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Drop Shipment – Functional Setup and flow

Posted on September 13th, 2008 by Sanjit Anand ||Email This Post Email This Post

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A Drop Shipment occurs when a customer order is sourced from and delivered by a supplier.

Order Management sends information to the Purchasing Application to create that PO, and then when that PO is received (to indicate shipment from the supplier to your customer), the order line is automatically updated to indicate that it was fulfilled.

In this process, the company running Order Management is modeled as the company to whom the end customer places the original order.

dgreybarrow-2Drop Shipment – Setup

You need to make sure these are attribute setup Correctly:

  • Item Attributes

tickPurchased : Enabled
tickPurchasable : Enabled
tickTransactable : Enabled
tickStockable : Optional
tickReservable : Optional
tickInventory Item : Optional
tickCustomer Ordered : Enabled
tickCustomer Order Enabled : Enabled
tickInternal Ordered : Disabled
tickOE Transactable : Enabled
tickShippable : Optional

  • And ,your do set up for Order Source Type as External

dgreybarrow-2Drop Shipment – Your Setup checklist

  • Ensure you have created your Order Management Transaction Types and linked your Transaction Types to order and line workflows that support drop shipments.
  • Ensure the Oracle Workflow Background Engine is running.
  • Ensure all Drop ship locations you will use to perform drop shipments have the Ship To Site and Receiving Site defined.
  • Ensure you have defined the Internal Ship To Locations for your drop shipment customers (Oracle Receivables Standard Customer window, Business Purpose Details Tab).
  • Ensure your standard items have an associated List Price defined within your PO Inventory organization (Oracle Payables Financial Options window, Supplier-Purchasing Tab).

dgreybarrow-2Drop Shipment – Process Steps

  • Create a Sales Order with line where the line source is External
  • Book and Schedule the Sales Order
  • Run Requisition Import Process
  • Now the line status will be in Awaiting Receipt
  • Login to the Receiving Organization (Purchasing) who has been setup as an Approver
  • Run Requisition Import
  • Create Purchase Order from the Requisition
  • Approve the PO
  • Receive the full quantity
  • Run Auto Invoice
  • Verify Invoice in Sales Order

Check the details here .

dgreybarrow-2Things not to forget in a DropShipment

  • Release 11i/12 does not support Drop Shipment across operating units.
  • Blanket PO’s will not used with Drop Shipment , the reason the PO must be created when OM notifies PO that a Drop Ship order has been created.
  • You can’t cancelled Drop Shipments once Oracle Purchasing obtains the receipt.
  • Standard Items can be used for Drop Shipment.
  • In 11i, PTO’s and ATO’s cannot be drop shipped

dgreybarrow-2Similar Post on Drop Shipment

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Posted in Oracle Order Management | 3 Comments »Email This Post Email This Post |

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3 Responses
  1. Parul Gupta Says:

    Hi Sanjit,
    You have mentioned ‘Release 11i/12 does not support Drop Shipment across operating units.’
    I understand their is a case of External Drop Shipment – A case in which one OU (A) sells the good to the customer (By selling , it means..Raising a Dropship SO and resulting AR invoice ) while the actual physical delivery happens through a External Supplier belonging to another OU( B) . The above Dropship SO would create a PO in OU-B with the ship to as Customer ship to. I/C AR invoice would be created in OU-B which would trigger an I/C AP invoice in OU-A. A PO invoice from OU-B would be created for Supplier. Similar would be a case of INternal drop shipment (Centralised distribution. I think both these models can be configured in apps.
    Please clarify and advice

  2. Asha Says:

    Can you please also let us know the RMA cycle in a similar way.

  3. Ashish Says:


    We do drop shipment from external Supplier.

    Will receving Drop Shipment generates GL transactions, If yes then how we can identify those GL Transactions.

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