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Understand “Drop Shipment” in Order Management?

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

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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:

DpshipmentflowHere 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

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.

Related Posts

Posted in Beginner, Oracle Order Management | 29 Comments »Email This Post Email This Post |

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29 Responses
  1. Subir Says:

    Excellent… god blase u…

  2. Tracy Says:

    Love your work!!! Absolutely useful.

  3. Excellent. Very Informative, good keep it up Says:



    […] can also see technical details for drop ship cycle in my earlier […]

  5. Santosh Says:

    Wonderfully compliled and best thing about this that it is made for better and easy understanding.
    Appreciate the efforts taken.

  6. Sanjit Anand Says:

    thanks santosh

  7. Sandeep Says:

    Too good. It is very helpfull

  8. Srini Says:

    Hi.. You guys r really doing good. Its the good way to learn as you people explaining along with with TABLES. I believe one should allways learn along with TABLES. otherwise no use

  9. Muthu .R Says:

    Very good Sharing

  10. chai Says:

    Extraordinary work bro…keep it up

  11. Jessica Sun Says:

    very helpful !!!

  12. Understand “Drop Shipment” in Order Management? -Part II Says:

    […] in one of the last post , we have seen drop shipments is a method of fulfilling sales orders by selling products without […]

  13. Munjal Shah Says:

    Its a Very Nice Article.

    Very Very Helpful. Thanks.

  14. Pranav Muley Says:

    This is a very good info.Great work.

  15. Raj Says:

    Great stuff……guys.
    I appreciate your piece of work..
    :) :)

  16. Mary Says:

    In Back to Back Order , How can we find the PO linked to an SO.?

  17. Jaya Says:

    Hi Sanjit,

    Can we know the Accounting entries happening at each step?
    Maybe an example with some values will be really great.

    Thanks in advance. Jaya

  18. Drop Shipment - Functional Setup and flow Says:

    […] the details here […]

  19. “Internal” versus “External” Drop-Ship: What’s the difference? Says:

    […] Understand “Drop Shipment” in Order Management? […]

  20. Zman Says:

    Can you explain
    1. how to create multiple POs for diff. suppliers (as in the sourcing rules)for a drop ship sales order
    2. How does MRP treat a drop ship sales oder?

    Thanks in advance!

  21. niket Says:

    fantastic,thank you so much

  22. billige Kontaktlinsen Says:

    Good information about dropshipping keep up the good work.

  23. Karthik Says:

    Good One and Thank you.

  24. amitha Says:

    very nice description

  25. ayan Says:

    really good,,looking 4 screenshots as it would be more helpful.

  26. chs Says:

    Thank you Thank you Thank you very much for such a wonderful material.

  27. syed ameer khusro Says:

    Really good, thanks for sharing

  28. rajesh Says:

    good work, Thanks

  29. Siva Says:

    Really very nice post and worthfull for all apps aspirants

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