Drop Shipments

Oracle Order Management and Oracle Purchasing integrate to provide drop shipments. Drop shipments are orders for items that your supplier ships directly to the customer either because you don't stock or currently don't have the items in inventory, or because it's more cost-effective 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 Purchasing's Requisition Import process creates the requisitions. Drop shipments are marked with the Source Type of External in Order Management and Supplier in Purchasing.

Integration between Oracle Purchasing and Oracle Order Management enables you to monitor the details and status of the drop shipment from the purchase order. Details of the drop shipment are included in the purchase order sent to the supplier. Changes to the sales order in Order Management are automatically reflected on the documents in Oracle Purchasing.

Certain changes to a purchasing document that references a drop shipped sales order line are allowed. Examples of changes in Oracle Purchasing that are not allowed are freezing, placing on-hold, and closing for receiving or invoicing of purchase order shipment information. You can cancel or finally close a partially filled drop shipment and the remaining quantity is placed on a requisition. Cancellation of a requisition line already on a sales order is not permitted.

When the drop shipment has been sent to the customer, the supplier can confirm the shipment through a phone call, an invoice, or an Electronic Data Interchange (EDI) document, such as an Advance Shipment Notice (ASN).

When you receive confirmation of a drop shipment, create a receipt against the shipment, even though you have not received the item physically (because your customer has received it directly). Even if your supplier sends an invoice, create the receipt for it. This creates inbound and outbound material transactions in your system for accounting purposes. You can also automatically create a receipt and delivery transaction against the drop shipment

Drop shipments support a destination type of expense or inventory only. Drop shipments only support a receipt routing of direct delivery.

You can handle returns of drop shipments using standard Order Management or Purchasing functionality. There are different ways you may want to handle returns depending on whether the customer returned the item to you or directly to the supplier.

Note: You should not drop-ship internal sales orders.

See the section Drop Shipments and the section Drop-Ship Order Flow in the Oracle Order Management User's Guide.

Supplier-Initiated Changes to Purchase Orders with linked Drop Shipment lines

When suppliers submit a change request for a purchase order shipment that has linked drop shipment sales order lines, where the Promised Date is updated, the following validations occur in the system:

When the Promised Date change is within the Buyer Auto-Acceptance Tolerances set for Supplier Change Order, an Oracle Order Management API is called to validate if the requested changes can be allowed on the sales order. If the validations are successful, the change order request by the supplier is automatically approved and the modified Promised Date is updated as Scheduled Ship Date in the sales order. If the validations are not successful, then an error message from the Oracle Order Management API is displayed in the page for the supplier to take corrective action

When the Promised Date change is not within the Buyer Auto-Acceptance Tolerances set for Supplier Change Order, an Oracle Order Management API is called to validate if the requested changes can be allowed on a sales order. If the validations are successful, the change order request by the supplier is routed to the buyer/requester for approval. When the buyer/requester accepts/rejects the changes from the workflow notification the following scenarios occur during the submission check of the purchase order:

When the Promised Date change is not within the Buyer Auto-Acceptance Tolerances set for Supplier Change Order, an Oracle Order Management API is called to validate if the requested changes can be allowed on a sales order. If the validations are successful, the change order request by the supplier is routed to the buyer for approval. When the buyer accepts/rejects the changes from the Respond to Supplier Changes page the following scenarios occur during the submission check of the purchase order:

Buyer-Initiated Changes to Purchase Orders with linked Drop Shipment Lines

Buyers can revise the purchase order (that have linked drop ship sales order lines) by changing the Promised Date value in Shipments; the system calls the Oracle Order Management API to validate if the changes to the Promised Date are allowed to reflect in the drop ship sales order:

Note: The Oracle Order Management API is called when the purchase order is created, and when the purchase order is finally submitted for approval.

Notifications

When changes to the Promised Date are not within the Buyer Auto-Acceptance Tolerances set for Supplier Change Order, the system first calls an Oracle Order Management API to validate if the requested changes can be allowed on the sales order. If the validations are successful, the change order request by the supplier is routed to the buyer for approval. When the buyer accepts/rejects the changes from the Change Request notification, the following scenarios can occur during the submission check of the purchase order:

Drop Shipments Across Business Units

Drop shipments across business units, also known as international drop shipments, is supported under the Oracle Center-Led Procurement flow. See: Center-Led Procurement Setup.

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