Understand “Drop Shipment” in Order Management?

Posted on July 4th, 2007 by Sanjit Anand | Print This Post | Email This Post

Order Management allows you to enter drop-ship sales orders as well as standard sales orders.

It means you can receive orders for items that you do not stock or for which you lack sufficient inventory, and have a supplier provide the items directly to your customer.

The best can be described as:

These are the following activity takes place when you have drop shipment

• Supplier
  • Warehouse Item
  • Ship order
  • Shipment notification
• Order Entry
  • Enter customer
  • Enter order
  • Demand order (optional)
  • Cancel order (optional)
  • Close order
• Purchasing
  • Create and send Purchase Order
  • Enter shipment notification in system
• Receivables
  • Create invoice
  • Collection of payment
  • Receipt

hence, drop ship order items ship directly from a supplier to the customer of the order processing company. A purchase requisition, then a purchase order, is generated to notify the supplier of the requirement. After the supplier ships the order, it notifies Purchasing to enter this information in the Purchasing module.

What are the advantages of Drop Shipment Orders?

These are the benefits:

• No inventory is required
• Reduced order fulfillment processing costs
• Reduced flow times
• Elimination of losses on non-sellable goods
• Elimination of packing and shipping costs
• Reduced inventory space requirements
• Reduced shipping time to your customer
• Allows you to offer a variety of products to your customers

How to understand the dataflow for Drop shipment Orders?

To understand, here are the processes divided in sub process and the underline activity is highlighted here:

Here are the Details as per Mark

1.Order Entry

Here the activity is entering process where oe_order_headers_all (flow_status_code as entered) oe_order_lines_all . The order is booked as DROP SHIP

2. Order Booking

3. The Purchase Release program passes information about eligible drop-ship order lines to Oracle Purchasing.The interface table which gets populated is
po_requisitions_interface_all

4. After Purchase Release has completed successfully, run Requisition Import in Oracle Purchasing to generate purchase requisitions for the processed order lines. The Requisition Import program reads the table po_requisitions_interface_all validates your data, derives or defaults additional information and writes an error message for every validation that fails into the po_interface_errors table.The validated data is then inserted into the requisition base tables po_requisition_headers_all,po_requisition_lines_all,po_requisition_distributions_all.Then use autocreate PO fuctionality to create purchase orders and then perform receipts against these purchase orders

7. After the goods are successfully received invoices for vendors are created in accounts payables as in normal purchase orders.

8. Invoices are generated for customers In account receivables.

9. oe_order_lines_all (flow_status_code 'shipped', open_flag "N")

10. oe_order_lines_all (flow_status_code 'closed', open_flag "N")

Hope this is great help to understand the flow.

1. Order Management – Split Lines
2. Oracle API Availability -Purchasing
3. Procurement/Purchase – Requisition take a look
4. Oracle Apps and ASN
5. Oracle API Availability – Oracle Payables (AP)