Drop Shipments for Release 11.

5


Oracle Order Management and Oracle Purchasing integrate to provide drop shipments. Drop
shipments are orders for items that the supplier ships directly to the customer either because the item
is not stocked or currently do not have the items in inventory, or because it is more costeffective for
the supplier to ship the item to the customer directly. Drop shipments are created as sales orders in
Order Management. The Purchase Release concurrent program or workflow in Order Management
creates rows in the Requisition Import tables in Purchasing. Then Purchasings Requisition Import
process creates the requisitions. Drop shipments are marked with the Source Type of External in
Order Management and Supplier in Purchasing.

Drop Ship Setup

1) ITEM ATTRIBUTES


Inventory -> Items - > Organization items

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) All Drop Ship items must be defined in the organization entered in the profile option OE: Item
Validation Organization and in the Receiving Organization.

NOTE:
a) Drop-ship items must be received in a logical organization. If using Oracle master Scheduling/MRP
and Oracle Supply Chain Planning avoid miscounting supply by not including logical organizations
in the planning. If logical organizations are included, ensure that doing so does not cause planning
and forecasting complications.
b) Drop shipments cannot be canceled once Oracle Purchasing obtains the receipt.








PROCESS

1) Create a Sales Order with a source type of external (at the line level) and a receiving
organization. When the Order Entry Status has been changed to Booked, it can be purchase released.





2) Enter Receiving Org (Logical org where OM is received).























3. Purchase release
Before the Purchase Release process can be run, the Sales Order must have the cycle
status of Purchase Release Eligible.
The Purchase Release concurrent program processes eligible lines with a source workflow type of
External and passes information to Oracle Purchasing.










4. Requisition Import
Run Purchasings Requisition Import program to create purchase requisitions based on this
information. When submitting the program, ensure that the Requisition Imports Multiple
Distributions parameter is set to No.











5. Finding the Requisiton Number/ Po Number
After the requisition has been imported to Finding the Requisiton Number/ Po Number
Shipping Actions Additional Line Info Drop Ship
To get the requisition / Purchase Order Number.



















OE_DROP_SHIP_SOURCES
This table stores relationship between order lines in oe_order_lines_all table and associated oracle
purchasing requisitions in PO_REQUISITIONS_ALL and Oracle purchasing purchase orders in
PO_LINES_ALL.

Name Null Type
------------------------------- -------- ------
DROP_SHIP_SOURCE_ID NOT NULL NUMBER
HEADER_ID NOT NULL NUMBER
LINE_ID NOT NULL NUMBER
CREATION_DATE NOT NULL DATE
CREATED_BY NOT NULL NUMBER
LAST_UPDATE_DATE NOT NULL DATE
LAST_UPDATED_BY NOT NULL NUMBER
LAST_UPDATE_LOGIN NUMBER
ORG_ID NUMBER
DESTINATION_ORGANIZATION_ID NUMBER
REQUISITION_HEADER_ID NUMBER
REQUISITION_LINE_ID NUMBER
PO_HEADER_ID NUMBER
PO_LINE_ID NUMBER
LINE_LOCATION_ID NUMBER
PO_RELEASE_ID NUMBER



























6. Autocreate
In Purchasing, use the autocreate function to create a Purchase Order or Purchase Order Blanket
Release from the imported requisition.








7. Create a Purchase Order against the Requisition.

8. Asset Subinventory

When receiving shipment confirmation, enter a receipt in Oracle Purchasing. The subinventory must
be an asset subinventory. To verify this, go to Inventory responsibility:
Setup -> Organization - > Subinventory



9. Receipts
Standard Oracle Purchasing functionality confirms that the supplier has completed the drop shipment.
Confirmation may be as simple as a phone call, or it may include Electronic Data Interchange (EDI)
documents, such as an Advance Shipment Notice (ASN) and an Advance Shipping and Billing Notice
(ASBN). For accounting purposes, receipt must performed. This will create the inbound and
outbound material transactions in the application. The receipt transaction will change the Purchase
Release orders cycle action to Confirmed.








10. Material Transactions and Material Distributions
The Material Transaction and Material Distribution forms will show the receipt and sales order
transactions.









11.Material Transaction Interface
The inventory issue to the sales order is performed internally in the application. The user is not
required to manually issue the item to the Sales Order. The application deliverers the item to the
inventorys subinventory using the applications standard functionality. The item is issued to the sales
order by inserting a row into the MTL_TRANSACTIONS_INTERFACE table. The Material
Transaction Interface Manager will then process the row. If the item has not been issued out of the
inventory subinventory, then check the Material Transaction Interface form.














12. Autoinvoice
After the receipt is recorded, run the Receivables Interface By running the Workflow program. The
Invoicing workflow activity transfers shipped item information including quantities, selling prices,
payment terms, and transaction dates to Oracle Receivables, which processes invoices and accounts
for revenue. Additionally, process credit memos and credits on accounts created from returns can be
created using this process. Upon completion of the Invoicing workflow activity, submit AutoInvoice
from Oracle Receivables to import invoice and credit data into Oracle Receivables.















Changes from 11.0 version

1) The order cycle is now taken care by Workflow, which defines the order cycle.
2) The RA_CUSTOMERS has been replaced by HZ_PARTIES and HZ_CUST_ACCOUNTS.
HZ_PARTIES is a denormalized form of table ZZ_LOCATIONS. So do not have to maintain
customer locations at two places(in HR and AR as done in 11) . Also do not have to link customer and
ship to location.


FREQUENTLY ASKED QUESTIONS

1. If changes are made to a sales order after the Purchase Order (PO) has been generated, will the
order changes automatically be updated on the PO?

Order changes will not be automatically updated on the PO. Pulling up the Discrepancy Report
will allow to view the differences between the Sales Order and PO. However, updates will have
to manually performed to the POs in the Purchasing application.

2. If items on a Drop Ship order are canceled, does the system automatically generate a PO Change
to the PO originally sent to the supplier?

No, Drop Ship functionality in this regard remains the same as in R11. There is a discrepancy
report available that will report differences between the PO and the Sales Order.

3. Does Order Management 11i have functionality to do serial number management with Drop
Shipments?

Serial numbered Drop Ship stock are now able tobe received. Order Management will
receive the serial number noted on the PO.

4. Can Configurable Items be drop shipped?

Currently only Standard Items can be drop shipped. Functionality for Configurable Items will be
added in future releases.

5. How do I drop ship across operating units?

Release 11i does not currently support this functionality.

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

If part of a drop-ship line ships, and do not wish to fulfill the remaining quantity, cancel the line.
Over-shipments must also be handled manually. If the supplier ships more than the ordered
quantity, can bill your customer for the additional quantity or request that they return the item.
Use the Drop Ship Order Discrepancy Report to view differences between the drop-ship sales
orders and the associated purchase requisitions and orders.







7. 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 Order Entry module ignores the setting of this parameter.
When it is populating the data in the purchase order 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'.

8. Will Blanket Po's work with Drop Shipment?

Blanket PO's will not work with Drop shipment because the PO must be created when OE notifies
PO that a drop ship order has been created. This PO is linked to the drop ship order so that when
the receipt is done (partial or complete) .OE is updated to rec interface eligible. Drop ship lines do
not use the pick release, ship confirm or inv interface order cycles.