Oracle Drop Shipments

Overview
1.1 Business Requirement
Drop shipments occur when your customer orders product from you, you order the product from your supplier, and your supplier ships the product directly to your customer.
Drop shipping functionality enables you to take an order from your customer and fulfill it directly from your supplier's site. 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 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
■ Enables you to offer a variety of products to your customers

1.2 Oracle Features
Oracle Order Management enables you to enter drop ship sales orders and lines for standard, model and kit, and configured items, although you currently cannot perform a drop shipment for Ship Model Complete (SMC) PTO’s. Order Management integrates with Purchasing to fulfill drop-ship orders. It populates the PO requisitions interface table with information for order lines that need to be fulfilled via an external source. Purchasing calls Order Management APIs (OE_DROP_SHIP_GRP) to communicate information about the requisition, purchase order and receipts. Order Management provides a link to the Drop Ship information from the Additional Line and Additional Order Information windows of the Sales Order Form
Application Setup

The following Application Setups are required for the Drop Shipment Business Flow.
ITEM ATTRIBUTES

Inventory -> Items - > Master items

Purchasing:
Purchased > Enabled Purchasable > Enabled
List Price (must be entered)

Inventory:
Transactable > Enabled Stockable > Optional
Reservable > Optional Inventory Item > Optional

Order Management:
Customer Ordered > Enabled Customer Orders Enabled > Enabled
Internal Ordered > Disabled Internal Orders Enabled > Disabled
Shippable > Optional OE Transactable > Enabled

Receiving: Receipt Routing set to Direct

All Drop Ship items (and all external ATO or PTO models, it's option class and options) must be defined in the organization entered in the profile option OE: Item Validation Organization and in the Receiving Organization.

NOTE:
Drop-ship items must be received in a logical (dummy) organization. If using Oracle master Scheduling/MRP and Oracle Supply Chain Planning avoid miscounting supply by not including these logical organizations in the planning.

TRANSACTION TYPE and SOURCE TYPE

To define a transaction type for your drop ship orders, and have the source type default to External on all sales order lines, the following setups must be done:

A. TRANSACTION TYPE: Orders/Returns ->Setup -> Transaction Types -> Define

The Line Flow - Generic workflow will handle drop ship lines. It 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 PO_REQUISITIONS_INTERFACE table. When Requisition import program is run the records will be pulled into Purchasing to create the requisition.

B. SOURCE TYPE DEFAULTING
Under the Shipping Tab in Sales Order form, the Shipping Source Type should be 'External'.
Orders/Returns -> Setup -> Rules -> Defaulting
Query up Entity = Order Line; Click on Attribute = Source Type, Click on Defaulting Source Rules

Add a new record in Defaulting Conditions by clicking on the '+' button in the toolbar
Select Defaulting Condition = ‘Regular Line’. Give it a precedence value of 5

Add a new record in Default Sourcing Rules by clicking on the '+' button in the toolbar
Select Source Type = Related Record

The Default Source/Value flex field window opens
Click on the List of Values for Related Object > Line Type will default
Click on the List of Values for Related Attribute > Source Type will default

Save the record