Drop Shipments

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S.Ananthakannan
MGIA123Z @ Motorola.com

Drop Shipments Overview

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

Drop Shipment

Supplier Customer

Invoice Purchase
order

ASN Invoice

Purchase
order
Your
company

The benefits of drop shipping include:

 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

Order Placement
You can enter orders using standard Order Management functionality, and decide at the
time of entry whether a particular line will be drop-shipped. As with standard sales
orders, you can modify orders or lines that you intend to drop ship after you have entered
them.

Purchase Requisitions

Order Management creates purchase requisitions when you use the Purchase Release
concurrent program with Oracle Purchasing Requisition Import program. Purchase
Release acts upon eligible lines that you want to fulfill from an external source. To use
this program, add the Purchase Release workflow process to any order workflow you use
with drop-shipped orders. Order Management provides reports to reflect item numbers
and purchase quantities.

Holds and Approvals

Standard holds and approvals functionality controls drop-ship sales orders. You can
implement holds and approvals at different stages in your order workflow to control the
drop shipment process. For example, if your supplier reserves the right to refuse returns,
you can add an approval step to your order workflow to ensure that the customer will not
receive a credit unless your supplier notifies you that they accept the returned item.

If you place a hold on a line before you run Purchase Release, Order Management
enforces the hold automatically. However, after a purchase order has been generated for
your drop-ship line, you must control holds manually by coordinating with your supplier.
The Sales Order and Purchase Order Discrepancy Report displays held orders for
your review.

Drop-ship Order Flow

Enter Sales Order

Book the Sales
Order Source Type: External.
Purchase Release Order ManagementOrders, ReturnsSales Orders

Parameter form: Enter sales order number, if required

Purchase Order ManagementOrders, Returns Requisition

Requisition Import
Name: Requisition Import
Parameters window: Import Source: Order Entry
(optional) and other default parameters.
 Auto create
Purchase Orders Purchasing Auto create
Approve the PO
Receive PO Purchasing Receiving Receipts
Create new receipt for the PO
In PO lines Enter Sub inventory
Drop-ship
Verification Orders, Returns  Order Organizer.
Choose Actions  Additional Line Information
In Drop Ship the Quantity Received for Drop Ship will
be there.

Entry and Booking

Enter, copy, or import an order. If the seeded workflow is assigned to the orders type,
then both internally and externally sourced lines can proceed through this workflow. The
seeded workflow branches are based on source type. If the workflow is a custom
workflow, ensure that it includes workflow steps necessary to process externally sourced
lines. If the order type has the default value for the source type field set as External, all
the lines of this order will have the source type ” EXTERNAL”. Only standard items
may be drop-shipped; kits and models cannot be drop-shipped. Depending on how
your order flow is defined, you can change the source type until the line has been booked.
A source type of null will be treated as an internally sourced line.

Standard Sales Order:

(Use OM Manager or OM SU responsibility)

1. Navigation: Order Management>Orders, Returns>Sales Orders
2. Enter Header details:

----- On clicking Sales orders, a new sales order screen to enter sales order header
details will open.

TABLE: The all headers details are stored in OE_ORDER_HEADERS_ALL and

OE_DROP_SHIP_SOURCES.

3. Enter Line information:

------- Open Line items tabbed region to enter order lines. Before book the order
Check source type in lines, it should be External, and then book the order.

------ After booking order, check status on order line.

Status should be Awaiting Receipt.
TABLE: The all headers details are stored in OE_ORDER_LINES _ALL.
Purchase Release and Requisition Import

The Purchase Release concurrent program processes eligible lines with a source
workflow type of External and passes information to Oracle Purchasing. Run Purchasing
Requisition Import program to create purchase requisitions based on this information.
When you submit the program, ensure that you set Requisition

Import’s Multiple Distributions parameter to No. After Requisition Import Completes

successfully, you can approve the requisitions to generate purchase orders. If the buyer
makes changes to the requisition or purchase order in Oracle Purchasing after Purchase
Release has been run, use the Sales Order and Purchase Order Discrepancy Report to
note differences between the original sales order and its associated purchase order.

Purchase Release

After booking the Sales order need to run Purchase Release concurrent program. It
processes eligible lines with a source type of External and passes information to Oracle
Purchasing.

1. Navigation: Order Management>Orders, Returns>Purchase Release

(Use OM Manager or OM SU Responsibility)

2. Open the Purchase Release concurrent program parameter form.

----- Enter sales order number, if required
 3. Submit the request.

Drop Ship Sales Order Workflow:

Sample Order Header Flow

Sample Line Flow

Note: In workflow diagram Green line indicates Drop ship line  Drop ship line

Schedule line:

Supply Line:
Purchase Release:

Ship line:
Purchase Requisition

After submit the PO Release the Run Purchasing Requisition Import program to
create purchase requisitions based on this information. When you submit the program,
ensure that you set Requisition.

1. Navigation: Order Management>Orders, Returns>Purchase Release

(Use OM Manager or OM SU Responsibility)

2. In Parameters window ----- Enter Import Source: Order Entry (optional).Don‘t change
other parameter entry details.
3. Submit the request. Open and view the output.

4. Check to ensure that Approve requisitions has been created by performing a right
mouse click on the order line, go to Additional Line Information then select Drop Ship.
5. NavigateActions  Additional Line Information- Tab: Drop Ship. Check
PO requisition the status, it should be approved. Copy the requisition number and do all
necessary steps in PO side.

TABLE: The all headers and lines details are stored in

PO_REQUISITION_HEADERS_ALL --Purchase order Requisition information

PO_REQUISITION_LINES_ALL --- Purchase order Requisition line information
Sales Order and Purchase Order Discrepancy Report

This report shows about sales order and PO differences.

1. Navigation:
Order Management>Orders, Returns>Reports, RequestsRun reports
(Use OM Manager or OM SU Responsibility)
 2. Open the parameter form
---- Enter Sort by like Customer name OR sales order OR others.
---- Enter Sale order Number.

3. Submit the request.

Purchase Orders types

1. Standard Purchase Orders

We generally create standard purchase orders for one–time purchase of various items. We
create standard purchase orders when we know the details of the goods or services you
require, estimated costs, quantities, delivery schedules, and accounting distributions. If
 we use encumbrance accounting, the purchase order may be encumbered since the
required information is known.

2. Blanket Purchase Agreements

We create blanket purchase agreements when we know the detail of the goods or services
we plan to buy from a specific supplier in a period, but we do not yet know the detail of
our delivery schedules. We can use blanket purchase agreements to specify negotiated
prices for your items before actually purchasing them.

Blanket Releases

We can issue a blanket release against a blanket purchase agreement to place the
actual order (as long as the release is within the blanket agreement effectively dates).

3. Contract Purchase Agreements

We create contract purchase agreements with your suppliers to agree on specific terms
and conditions without indicating the goods and services that you will be purchasing.

4. Planned Purchase Orders

A planned purchase order is a long–term agreement committing to buy items or services

from a single source. You must specify tentative delivery schedules and all details for
goods or services that you want to buy, including charge account, quantities, and
estimated cost.

This document discuss about Standard Purchase Order only.

Auto-creation of a Purchase Order

We can create the standard purchase order or blanket purchase orders using an auto create
method from an Approved Purchase Requisition.

1. Navigate using this path Purchasing Autocreate.

(Use PO Manager or PO SU Responsibility)
2. Enter the search information that you have some examples are: Buyer Name,
Requisition Number, Requester Name, Creator name, etc.

3. Click Find and select t the Requisition Line that you wish to convert to a PO
by putting a check mark in the block to the left of the requisition Number.
4. Click the button bottom right of the screen named Automatic button.

---- Enter Supplier Name and Site information, if required

5. Click the button bottom of screen named Create to confirm.

6. Purchase Order Document will display. Review for completeness, filling in any
missing data.

7. Do not change currency, must leave as set in system

8. Click on Terms.

9. Select Confirming Order, if appropriate. (Standard practice should be to confirm all

Purchase orders).
 12 Payment Terms, Freight Terms, Carrier, FOB point, and Firm may on occasion
require changing, but, this is rare.

13 Click the button named Shipments at the bottom of the screen.

14. If necessary, adjust shipment information. Be Certain the ORG is for the
appropriate organization. BCS Nogales is N01.

15 Click on the Save details.

16. Click on the button named Approve at the bottom of the screen to submit to the
approval workflow.

17.. Click on OK.

18. Go to Inquire Tab then select the View action history. It shows your PO Approval is
pending for whose approval.

TABLES:
PO_RELEASES_ALL --- Purchase order blanket and planned release information

PO_HEADERS_ALL – Purchase order header level information

PO_LINES _ALL --- Purchase order Line Level Information

PO_LINE_LOCATIONS_ALL --- PO shipment information.

Confirmation of Shipment and Receipt

Standard Oracle Purchasing functionality confirms that your supplier has

Completed the drop shipment. Confirmation may be as simple as a phone call, or it Drop-
ship Order Flow may include Electronic Data Interchange (EDI) documents, such as an
Advance Shipment Notice (ASN) and an Advance Shipping and Billing Notice
(ASBN).When you receive shipment confirmation, enter a receipt in Oracle Purchasing,
even if the drop-shipped item is not transactable.

Create new receipt for the PO

When a vendor sends only an invoice for drop shipments, you will need to perform
passive receipting. The receipt quantity will need to be retrieved from the invoice and a
logical receiving of the drop shipments needs to be performed. Passive receiving must be
performed manually.

1. Navigate using this path Receiving Receipts

(Use PO Manager or PO SU Responsibility)

4. Open the Receipts form

--- Enter the PO number and click the find button.
5. Enter all require information PO header form like shipment and pack slip etc.
6. Enter all require information PO Lines form: Enter Sub inventory.
7. Then save the details. The new receipt number will be generated.
8. After receipt number generation, Receipt Traveller Concurrent program
Submitted automatically. It shows receiving transactions details.
TABLES:

RCV_SHIPMENT_HEADERS – PO Receipts header level information

RCV_SHIPMENT_LINES --- PO Receipts Line level information

RCV_TRANSACTIONS --- PO Receipt Transaction information

Receiving Transactions
This creates inbound and outbound material transactions in your system for accounting
purposes. You must receive drop-ship items in a logical organization. If you use Oracle
Master Scheduling/MRP and Oracle Supply Chain Planning, to avoid miscounting supply
you may not want to include logical organizations in your planning. If you choose to
include logical organizations, ensure that doing so does not cause planning and
forecasting complications. If your supplier should send only an invoice, you need to enter
a passive receipt.

1. Navigate using this path Receiving  Receiving Transactions summary

(Use PO Manager or PO SU Responsibility)
2. Enter PO number or Receipt number and click the find button.
3. Click Header and transactions button and view the all transactions details.
TABLE: RCV_TRANSACTIONS --- PO Receipt Transaction information
Drop-ship Verification:

1. Navigation: Order Management>Orders, Returns>Sales Orders

(Use OM Manager or OM SU responsibility)

Check the line status, it should be closed. Then do navigation given below.

2. NActions  Additional Line Information- Tab: Drop Ship.

3. Check the Drop Ship the Quantity Received for Drop Ship will be there.
2. In Drop Ship the Quantity Received for Drop Ship will be there.

3. Click the Purchasing Button and view complete shipment information.

TABLES: PO_LINE_LOCATIONS_ALL --- PO shipment information.

RCV_TRANSACTIONS --- PO Receipt Transaction information
Invoicing

After your system’s inventory has a record of the transaction, run the Invoicing Activity
and Auto Invoice Programs to generate an invoice for your customer. You may want to
pass on any landing or special charges that your supplier imposed on the drop shipment.
Freight and special charges may be associated with shipments automatically.

1. Navigation: ARInterfacesAuto Invoices

(Use AR Manager or AR Manager SU Responsibility)

2. Then open Master Invoice program parameter form

---- Enter Number of instance parameter as ‘1’

---- Enter invoice source parameter as ‘OE_IMPORT_AUTOMATIC’.
---- Enter Default date as sysdate.
---- Enter sale order number (option)
3. Submit the request. Invoice will be generated for the given sales order.

4. Finally this invoice will be sent to customer.

TABLES:
RA_INTERFACE_ALL --- All sales order information are interfaced.
RA_CUSTOMER_TRX_LINES_ALL – AR Invoice Transaction information
Major Tables Used

 OE_DROP_SHIP_SOURCES ---- Drop ship order information

 PO_REQUISITION_HEADERS_ALL --Purchase order Requisition information

 PO_REQUISITION_LINES_ALL --- Purchase order Requisition line information

 PO_RELEASES_ALL --- Purchase order blanket and planned release information

 PO_HEADERS_ALL – Purchase order header level information

 PO_LINES _ALL --- Purchase order Line Level Information

 PO_LINE_LOCATIONS_ALL --- PO shipment schedule information

 OE_ORDER_HEADERS_ALL – Sales Order level information

 OE_ORDER_LINES_ALL – Sales Order Line Level Information

 RCV_SHIPMENT_HEADERS – PO Receipts header level information

 RCV_SHIPMENT_LINES --- PO Receipts Line level information

 RCV_TRANSACTIONS --- PO Receipt Transaction information

 RA_CUSTOMER_TRX_LINES_ALL – AR Invoice Transaction information.

PO Interface level tables:

 PO_HEADERS_INTERFACE

 PO_LINES_INTERFACE

 PO_REQUISITIONS_INTERFACE_ALL

 RCV_TRANSACTIONS_INTERFACE

 PO_INTERFACE_ERRORS

 RA_INTERFACE_ALL
Drop Ship Set Up:
1). NAVIGATE: Using your H03: Seattle Item Update responsibility
Items>Organization Items> Query Item to be converted to Drop Ship

Go to Order Management Tab

• Change Default Source Type to “EXTERNAL” for items which are Always
sourced externally
• Shipping Subinventory: Select “DROPSHIP”

Go to Purchasing Tab

• Ensure a value is loaded to the List Price field

Go to INVOICING tab…Check to ensure SALES ACCOUNT is populated (should be as
a result of PDM interface).
Go to Costing tab….Check to ensure COGS account is populated (same as above)

Save

2). NAVIGATE: Using your H01: Horsham Buyer Responsibility

Purchase Orders>Purchase Orders>

• Type = BLANKET PURCHASE AGREEMENT

• Supplier = Choose Vendor
• Ship to = does not matter (comes from sales order)
• Amt Agreed = enter total amount agreed to buy from vendor over the next year
Go to Lines:

• Type = Inventory
• Item = Drop ship item number
• Price = Purchasing price from vendor (leave quantity field blank)
• Price Break Window – Choose Quantity 1 Break Price (agreed price above)

• Save – Submit for approval (uncheck email box)

 3). NAVIGATE: Using you H03: Seattle Scheduling Sharing responsibility to set
up Sourcing Rule Supply Base>Sourcing Rules…will take you to the Define Sourcing Rule
window

• Enter Item Number-Org combo (501209-004-00 H03) (Rules are org specific)
• Choose effective dates
• Choose Type: Buy From: (Pick Vendor from LOV).
• Choose Supplier Site from LOV’s
• Choose Allocations (if you are using multiple Vendors)…mostly it will be 100%
• Rank = 1

Save

4). NAVIGATE: Using your H03: Seattle Schedule Sharing responsibility

Supply Base>Assign Sourcing Rule

Assignment Set – Click on the Flashlight on the Toolbar>Always select N01 Schedule
Sharing

Go to “Assigned to” > Click on any of the rows in the lower section and add a new row
by clicking on the green + on the toolbar which reads “New”
• Assigned to = Item Organization
 • Org = Org
• Item Category = Item #
• Type = Sourcing Rule
• Sourcing Rule/BoD = Choose new Sourcing rule created in previous step which is
your Item #

Save

5). NAVIGATE: Using your H03: Seattle Schedule Sharing responsibility

Supply Base>Approved Supplier List

• Type = Item
• Item = Item number for drop ship

Navigate to Key Attributes

• Business = Direct
• Supplier = Vendor
• Site = Vendor site
• Status = APPROVED (will default as “NEW”) – rule will not work if you do not
change this to approved
• Supplier Item = if you have the supplier part number you would enter it here
Navigate to Attributes

• Purchasing UOM = Each

• Release Generation Methods = Automatic Release (if you choose either of the
other two, the release will not automatically release)
• Country of Origin = Assign as known

Navigate to SOURCE DOCUMENTS

• Type = Blanket
• Use LOV’s to assign your blanket number (it will be available if the blanket PO
has been approved)
Save

This must be done for each Item in each organization

REQUISITION IMPORT MUST BE RUNNING IN EACH ORGANIZATION TO

ENABLE BLANKET RELEASES TO BE GENERATED AUTOMATICALLY AS A
RESULT OF NEW DROP SHIP SALES ORDERS.
FREQUENTLY ASKED QUESTIONS (FAQ)

1. What are the Item Attributes that affect Drop Ship orders?

The following item attributes should be set:

Purchased (PO) Enabled
Purchasable (PO) Enabled
Transactable (INV) Enabled
Stockable (INV) Optional
Reservable (INV) Optional
Inventory Item (INV) Optional
Customer Ordered (OE) Enabled
Customer Orders Enabled (OE) Enabled
Internal Ordered (OE) Disabled
Internal Orders Enabled (OE) Disabled
Shippable (OE) Optional
OE Transactable (OE) Enabled

2. How do I drop ship across operating units?

Release 11 does not currently support this functionality.

3. Is it possible to drop ship ATO/PTO models?

Release 11 does not currently support this functionality.

4. When the Requisition Import parameter 'Initiate Approval after

Import' is set to 'No', the requisition still gets imported in an approved
status. Why is this?

The Purchase Release program in the OE module ignores the setting of

this
parameter. When it is populating the data in the po_requisitions_interface
table the field authorization status is hard coded with the value
‘APPROVED’.

Thus in the case of drop shipments, the requisition always gets imported in
an approved status. The reason for this is because the sales order has
already been 'purchase released'.
5. Why does the ship date for drop ship orders show as Sysdate in
Receivables, as opposed to the actual date the product was shipped?

For drop ship transactions the ship_date_actual field which is passed to

Receivables is obtained from the transaction date in the rcv_transactions
table. This is the date which shows on the Receiving -> Receipts form in
Purchasing when receiving against the PO. In order to reflect the actual
date the product was received, if different from the current date, this
field should be updated on the form.

NOTE: Prior to the fix in Patch 1165312 the ship_date_actual for drop
ship lines was passed to Receivables as NULL, which caused the
order date to be used on the invoice.

6. How are cancellations handled in drop ship orders?

A new functionality for Canceling Drop Ship Orders is added in OE with

the fix for Bug 1380679.

Before the Base Bug:

-------------------

For Drop Ship Order, Receiving quantity for a Cancelled Order was
allowed. Customers had to run 'Sales Order Purchase Order Discrepancy
Report' to know such descrepencies.

After the Bug Fix:

-----------------

Cancel Orders Form allows users to cancel a Drop Ship Order only if the
corresponding Requisition is cancelled. There are two scenarios:

1. Cancelling an Order with Drop Ship Lines.

An Order with Drop Ship Lines is allowed to Cancel only if all

requisitions for the Order are cancelled and no receiving is done for
these lines. If Requisition doesn’t exist for any of the Drop Ship Lines,
then the Order can be cancelled.
 2. Cancelling a Drop Ship Line in an Order.

A Drop Ship Line in an Order can be cancelled only when the

corresponding Requisition is cancelled. Quantity allowed to cancel for
this line is Requisition’s cancelled quantity - Order's cancelled quantity
(if Order is partially cancelled already). If Requisition doesn’t exist,
then the Quantity allowed to cancel is Order's ordered quantity - Order's
cancelled quantity (if Order is partially cancelled already).

Note: In both scenarios above, if Order's data is interfaced to Requisition

table and Requisition is not yet created, all the Ordered quantity is
cancelled. This may again result in Receiving against a cancelled Drop
Ship Order. This case is not handled as Purchase Release is a Request
Set of 'Purchase Release' and 'Requisition Import'.

7. How are over/under shipments handled in drop shipment?

If part of a drop-ship line ships and you do not wish to fulfill the
remaining quantity, cancel the line. If the quantity shipped is less than
the quantity ordered, the sales order line will be split into two lines. The
first line will display the quantity shipped and the second line will display
the backordered quantity. Over-shipments must also be handled manually.

If the supplier ships more than the ordered quantity, you can bill your
customer for the additional quantity or request that they return the item.
Use the Sales Order and Purchase Order Discrepancy Report to view
differences between your drop-ship sales orders and their associated
purchase requisitions and orders.

8. Did any drop-ship functionality change from R11 to R11i?

In R11i drop shipping is Workflow enabled. The OM Order Line Workflow

calls the 'Create Supply - Line' process. This process has a function called
'Branch on Source Type' which will detect an item with a Source Type of
'External' and set the line to a 'Purchase Release - Deferred' status. Then
when the Workflow Background processor picks up the line, it will initiate
the Purchase Release process to write the records to the interface table.
After the Requisition Import is successfully run, the sales order line status
will change to 'Awaiting Receipt'.

Another big change in R11i is in the way locations are maintained. You no
longer need to define a separate Purchasing Location for each customer
Ship-To location, as was necessary in R11. Purchasing now uses a view a
the HZ and HR tables to derive the locations.

9. How can I view the Purchasing information for a drop ship order?

After the requisition import successfully pulls in the data from the
PO_REQUISITIONS_INTERFACE_ALL table, and creates the internal
requisition, this information is available from the Sales Orders form as
Follows:

Select the sales order line with the externally sourced item and hit
Actions -> Additional Line Information
Select the Drop Ship tab to view the data

10. Does the Purchase Release concurrent program still exist?

Yes, this program can be run from the Orders, Returns -> Purchase Release
menu. If there are holds which prevent the order from progressing through
the Workflow normally after the order is booked, these holds must be
manually released. Then the externally sourced lines can be sent to
Purchasing by running the concurrent program.

Alternatively, you can use the Actions -> Progress Order button to push the
lines through to the PO_REQUISTIONS_INTERFACE_ALL table for
Requisition Import to pick them up.