Hello, I'm Nari Woo from the SERVEONE Order Management Team
Welcome to the 2025 SERVEONE MRO Process Order Management lecture
First, a quick overview of PO management
PO management means
the buyer understands the delivery type and supplier selection logic
based on master data,
then creates and manages POs accordingly
In this chapter, I’ll briefly cover the PO management standards
and the updated assignee logic in 2025
Then, we’ll dive into PO Simulation,
the core logic for delivery type
and automatic supplier selection
First, let’s clarify the difference between orders and purchase orders
SO is the customer’s request,
while PO is SERVEONE's request for suppliers to deliver goods
For reference, in 2024, SERVEONE
processed about 8.7 million orders in Korea,
which averages to 36,000 orders per working day
SERVEONE manages POs efficiently by dividing them into
real-time POs and batch-generated POs
POs are divided into two type
Real-time PO, created immediately with the customer SO
Automatic PO, created through scheduled PO simulation batches
Real-time POs apply to cases like Pre-Receipt orders or sub-materials,
where the delivery type and supplier are already fixed, so no PO simulation batch is needed
Automatic POs cover all other orders
Currently, automatic batches run four times a day
At 9 AM, 11 AM, 2 PM, and 4 PM
Each batch includes all SOs created up to 30 minutes before the batch
Also, for 10 minutes before and after each batch, order changes are not allowed
Based on the PO simulation results, the delivery type and supplier are set to create PO
There is no automatic batch on weekends
So if a customer SO is created after 3 PM on Friday,
it won’t be included in the 4 PM batch,
and the PO will be created on Monday at 9 AM
Understanding the batch schedule
helps reduce unnecessary communication between team
So not only buyers,
but also sales and operations managers should know these batch times
Next is the 2025 buyer assignment logi
The buying team is determined based on the attributes of the operating unit
In 2024, R&D was reassigned to the Buying Team
For LG Headquarters, the construction materials and repair operating units
are handled by either the LG Business Team
or the EV Business Team, depending on the region attributes
For LG promotional operating units, they are handled by both the LG Business Team and the Sales Business Team
Next, let’s look at the PO simulation
that determines the delivery type and supplier
The PO simulation follows decision logic to set both the delivery type and the supplier
Delivery type is determined using the sales/customer master, product master, and logistics master,
which decide whether the order can go through the hub
Then, the system checks for S-MRP master data
and whether bundled delivery applies
Finally, for orders going through the hub, the detailed delivery type is determined
Supplier selection is based on factors like minimum order quantity, delivery availability,
purchase price, and supplier evaluation
SERVEONE has four delivery types
Direct delivery which supplier ships straight to the customer,
No-stock which goes through the hub, Center, and VMI
Direct delivery ships straight from the supplier to the customer without SERVEONE's physical inspection,
so delivery proof must be uploaded once completed
For No-stock delivery, the supplier delivers to logistics center,
then SERVEONE ships to the customer via own fleet or courier service
In No-stock POs, the inbound hub
is decided by the supplier master’s default hub,
and the outbound hub is set by the customer’s operating unit
For Center and VMI, these are products managed under S-MRP
Center stock is settled at inbound due to pre-purchase
VMI stock is settled at customer outbound completion
Now, let’s look at the auto logic for
delivery type and supplier selection
Delivery type is determined by the SO’s Customer master, Product master,
Logistics master, S-MRP data and order info
These four methods will be determined
These master fields are
straightforward in meaning
Please review the items on the next pages
If you grasp their operational implications,
that’s enough
So I’ll skip the detailed explanation here
Our supplier selection logic is simpler than delivery type
First, it checks if a designated supplier exists in the sales master
Then it looks at Pre-Receipt status
and any assigned supplier info
Next, it checks the supplier’s direct delivery coverage
to determine the supplier
Many assume the first priority in supplier selection is purchase price,
but in fact, it’s minimum order quantity
Even if the price is low,
if it doesn’t match the customer’s order quantity or conditions, it’s meaningless
That’s why MOQ comes first
The second priority is delivery availability
After the delivery type is set,
the system checks if it matches the supplier’s delivery coverage
If it does, the supplier is eligible
Sometimes this results in a PO
going to an unexpected supplier
This usually happens when the delivery type is set as direct delivery
To fix this, you can either change the delivery type
to No-stock by updating the master data,
or request an update to the supplier master
to correct the delivery availability info
The third priority is purchase price, using the lowest purchase price as the standard
The fourth priority is the supplier evaluation score
If two suppliers have the same lowest price,
the system uses the evaluation score in the supplier master to make the decision
As an exception, when an order is created in the SSP Mall,
the system uses SSP supplier status as the third priority
For SSP representative products,
the purchase info includes whether the supplier is SSP-designated, so these are managed separately,
and the PO is directed to that assigned SSP supplier
As mentioned earlier, I think the people in charge
will understand the meaning of each master information
in the automatic delivery type determination criteria by reading through it once,
so I will skip over it
This information can be found in Planned PO Inquiry
Click the PO simulation number for a completed SO,
and a popup will show each simulation item with values of Yes or No
These values are the criteria for delivery type decisions
It’s best to check them directly in practice,
seeing it firsthand makes it easier to understand
This table shows the detailed logic for how the final delivery type is decided
based on each master data field
Using the sales/customer master, product master, and logistics master,
the system decides whether the order can go through the hub
Then it checks for S-MRP data
and whether bundled delivery applies,
to determine the detailed delivery type for hub-routed orders
As an exception, when the order falls into a courier delivery area rather than a hub self-delivery area,
the shipping hub may be set to the supplier’s primary receiving hub
instead of the customer’s hub
This logic is designed to reduce unnecessary hub-to-hub transfers,
so please keep it in mind
Also note that if the assigned supplier is capable of nationwide self-delivery
or if it is a linked supplier, some orders may be switched to direct delivery as another exception
Please review the table logic with these exceptions in mind
Here are the detailed criteria for supplier selection I mentioned earlier
Most of the points should be straightforward to understand
For the second priority, delivery feasibility,
when the shipping method is determined as direct delivery,
the system checks whether the supplier’s master data includes a self-delivery service area
that matches the order’s delivery region
The purchase price is not the item price shown in the purchase information
It means the aggregated purchase condition value
for that specific order
In practice, the product price in the purchase info
and the purchase price in the order info can differ
So it’s important to keep in mind that conceptually, these two are not the same
To summarize the supplier selection logic so far,
please note only the exception case where the inbound hub for non-stock orders
is applied identically as the outbound hub
The purchase order status is determined based on the delivery type and supplier decision
from the order simulation
There are three statuses: Pending, On Hold, and Error
First, the supplier decision method is divided into
Customer-specified and Auto-determined
Then, depending on the priority order mentioned earlier
and the existence of purchase information, the final PO status is classified
Basically, regardless of the supplier decision method,
if valid purchase information exists, the status becomes Pending
If no purchase information exists, the status becomes Error
If there is no purchase info for a designated supplier,
the message will be “Supplier cost not set, undecided”
If there is no valid purchase info at all, the message will be “Supplier not decided, no purchase info”
Both cases result in Error, but the messages differ
The On Hold status applies only when the supplier is chosen by auto-decision
When multiple purchase information records exist under the same criteria,
when the decided supplier cannot deliver,
or when the minimum order quantity is not met, then system shows error message
This is the overall PO process summarizing the purchase order simulation
After the customer SO is created, the system first checks for pre-receipt handling,
customer-specified supplier, or purchase-specified supplier
If no designation exists, the order runs through the PO simulation
Then valid orders move to PO Pending
Others remain as PO Error or On Hold
Pending orders are processed during the 1st and 4th automatic batch runs, where POs are generated
Suppliers then receive the POs, deliver the goods,
or reject the order if delivery is not possible
As mentioned earlier, PO Errors and On Hold statuses
occur in the process
The root cause is usually missing or invalid purchase info
For PO Errors, you must create valid purchase info based on the error reason
If no valid purchase info exists at all,
the message shows Supplier Not Determined / No Purchase Info
If a designated supplier’s info is missing,
the message shows Supplier Price Not Determine
In each case, update the purchase info and check with the sales manager
For On-Hold POs, you can resolve them
by updating purchase info or supplier master data as needed
The buyer can then review the case,
make adjustments such as price changes,
and directly release the hold
Simulation messages and handling methods are documented in detail,
so please refer to them in practice
Purchase order errors occur when valid purchase information is missing
After the SO is created, delays are inevitable
while purchase info is reviewed or vendor quotes are arranged
Please minimize unnecessary requests
Keep purchase information updated
to meet customer deadlines and avoid claims
In the case of rejections, the purchasing manager in charge must handle them thoroughly
Depending on the supplier’s reason for rejection, you should coordinate with relevant departments to resolve it
Rejected cases can be managed in the PO history screen
by using the Order Confirmation Request menu
They are divided into order confirmation requests and order cancellation requests,
and you choose the type depending on the reason
An order cancellation request does not mean it is immediately canceled
The operations or sales manager will confirm with the client, and if cancellation is possible,
it will be registered as on hold first, then processed
Please refer to the actual processing screen shown here
for details on each request reason
Next is the actual system manual
Please refer to the screen, we will move on without explanation
Now let me explain the replenishment PO simulation
Based on S-MRP reference information, the replenishment PO simulation
determines the supplier, the replenishment PO target, and the quantity
Here, S-MRP reference information refers to
master data required to run S-MRP
This includes safety stock, maximum stock, lot size, and inbound lead time
The target of the replenishment PO simulation is VMI and center inventory under S-MRP management,
where available stock is below the reorder point
The buyer sets the reference data in S-MRP
and the replenishment PO type
Based on this, the replenishment PO simulation is run,
and the ROP and replenishment order quantity are determined
The buyer then executes the replenishment PO
and, if necessary, creates an outbound order for center inventory returns or VMI withdrawals
Before covering the details of the replenishment PO simulation,
let\'s look at the S-MRP registration process
The buyer selects the inventory items to manage,
calculates logistics costs via CST,
and performs a P&L analysis, then proceeds with S-MRP registration
Unlike center inventory,
MI is a contract to rent space in our logistics center
A separate VMI material contract is required,
and the standard contract is available in the e-contract system
Based on the logistics costs allocated from CST,
the buyer must conduct a P&L analysis
and review inventory operations with a focus on improving profitability
Now let’s go over each of the S-MRP reference data items
The required data are safety stock, maximum stock, lot size, and inbound lead time
Safety stock is set based on the average monthly sales of up to the past three months
The recommended safety stock is the three-month average monthly sales
multiplied by 24 working days
In practice, safety stock is usually set to the average one- or two-month inventory level,
limited to normal stock
Maximum stock is recommended at twice the safety stock,
though for imports or long lead-time items, a higher maximum stock may be set
Lot size is a different concept from MOQ
It should be understood as the multiple order unit rather than the minimum order quantity
Even if customer sales quantities are calculated per unit,
when negotiating with suppliers on inventory operations,
the release standard is often based on box or pallet quantities
In most cases, this pack quantity becomes the multiple order uni
Inbound LT is also a different concept from the standard delivery LT in the product master
It generally refers to the lead time required for
the replenishment order to arrive at our hub
This information may need to be updated due to
changes in customer demand or supplier conditions
Since the replenishment order simulation runs based on this data,
it must be checked and revised regularly
Under here is 2025 inventory manager assignment logic
Based on the highest purchase volume operating unit,
the manager is designated from
the Purchasing HQ, Sales HQ, or LG HQ
If there are no performance records in both 2024 and 2023,
the manager is assigned to the detailed category manager
of the initial operating unit listed in the item master information
If an inventory manager change is required,
you can coordinate with the current manager and then send a change request email
to the inventory manager within the Purchasing Management Team
Next, based on the S-MRP reference data mentioned earlier,
I will explain the logic for updating the reorder point,
optimal ordering date, and inventory status of stocked items
The formula for the reorder point is the sum of safety stock and the daily average sales quantity multiplied by the inbound LT
Conceptually, safety stock is the minimum quantity
that SERVEONE must always hold
When placing replenishment orders, you must account for how many units are sold daily
and how long it takes for the replenishment order to arrive at our logistics hub
This way, when the new stock arrives,
the remaining stock level at the hub aligns with the safety stock
So, like the example,
if the safety stock for PVC gloves is 3,200 units, the daily average sales are 1,040 units,
and the inbound lead time is three days,
the buyer should place a replenishment order when inventory reaches 6,320 unit
This is calculated as the safety stock of 3,200 plus the daily average sales of 1,040
multiplied by the inbound lead time of three days
By doing so, inventory will not fall below safety stock
and will be replenished at the right time
For the optimal order date and inventory status, it’s best to review the concepts briefly
and then move on
There are three types of replenishment orders
Automatic orders are created after the simulation,
based on the target and quantity
Semi-automatic shows the results to the buyer,
who then manually confirms and creates the order
Manual means no simulation is run,
and the buyer adds items
and quantities directly
Replenishment targets are checked once a day for both automatic and semi-automatic orders
If available stock falls below the reorder point, the item is flagged for replenishment
Available stock means hub inventory in S-MRP,
plus incoming stock,
minus open SO quantities
Replenishment quantity is calculated as
maximum stock in S-MRP minus available stock
If a multiple order quantity is set,
the replenishment adjusts to that unit
If the calculated quantity is smaller than the MOQ,
the system will not process it
In that case, the buyer must review and update MRP info or place a manual order
If replenishment exceeds max stock set by the buyer,
it requires agreement with the Inventory Manager
In the PVC glove example, 38,000 max stock
minus 13,500 available stock equals a replenishment of 24,500
To summarize, replenishment happens
not when stock falls below safety stock,
but when available stock is less than the reorder point
Replenishment quantity = max stock – available stock
For VMI stock with a separate VMI contract,
the supplier is predetermined
For Center stock, unlike normal customer order logic,
since SERVEONE pre-purchases,
only purchase price is considered
The supplier with the lowest purchase price is chosen at the replenishment point
If prices are the same, the supplier with the higher evaluation score is selected
Next is the VMI order process
Unlike Center stock, VMI is requested to the supplier front system
The supplier receives it, issues a shipment instruction,
and uploads inspection reports if required
After confirming shipment, the order details appear as normal
For sub-materials, inspection reports are mandatory,
so for the people in charge,
please refer to the VMI manual for details
Replenishment orders can be partially canceled depending on the stock type
For VMI, once shipment is confirmed, cancellation is not possible
A CSR must be issued
So please notify suppliers in advance
to ensure shipment confirmation is handled properly
For Center stock, cancellation is possible
before supplier acceptance, at order receipt, or at shipment rejection,
similar to regular non-stock direct orders
As mentioned earlier, available inventory
includes replenishment orders confirmed for shipment by suppliers
Long-delayed replenishment orders can cause mismatches between available inventory and actual stock
This may lead to stockouts and delivery delays
So buyers must take note of this and manage inventory accordingly
Next is long-term inactive inventory management
At SERVEONE, long-term inactive inventory
is defined as items with no shipment for over six months or with turnover days exceeding six months
We monitor inventory monthly
and conduct physical checks twice a year
So buyers managing inventory
must prevent long-term inactive stock
by regularly updating S-MRP master data
and managing changes in customer demand
For inventory withdrawal, center stock is pre-purchased by SERVEONE,
so treat it as return
If normal sales are not possible, we handle it through discount sales, third-party sales,
or disposal such as scrapping
VMI is based on hub space rental,
so withdrawals must be pre-agreed with the supplier
The supplier requests the VMI withdrawal directly,
and the buyer accepts it and creates the withdrawal PO
Next is the system manual for SMRP, covering registration, replenishment, and withdrawal
Please refer to it as needed in your work
This page shows inventory information inquiry, modification, and deletion,
and also allows changing the inventory management status
Changes are applied to the SMRP master after approval,
which will be explained in detail on the next page
Normal hold is a menu to change the inventory management status
Select the item, execute the menu, and save
Then the status changes immediately
In the SMRP inquiry menu,
you can request modification or deletion of the MRP master with manager authority
If the deletion target is not reflected in the master,
the buyer must confirm whether to proceed with replenishment or deletion
Additional work is needed to
manually change the shipping type
This can cause delays in supplier acceptance
and eventually lead to customer delivery delays
Please keep master data
and inventory status up to date
This ensures reduced workload for managers and compliance with delivery deadlines
The FAQ covers questions
frequently asked in practice
We will look at two main cases,
and the rest you can review as reference
The first question is, “What if purchase info is valid,
but the order error is not resolved
even after re-running the simulation?”
This happens when the order needs purchase info
for a designated supplier such as customer-designated,
buyer-designated, or pre-receipt
Check the order’s simulation result
and error message in the order forecast screen,
then fix the designated supplier’s purchase info
or resolve it through cross-department coordination
The second question is, “What if inventory purchased in the past
has now expired and cannot be returned to the supplier?”
If the stock cannot be returned, consumed, or resold,
write-off can be reviewed
If inventory cannot be returned,
consumed, or resold,
a write-off review is possible
Currently, the write-off process is carried out once each half year
In relation to this, prior inventory inspection
and final confirmation of disposal plans are required
For any questions about the process,
please contact the Inventory Management Manager in the Purchasing Management Team
Please review the remaining content by each person in charge
That concludes this lecture