Overview of Drop Ship in Order Management
Drop Shipping is a pivotal supply chain model for modern commerce. It enables a seller to fulfill customer orders without stocking the items in their own warehouse. Instead, when an order is placed, the seller purchases the item from a third-party supplier, who then ships it directly to the end customer. This process minimizes inventory holding costs and can significantly expand a company's product catalog. In Oracle Fusion, this entire flow—from sales order to purchase order to shipment—is seamlessly integrated and automated.
Process Flow:
How Drop Ship Works in Order Management
This section breaks down the prerequisite setup and the transactional flow.
Pleaes note that, I am using pre defined Vision users and setup for this testing scenario
Drop Ship Process
- Blanket Agreement
- Setting Item Specifications.
- Global Order Promising Setup.
- Create ATP Rule.
- Assignment Rule.
- Order Management Parameter
- Prepare Setup.
- Offering Selection.
- Sales Order Fulfillment Enablement under Procurement Options.
- Drop Ship Enablement under Order Management Options.
- Drop Ship Financial Flow.
- Drop Ship Sales Order Creation.
- Create ASN for the Purchase Oder
- Sales Order Line is at Awaiting Invoice Status
Blanket Agreement
A Blanket Purchase Agreement (BPA) is a long-term agreement with a supplier for predefined items at negotiated prices. For drop shipping, having a BPA in place is crucial for automation. It allows the system to automatically generate a standard purchase order against the agreement when a sales order is booked, ensuring correct pricing and supplier terms without manual intervention.
- Agreement Used for Testing: 52207
- Item: CM53035
Setting Item Specifications
For an item to be eligible for drop shipping, specific attributes must be configured correctly. This setup tells the system, "This item is not stocked by us; procure it from a supplier when a customer orders it."
Key attributes to verify in the Product Information Management workspace:
- Order Management Tab: Back to Back Enabled: Set to "Yes". This is the master switch that triggers the automatic creation of a supply order (purchase order) when a sales order demand exists. Default Sales Order Service Type: Set to "Enabled".
- Purchasing Tab: Purchasable Item: Must be set to "Yes".
- MRP Planning Tab: Ensure sourcing rules are defined (covered next).
Item: CM53035
Global Order Promising Setup
Global Order Promising is the engine that determines how and from where an item will be sourced to fulfill an order. For drop shipping, we must configure it to always source the item by buying it from a specific supplier.
- Sourcing Rule: This rule defines the supply source. For drop ship, you create a "Buy" rule from your designated supplier.
- ATP (Available to Promise) Rule: This rule defines how the system checks for availability. For drop ship items, you might use a rule that considers the supplier's lead time.
- Assignment Rule: This is the crucial link that attaches the sourcing rule to the specific item (e.g., CM53035). By setting the assignment level to "Item," you ensure that every time this item is ordered, the system uses the drop ship sourcing rule.
Create ATP Rule
Assignment Rule
For the Global Order Promising, assignment rule set is required to confiture the item and specifying the sourcing rule we have created above
Assignment level = Item
Item: CM53035
Select Sourcing Rule: assign the rule that we created above
Order Management Parameter
Prepare Setup
The Order Management parameters control the default behaviors and features for the entire module. Before proceeding, ensure your setup is initialized via the "Manage Order Management Parameters" task.
Task: Manage Order Management Parameters
Offering Selection
Sales Order Fulfillment Enablement under Procurement Options
Oracle Fusion uses a concept of "Offerings" and "Features" to toggle high-level functionalities on and off.
Two key features must be enabled for drop shipping to work
Go to Offering
Select Procurement and then Opt-In Feature
Customer Sales Order Fulfillment must be enabled
Drop Ship Enablement under Order Management Options
Drop Ship feature required under Order Management
Drop Ship Financial Flow
Task: Drop Ship Financial Flow
Drop Ship Sales Order Creation
Now that the setup is complete, you can create a sales order. When you add the drop ship-enabled item (e.g., CM53035), the system automatically:
- Recognizes the item needs a back-to-back supply source.
- Uses the GOP setup to determine the supplier from the sourcing rule.
- Creates an internal requisition for the item.
- Automatically generates a Drop Ship Purchase Order (in this case, US165205) based on the Blanket Agreement.
Order 98500
The Fulfillment tab in the sales order line provides a powerful view of this entire linkage, showing the requisition, purchase order, and their statuses.
Below is the screenshot of Supply Purchase Order
Drop Shipment PO: US165205
Create ASN for the Purchase Oder
Once the purchase order is created and sent to the supplier, the supplier's responsibility is to ship the goods and provide an Advance Shipment Notice (ASN). In Oracle Fusion, this can be done by the supplier through the Supplier Portal. The ASN provides electronic notification of the shipped goods, including contents, quantities, and shipment tracking information. Creating the ASN against the PO (US165205) is a key step that triggers updates in your system.
PO: US165205
Select lines and create ASN
Provide the sample ASN details such as Shipment No, Packing slip, Bill of Lading and others.
Sales Order Line is at Awaiting Invoice Status
Once the Supplier ASN processed in Oracle Fusion, related Sales Order Lines status will changed to Awaiting Billing
When the supplier's ASN is received and processed in Oracle Fusion, the system understands that the physical shipment to the customer is complete. Consequently, it automatically updates the status of the corresponding sales order line to "Awaiting Billing".
By following this step-by-step guide, you can configure and execute a fully automated drop ship process in Oracle Fusion (Redwood UI). This process streamlines your supply chain, reduces inventory costs, and ensures a seamless flow of information from your customer's order directly to your supplier's shipment.
Reference: For further official details, please refer to the Oracle document: Order to Cash Drop Ship Order Flow (Doc ID 2278649.1)