Best Practices: Item Substitutions

Overview

Manufacturing and supply chain disruptions have resulted in item substitutions becoming more common. A substitution is an item a supplier uses in place of another item when fulfilling an order. Substitutions should be communicated between suppliers and their trading partners and should be agreed upon as like products for temporary fulfillment. Suppliers should communicate permanent changes to catalog and item details to buyers so they can update their item master to accommodate future order requests without creating exceptions.

Many of these item substitutions are known and approved between the buyer organization and the supplier or distributor. However, there is a wide range of variation with how item substitutions are communicated in Purchase Order Acknowledgement (POA) transactions.

This job aid contains best practice recommendations for suppliers and distributors when they communicate these substitutions to buyer trading partners. It also contains best practice for buyers who use My Exchange that will help them differentiate between known auto-substitutions and potential exceptions that need to be resolved.

Best Practice for Suppliers

Suppliers and distributors can add the standard “IS” status code to their organization’s POAs (EDI 855) to communicate line-item attribute changes such as supplier part number (SPN), unit of measure (UOM), quantity (QTY), and price.

Best Practice for Buyers

Buyers can use the “Accepted – Substitution Made” exception status in My Exchange to quickly identify orders that have item substitutions, thereby reducing the volume of orders with exceptions that need to be worked.

Identify Orders

Buyers can identify orders with item substitutions in three places: using a Quick Clicks filter, by searching in Advanced Search, and by selecting the Exception Type column on the Orders page.

The “Accepted – Substitution Made” Quick Click filter is in the left pane in the list of Pending Exceptions.

To find exceptions using Advanced Search, click the Advanced Search link in the right pane and select the Accepted – Substitution Made option in the Exception Type list.

To find exceptions on the Orders page, click the Exception Type column header in the right pane and select the Accepted – Substitution Made option in the list.

Manage Exception Orders

After identifying item substitutions, buyers need to manage those exceptions as they would any other exception type.

  1. Select an order. The action menu is enabled.

  2. Take ownership of the exception by adding a yellow flag and a comment.

  3. Click the link in the PO# column. The PO View opens.

  4. Scroll down to view items that are identified with the “Substituted” line status.

  5. Take one of the following actions, based on the situation:

    1. When the item substitution is known and agreed to by both trading partners, use the green flag to resolve the Exception in My Exchange

    2. When the substitution is unknown or the pricing is a concern, use the yellow flag and follow your organization’s normal process to contact the vendor

    3. When you know this is a temporary substitution, update your item master for the future “requisition to order” process, where appropriate

  6. Repeat this process for all substitution exceptions.

Exception Management Best Practice for Buyers

Tip #1: You can create work lists (which are saved filter sets) for commonly substituted items for your primary suppliers and distributors. Work lists will help you to quickly filter exception lists in the future. See the Create Work Lists topic in the product help for details.
Tip #2: To make the exception management process more efficient you can filter the exceptions by the Supplier Part # (SPN).

To filter orders by SPN:

  1. Open the Orders page.

  2. Click the Accepted – Substitution Made filter.

  3. Click a PO# link. The PO details page opens.

  4. Open the line that has a Line Status of Substituted and copy the PO’s Supplier Part #.

  5. Close the PO details.

  6. Click the Pending Exceptions Quick Click.

  7. Paste the SPN in the Supplier Part # column and press ENTER.

  8. Select all exceptions in the filtered list and use the yellow (ownership) or green (resolved) flags and related comments to manage the exceptions related to the item substitution (for example, SPN, UOM, QTY, and price).

Exclude Exceptions

In cases where related SPN and price exceptions are known and agreed to between the trading partners per an automatic, temporary substitution, buyer organizations may consider automatically excluding visibility of the following exception types on future orders:

  • Part Number

  • UOM

  • Price

  • Contract Price

See the Exclude and Restore Exceptions topic in the product help for more information.

Research Exceptions

Buyer teams and managers can research exceptions using the following reports and analytics page.

Flagged Exceptions Report

Run the Flagged Exception Report to track management of item substitution exceptions. This report includes exceptions that are open and provides details in near real time. Activity includes pending exceptions that users have marked as owned (yellow flag ) or resolved (green flag ).

Exception Summary Report

The Exception Summary Report is an historical report. It provides visibility into your item substitutions and serves as a true report outside of the buyer exception management Quick Click work queues. It includes order exception history by date range and exception types such as SPN, UOM, QTY, and price.

Order Exception Analytics

Use the Accepted – Substitution Made filter on the Analytics, Order Exception Analytics page to analyze the exception volume. The report includes exception types, trading partners, and exception trends over time.