Oracle DROP SHIPMENTS

There are scenarios when we order a product to a supplier but we get the product delivered by the manufacturer itself. In this case, the supplier in turn places the order to the manufacturer requesting them to deliver the product directly to customer instead of them. This process is called Drop Shipment.
Sales order is entered in Oracle having the source type of the order line as “External”. Once the order is booked, the purchase release process will insert line details in the
PO_REQUISTIONS_INTERFACE_ALL table. We need run the “Requisition Import” program to create the requisition. Requisition to be auto created to a Purchase Order. There are no physical receipt happen at the supplier end, as the manufacturer ships the product to the customer. Based on the confirmation from manufacturer, supplier performs the receiving in Oracle and the related sales order gets picked and shipped automatically. Following screen shots demonstrate the setups and process flow for Drop shipment in Oracle Applications R12.

Create an Item copying the Purchase Order template and setup the “Default SO Source Type” value as 'External” in the “Order Management” tab.

 Enter “List Price” value in the “Purchasing” tab. Assign the item in the respective inventory organizations. In this document we have assigned it to M1.

Create a Sales Order.

Enter the item in the Sales Order line. Note that, the receiving org is M1.

Also note that, Source type of the order line is “External”. Once the order is saved, book the order and run the workflow background process which will update the line status to “Awaiting Receipt”. Run the “Purchase Release” program which will insert details based on the order line to the PO_REQUISITIONS_INTERFACE_ALL table to create a requisition. Next run the “Requisition Import” program to create requisition.

To find the requisition created, navigate to Requisition Summary and search for the requisition specifying the date range.

Above screen shot shows the requisition created by the Requistion Import program.

Click on the Tools -> View Sales Orders which will show you the related sales order.

Auto create the requisition to Purchase Order.

Select the requisition line to be auto created.

Enter the Supplier name and site information.

Purchase Order is created as shown above. Submit the PO for approval by clicking on the “Approve” button.

Click on “OK” to submit for approval.

PO approved as shown above.

Receive the PO either through Inventory or Purchasing responsibility.

Select the line for Receiving and mention the subinventory and locator(if needed) information.

Receipt created.

As soon as receipt created and “Receiving Transaction Processor” completes, the order line gets shipped.

Order Line status changes to “Shipped” and Qty Shipped updated. Finally the lines will be interfaced to Invoice and drop ship cycle completes.