status_combo=edi_code+"-"+edi_code_ack+"-"+edi_ack_status
| eval edi_code_groupby=if(isnull(edi_code_ack), edi_code, edi_code_ack)

image5.png

With the proper evaluation conditions in place, we can now merge EDI requests with their corresponding acknowledgments using the stats command.

index=supply_chain_edi sourcetype="edi:x12" edi_code IN (860, 850, 997)
| table _time edi_ack_status edi_buyer edi_code edi_code_ack edi_cont_num edi_date edi_flag edi_requestor edi_responder edi_seller edi_sequence edi_time edi_tr_id edi_type 
| eval edi_ack_status_combo=edi_code+"-"+edi_code_ack+"-"+edi_ack_status
| eval edi_code_groupby=if(isnull(edi_code_ack), edi_code, edi_code_ack)
| stats last(_time) AS _time, last(edi_requestor) AS edi_requestor, last(edi_responder) AS edi_responder, first(edi_code) AS edi_type, values(edi_code) AS edi_code, last(edi_ack_status) AS edi_ack_status BY edi_tr_id edi_code_groupby

image12.png

The result of the stats command offers a strong foundation for various other analyses, especially in identifying issues related to missing acknowledgments. For example, if an acknowledgment for an EDI 850 (Purchase Order) is not received, we can infer that the receiver has not recognized or processed the order. By searching for 850 Purchase Orders and mapping them with their acknowledgments, we can quickly identify which orders are at risk of not being fulfilled. 

Using the foundational Splunk search above, we can generate a variety of KPIs, alerts, and reports that effectively monitor the purchase order lifecycle.

Summary

Monitoring the purchase order lifecycle is critical to ensuring that the supply chain operates efficiently and without interruption. By tracking the transmission and acknowledgment of POs and handling order changes in real time, companies can avoid costly disruptions and maintain a smooth flow of goods and services.

Next steps

  • Create dashboards for PO lifecycle monitoring:
    • Build custom dashboards in the Splunk platform to visualize the flow of purchase orders and acknowledgments.
    • Use the dashboard to display:
      • Number of transmitted purchase orders (EDI 850).
      • Percentage of POs acknowledged (EDI 997).
      • Any unacknowledged or delayed orders.
      • Status of order changes (EDI 860) and whether they were accepted or rejected.
  • Monitor order confirmation and changes:
    • Use SPL queries in the Splunk platform to check for unacknowledged POs or missing responses from suppliers. Example SPL Query: index=edi sourcetype=edi_850
      | stats count by order_status supplier_id
    • Set up specific queries to track order changes and their acknowledgments (EDI 860).
  • Set up real-time alerts:
    • Configure alerts in the Splunk platform to notify the team of potential issues, such as:
      • Delays or rejections in order changes (EDI 860).
      • POs that haven’t received a 997 acknowledgment within a specified time frame.
        Example: Create a real-time alert if a PO acknowledgment is not received within 24 hours of the order being transmitted.
        index=edi sourcetype=edi_997
        | where acknowledgment_status="missing" and time > 24h
        | alert
  • Analyze historical data and trends:
    • Periodically review historical data to identify patterns, such as recurring suppliers with delayed responses or frequent errors in PO transmissions.
    • Use trend analysis to improve the efficiency of the purchase order lifecycle over time.
  • After setting up PO lifecycle monitoring, users should continue to:
    • Fine-tune alert thresholds. Based on operational requirements, adjust the timing for acknowledgment alerts or error tracking.
    • Monitor supplier performance. Continuously assess how well suppliers are adhering to SLAs (service level greements) in terms of timely responses to purchase orders and changes.
    • Automate reports. Use the Splunk platform to generate automated reports on the health of the purchase order process and review them regularly to identify opportunities for improvement.

Additionally, follow the Supply Chain Optimization Solution Accelerator to learn how to ingest the EDI transaction data set. After the data is collected, ensure that the appropriate TAs are applied to extract the default EDI fields for analysis. For a deeper understanding of how EDIs function, refer to the Understanding EDIs section within the solution accelerator.

Finally, Splunk offers a turnkey professional services solution to monitor the reliability and health of your supply chain systems. To learn more about engaging our professional services, contact our sales team.