Drop Shipment is a process where the Sales Orders are fulfilled using third party suppliers who ship the products/items directly to the customer, without physically receiving the material into the organization warehouse.
Order Management sends a purchase request to Oracle Procurement, which places a purchase order with third party supplier, then the supplier ships directly to your customer. The process helps to reduce total inventory management and reduce overall fulfillment cost.
Below are detailed setups to implement Drop Ship Process in the Order Fusion SCM Cloud.
- Enable the drop ship features in Order Management and Procurement Offerings
a. Order Management Offerings
Navigation: Setup & Maintenance > Setup: Order Management > Actions > Change Feature Selection
b. Procurement Offerings
Navigation: Setup & Maintenance > Setup: Procurement > Actions > Change Feature Selection
2. Enable Drop Ship Financial Flow
Setup relationship between Selling Business Unit & Requisition Business Unit and Change of Ownership
Navigation: Setup & Maintenance > Manage Drop Ship Financial Flow
– Supplier Ownership Change Event=ASN from Supplier OR AP Invoice Match
Please make sure that the status is set to Active.
3. Order Management parameters – Specify a procurer/preparer
Navigation: Setup & Maintenance > Manage Order Management Parameters
4. Setting up Sourcing Rule to buy from third party Supplier
- Sourcing Rule
Navigation: Global Order Promising > Tasks > Manage Sourcing Rules
- Global Order Promising (GOP) Assignment Set
Navigation: Global Order Promising > Tasks > Manage Assignment Sets > GOP Assignment Set > Edit > Add Sourcing Assignment
Note: For Drop Ship, Sourcing Assignment should be at Item, Category, Item & Customer or Global level only.
5. Defining item – Setting up Drop Ship item attributes
Navigation: PIM > Manage Items > Search/Define the drop ship item in OM validation org > Specifications > Sales and Order management (Tab)
Default Sales Order Source Type: Can be External or Internal. If you mark as External, then the item is treated as drop ship always. If it is marked as internal, then the item’s sourcing rule and Ship From Warehouse on the sales order line decides whether it has to be processed as drop ship/regular sales order.
- Purchasing Tab
Setup List Price and enable Purchasable led flag. Otherwise purchase requisition creation fails.
6. Setting up Supplier and Supplier Site
Setup the supplier and supplier sites in Procurement/Payables, similar to the other supplier accounts.
7. Creating Blanket Purchase Agreement for drop ship Items
This is an optional step. If the blanket purchase agreement is setup for the drop ship item(s), then the PO is auto-created when the drop ship sales order is processed. Otherwise system creates purchase requisition only (Sales Order line Scheduling and Purchase Requisition Creation), then Buyer should create the Purchase Order manually for the drop ship requisition(s).