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Order Management

Drop Shipment - Functional Setup and flow

A Drop Shipment occurs when a customer order is sourced from and delivered by a
Order Management sends information to the Purchasing Application to create that
PO, and then when that PO is received (to indicate shipment from the supplier to
your customer), the order line is automatically updated to indicate that it was
In this process, the company running Order Management is modeled as the company
to whom the end customer places the original order.

Drop Shipment - Setup

You need to make sure these are attribute setup Correctly:

Item Attributes

Purchased : Enabled
Purchasable : Enabled
Transactable : Enabled
Stockable : Optional

Reservable : Optional
Inventory Item : Optional
Customer Ordered : Enabled
Customer Order Enabled : Enabled
Internal Ordered : Disabled
OE Transactable : Enabled
Shippable : Optional

And ,your do set up for Order Source Type as External

Drop Shipment Your Setup checklist

Ensure you have created your Order Management Transaction Types and
linked your Transaction Types to order and line workflows that support drop
Ensure the Oracle Workflow Background Engine is running.
Ensure all Drop ship locations you will use to perform drop shipments have
the Ship To Site and Receiving Site defined.
Ensure you have defined the Internal Ship To Locations for your drop
shipment customers (Oracle Receivables Standard Customer window,
Business Purpose Details Tab).

Ensure your standard items have an associated List Price defined within your PO
Inventory organization (Oracle Payables Financial Options window, SupplierPurchasing Tab).
Drop Shipment - Process Steps

Create a Sales Order with line where the line source is External
Book and Schedule the Sales Order
Run Requisition Import Process
Now the line status will be in Awaiting Receipt
Login to the Receiving Organization (Purchasing) who has been setup as an
Run Requisition Import
Create Purchase Order from the Requisition
Approve the PO
Receive the full quantity
Run Auto Invoice
Verify Invoice in Sales Order

Things not to forget in a DropShipment

Blanket POs will not used with Drop Shipment , the reason the PO must be
created when OM notifies PO that a Drop Ship order has been created.
You cant cancelled Drop Shipments once Oracle Purchasing obtains the
Standard Items can be used for Drop Shipment.

Drop Shipment, BackOrders and Back to

Back Order
Back Orders

The Oracle term backorder is a status on the order line or delivery line
indicating that you have tried to release an order for picking in your
warehouse, but that the pick release was UNSUCCESSFUL because there was
no available inventory.(Backorder can be partial or complete). The Oracle
term backorder does NOT mean that you have open purchase orders for the
out-of-stock item from your vendors.
The term backorder is also used in business a little differently than in Oracle.
The term An item is on backorder usually means that the item is not in
stock, but the shipping company has already placed purchase orders from
their suppliers to restock the item.
Back Order is when you do not fulfill the Sales Order, or if the inventory is out
of stock for delivery to customer.

Drop Shipment

Drop shipment on the other hand is a method of order fulfillment where the
organization taking the order does NOT maintain their own inventory for the
drop-shipped product, but fulfill their orders through 3rd party vendors who
directly ship to the end customer ordering the product.

For example,

A orders item x from B

B orders item x from C
C ships Item x to A.
B bills A for the order, C bills B for the order

Back to Back Orders

In Back to Back order the shipment process is also completed through OM as a
standard order after the item is received against a PO.
What is the major difference between drop shipment and back to back
order ?

In B2B the source will be internal but the item would be procured after the
order is created or after the demand is made.
In Drop Ship the source will be external
In Drop Ship orders, material is directly shipped to the customer from the
supplier. Thus, inventory is not affected. In this case, only logical receiving is
done. But in the case of Back-to-Back orders, material is taken from inventory.
Drop Ship orders may have many Purchase Orders connected to them. In
Back-to-Back orders one PO is tied to one Sales Order.

More on Drop Shipment & Back to Back Orders(Functional)

High Points for EBS Base Functionality for Drop Shipment

Drop shipment order processing in EBS is managed using workflow

Drop ship functionality is based on source type of an order line
You can automate your PO/BPA release creation based on ASL/sourcing rule
Drop ship process uses standard OM workflows.
You can use Sales order Purchase order discrepancy report to identify
discrepancies between the OM and the PO
There is a links OM and PO to provide visibility through entire supply chain

The entire Drop shipment process flow can be best understood as figure below:

Points for Implementation Considerations

 Order line attribute: Source Type (need to be external). You can be defaulted from item or
order type
 Menu -> Responsibility Order Entry Super User/setup/Orders/Types
 Setup an order type using the cycle defined in the previous step (a),an order number
source, a valid standard value rule set.
 Item attributes (OM and Purchasing)
You need to do the setup for these attributes:
-Purchased (PO) Enabled
-Purchasable (PO) Enabled
-Transactable (INV) Enabled
-Stockable (INV) Optional
-Reservable (INV) Optional
-Inventory Item (INV) Optional
-Customer Ordered (OE) Enabled
-Customer Orders Enabled (OE) Enabled
-Internal Ordered (OE) Disabled
-Internal Orders Enabled (OE) Disabled
-Shippable (OE) Optional
-OE Transactable (OE) Enabled

Setup requisition import parameters

You can also use grouping by Vendor
You can also set the multiple distributions set to No
ASL and/or Sourcing rule relationship need to be setup for Automatic PO creation
Oracle recommends using a logical organization for drop shipment. Exclude this organization
for planning purposes. It can be worked around using non nettable Dropship subinventory

Back to Back Order

As mention above this is ability to create specific supply orders for customer sales orders.
These are main features avaible in EBS

Designate specific items as B2B orderable

Enter sales order lines for these items, and have the supply automatically created via a
Have the requisition converted into a Purchase Order or a release of a blanket Purchase Order
View the requisition number or PO number and its status from the Sales Order (using
reservation details window)
Reserve the supply from the Requisition to the PO and finally to the Sales Order once the PO
is received
Pick, ship and finally invoice the customer for the product.
Note to Buyers field in the requisition captures the Sales order information
Line status information shows the progress of the order
PO Req Created
PO Req Requested
PO Created
PO Received
If line is manually reserved it progresses to Awaiting Shipping
Changes and Cancellations on sales orders:
 Reservation is changed
 Notification sent to Buyer

drop Shipment is a process where the customer places a purchase order on a company and this
company instructs its supplier to directly ship the items to the customer.
Drop shipments are done because of the following reasons:

Customer requires an item that is not normally stocked

Customer requires a large quantity of the item which is not available with you
It is more economical when the supplier ships directly to the customer .

Types of drop shipment

If you see the real world scenarios this can be best categorize as mainly under three heads as:

Type 1 : Full Drop Shipment

Where the seller sends the purchase order to the supplier for the full quantity that the customer had

Type 2 : Normal Shipments and Partial Drop Shipment

Under this scenario, If the seller has only part of the quantity available for shipping to the customer,
then that quantity is shipped; a purchase order is created for the remaining quantity which the seller
was not able to fulfill. This is typically true for single based item.

Type 3 : Normal Shipments and Full Drop Shipment

In this scenario, the seller ships some goods from inventory to the customer, and the other goods are
always shipped from an external source (supplier).
Process Flow for Drop Shipment (Adopted from User Guide)
Drop Shipments for Standard Items

Enter an order for drop ship item

Book the order
Run Requisition Import
Create a purchase order from the requisition
Approve the purchase order
Receive against the purchase order

Forward drop ship flow for ATO model


Enter a sales order for your drop shipped ATO model.

Select your options.
Schedule and book order (schedule date should default to request date for all lines).
Create you configured item by progressing your order ATO Model line or running the
Autocreate Configuration batch process.
Verify order and line status.
Create a supply order (dropship requisition) by progressing your configuration item line or
running the Autocreate Dropship Requisition batch process
Run the Oracle Purchasing Requisition Import to create a purchase requisition.
Create a purchase order for the requisition.
Approve the purchase order.
Receive the purchase order.

Forward drop ship flow for ATO Item

1. Enter a sales order for your drop shipped ATO item
2. Schedule and book order (schedule date should default to request date for all lines).
3. Create a supply order (dropship requisition) by progressing your configuration item line or
running the Autocreate Dropship Requisition batch process.
4. Run the Oracle Purchasing Requisition Import to create a purchase requisition.
5. Create a purchase order for the requisition.
6. Approve the purchase order.
7. Receive the purchase order.
Non-SMC PTO model with drop shipped standard options

Enter a sales order for your PTO model.

Select options; source type on the components will default.
Schedule and book the order.
Run requisition import to create a purchase requisition.
Create a purchase order for the requisition.
Approve the purchase order.
Receive the purchase order.

Drop Shipment (Technical)

This section is going to help those who asked to provide some more granular details for drop shipment
some time back.
As discussed above and in last post drop shipment is the process by which an organization takes
orders from their customer and gets it fulfilled by a 3rd party. The selling organizatoin places a

purchase order to teh 3rd party (supplier) who ships the ordered products to the end customer
directly. There are a large number of tables that contain data related to drop ship orders. For example:

oe_order_headers_all and lines_all (order info)

po_requisition_lines_all, headers_all etc.( req. info)
po_headers_all, lines_all (po info)
oe_drop_ship_sources_all (this table contains the link between the req, po and the original

Moreover, there are many more tables involved in this therefore its better to have a understanding by
corresponding ER diagram.

There is always a need to develop some of the custom report, therefore understanding of
understanding table is very very important. Here are the same of underline tables details.

 This table stores document shipment schedules for purchase orders, purchase
agreements, quotations, and RFQs.
 This table stores purchase document lines for purchase orders, purchase agreements,
quotations, and RFQs.
 This table stores document headers for purchase orders, purchase agreements,
quotations, and RFQs.
 This table stores purchase order distributions.
 This table stores requisition headers.

 This table stores requisition lines.

 This table stores requisition distributions.
 This is the Requisition Import interface table.
 This table stores information for all order lines in Oracle Order Management.
 This table stores relationships between order lines in oe_order_lines_all table and
associated oracle purchasing requisitions in PO_REQUISITIONS_ALL and Oracle
purchasing purchase orders in PO_LINES_ALL.
 This table stores receiving shipment line information.

Order Management(OM) Integration

OM is one of the most complex modules in EBS, and in typical complex business model, the
integration of other product or third party cant be denied. Processing an Order requires integration
with many other business areas. Most integration points with other Oracle products are implemented
via PL/SQL-based APIs.Here is brief discussion for Order Management EBS Integration points.

How Order Management integrated with iStore?

OM records customer orders placed via iStore, Order Capture and other CRM applications. It
validates setup for shipping and payment options along with providing order status and the shipping
information to customers. Once the quote is converted into an order, you can only make changes to

the order through Order Management, prior to booking.

How Order Management integrated with Telesales?
Telesales eBusiness Center has several integrations with Order Management. There is an Order tab to
view order history and create new orders.
How Order Management integrated with Cost Management?
OM call the the Cost Management CST_COST_API to obtain cost from cst_item_costs or
cst_quantity_layers when the Gross Margin feature of OM is enabled.
How Order Management integrated with Field Service?
Field Service Report requires specifically that you setup Price Lists, Units of Measure (UOM), and two
Inventory Item Attributes in Order Management. Price Lists contain the list price for an item. Items
could be material, but also labor and expenses like units of driving distance. Once material, expense
and labor transactions for a task have been taken down on the Field Service Debrief, this information
is updated to Charges. In Charges the list price for the item is received from Order Management and is
used to generate an invoice for a customer.
How Order Management integrated with Depot Repair?
This is used by Depot Repair to create RMA and Sales Orders, validate customer accounts, and invoice
customers for repairs.
How Order Management integrated with Install Base?
Information about Install Base trackable items is interfaced to Install Base in the following ways:

Shippable Items: For both orders and returns, information is interfaced to Install Base via
Inventory Interface.
Non-Shippable Items: For both order and returns, information is interfaced to Install Base via
the Order Management Fulfillment workflow activity Install Base also supports Internal Sales
Order transactions by appropriately creating /updating item instances as a result of
transactions between internal organizations such as pick transactions, shipments, and

How Order Management integrated with Service Contracts?

Service Contracts need to pulls information from the Install Base newly created customer records and
creates an ownership record.

Warranty: A Warranty contract is created when a Serviceable product is shipped.

Extended Warranty: An Extended Warranty contract is created when an Extended Warranty
is sold on a sales order. Oracle EAM & OM integration
Subscription: Fulfillment starts after the contract approval process.
RMA: Service Contracts sends Order Management RMA information

How Order Management integrated with Advanced Planning System/Global Order

Promising/ ASCP?
Order Management uses Advanced Supply Chain Plannings Global Order Promising functionality to
check the availability of ordered items and to schedule order lines.Scheduled Order Lines are viewed
as demand by the Advanced Planning System.

How Order Management integrated with Purchasing?

Order Management integrates with Oracle Purchasing in the following functional areas:

Return Receipts: Order Management uses the Oracle Purchasing Receipt functionality to
handle Return receipts. When an item is received, Purchasing calls Order Management to
indicate delivery and to get COGS information.
Internal Orders: Oracle Purchasing uses Order Import to create internal orders.
Drop-Ship Orders: 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.

How Order Management integrated with Bills of Material ?

This is integrated with BOM when models and kits are entered on sales orders.Normally OM uses the
Bill of Material defined for the model or kit or explode the model into its components, for the purpose
of the user selecting options and for shipping purposes.
How Order Management integrated with Workflow ?
Oracle Workflow is heavily used in EBS and specially to manage Order and Line processing. These
PL/SQL based Workflow is a natural replacement for Order Cycles functionality. It provides a
Graphical User Interfaces for defining activities, notifications, flows and viewing flow status.
How Order Management integrated with Advanced Pricing ?
OM is tightly integrated with Advance Pricing which includes price lists, modifiers, and agreements.
Order Management, through its Sales Agreement functionality, creates price lists and pushes them
into the Advanced Pricing tables. Order Management calls the Pricing Engine to make pricing
requests during the processing of orders, and receives pricing information back from Advanced
How Order Management integrated with Configurator ?
Order Management integrates with Oracle Configurator to support ordering and validation of
configurations. The Configurator window is a Java Applet that can be launched from the Sales Order
How Order Management integrated with Oracle Payment ?
As we know Oracle payment is new product and OM accepts Credit Card information when entered on
orders. It integrates with Oracle Payment to validate this information and get Credit Card
authorizations. This information is then interfaced to Receivables.
How Order Management integrated with Receivables ?
Order Management integrates with Oracle Receivables in the following function areas:

Invoice Interface: Order Management sends invoices and credit memos to Receivables via the
Invoice Interface workflow activity. The seeded Invoice Interface - Line workflow sub-process
populates the Receivables interface table.
Receipts: Order Management calls Receivables Receipt API to create receipts for prepaid
credit card orders. Order Management receives a payment-set id from AR when the receipt is
created, and then passes that id back to AR in the autoinvoice tables at invoicing time so that
the invoice can be matched to the receipt.
Tax: Order Management calls the Global Tax Engine APIs to default the Tax Code
(ARP_TAX.GET_DEFAULT_TAX_CODE) and to calculate estimated tax

(ARP_PROCESS_TAX.SUMMARY) for the order Line. The estimated tax value is now stored
on the line and re-calculated only when any of the attributes affecting tax change. Information
about the tax value is also stored as Line Price Adjustments.
Credit Management: If the Credit Management product is installed, notifications are sent to it
by Order Management when an order or line goes on credit hold, to initiate a credit review. If
the credit review results in a decision to approve the order, a business event is posted which
OM subscribes to and then releases the credit hold.

How Order Management integrated with Payables ?

OM accesses the AP Bank Accounts table to populate the Credit Card LOV when an order is being
entered with a payment type of Credit Card. Additionally, if a new credit card number is entered and
the authorization of that card through iPayment is successful, Order Management calls an AR API to
create a new bank account record for the customer in the Bank Accounts table.
How Order Management integrated with Inventory Management ?

Order Management integrates with Oracle Inventory Management through Managing

You can create reservations to on-hand quantities from the Sales Orders form.

How Order Management integrated with Trade Management ?

Order Management can receive RMA orders and lines from Oracle Trade Management as part of its
dispute handling functionality.

Order 2 Cash Cycle

Order Management

You enter sales and return orders within an operating unit.

You define price list and discount names for the entire instance. You can also define price list
lines, discount lines,
and quantity breaks for the entire instance. If you have more than one validation organization
in the instance, you may experience error messages when querying a price list if the inventory
item is not valid in your operating units OM validation organization. Thus it is best to define
price lists by operating unit.
You can check credit within an operating unit.
You assign order lines and shipments to a specific warehouse (inventory organization).
You pick release orders and print pick slips by operating unit.
You ship confirm orders and print shipping documents by inventory organization. You can
ship from another operating unit, even if in a different set of books.
You receive returned goods in the inventory organization specified on the return.
Inventory and Manufacturing integration functions, such as reservations, available to promise
checking, sales order demand, and assemble to order job creation are processed in the
appropriate inventory organization.

Order Management /Account Receivable

You setup customers for the entire instance but addresses for each operating unit.
You merge customers and addresses within an operating unit.
You report supplier/customer netting within an operating unit.

Account Receivable

You setup receivable account defaults within an operating unit.

You produce invoices, statements, and dunning letters within an operating unit.
You enter and track customer commitments within an operating unit.

Understanding data flow for Internal

The process flow for Internal Orders
Internal orders normally start with creation of requisitions in Oracle Purchasing (which is created as
Internal Sales Orders) .
Once the requisitions created from the MRP and Inventory modules, the Requisition Import program
must be run in order to move records from the requisition interface tables to the historical
Now next is to create internal requisitions from Purchasing module.When each requisition is
approved, data will be inserted into the MTL_SUPPLY table. When the items on the requisition are
stocked in inventory, the supply data can be viewed from the inventory form called Item
Supply/Demand.Once the Internal Requisition is approved, a user should run Create Internal Sales
Orders (from a Purchasing responsibility) to load the internal sales orders interface tables called in
Order Entry.
After the Creation of Internal Sales Orders has completed, a Import Orders concurrent program need
to run from an Order Management.
at this stage, Oracle order Workflow will process the internal sales order using the workflow definition
listed for the Transaction Type definition in Order Management. When the workflow completes the
Shipping Network is checked to see if the Transfer Type between the source and destination
organization is In transit or Direct.
You can use Oracle Order Entry/Shipping to define order cycles, approvals and holds.
Internal Requisitions use the Account Generator, which automatically builds account distributions.
You can specify only one accounting distribution per inventory sourced line.
This internal requisition process provides the features needed to define your inter- organization
shipping network. For transfers between two organizations, you can specify whether to use in transit
or direct shipments. You can also require internal requisitions for transfers between specific

Understanding data flow for Standard


1. Order Entry This is first stage when Order in enter in system.When the order is entered it
basically create a record in order headers and Order Lines table.
 oe_order_headers_all (Here the flow_status_code as entered)
 oe_order_lines_all (flow_status_code as entered) ( order number is generated)
2.Order Booking
This is next stage , when Order which is entered in step 1 is booked and Flow status changed from
Entered to Booked.At this stage , these table get affected.

oe_order_headers_all (flow_status_code as booked ,booked_flag updated)

oe_order_lines_all (flow_status_code as awaiting shipping, booked_flag updated)
wsh_new_deliveries (status_code OP open)
wsh_delivery_details (released_status R ready to release)

Same time, Demand interface program runs in background And insert into inventory tables
3. Reservation
This step is required for doing reservations SCHEDULE ORDER PROGRAM runs in the background
and quantities are reserved.Once this program get successfully get completed , the mtl_reservations
table get updated.
4. Pick Release
Ideally pick release is the process which is defined in which the items on the sales order are taken out
from inventory.
Normally pick release SRS program runs in background . Once the program get completed these are
the table get affected:

oe_order_lines_all (flow_status_code PICKED )

wsh_delivery_details (released_status S submitted for release )
(move order tables.Here request is generated to move item from saleble to staging sub
Mtl_material_transactions_temp (link to above tables through

5.Pick Confirm
Items are transferred from saleble to staging Subinventory.

wsh_delivery_details (released_status YReleased )

6.Ship Confirm
Here ship confirm interface program runs in background . Data removed from wsh_new_deliveries

oe_order_lines_all (flow_status_code shipped)

wsh_delivery_details (released_status C Shipped)
mtl_material_transactions(linked through Transaction source header id)
Data deleted from mtl_demand,mtl_reservations
Item deducted from mtl_onhand_quantities

7.Enter Invoice
This is also called Receivables interface, that mean information moved to accounting area for
invoicing details.

Invoicing workflow activity transfers shipped item information to Oracle Receivables.

ra_interface_lines_all (interface table into which the data is transferred from order
Then Autoinvoice program imports data from this

Table which get affected into this stage are recievables base table.
 ra_customer_trx_all (cust_trx_id is primary key to link it to trx_lines table and
trx_number is the invoice number)
 ra_customer_trx_lines_all (line_attribute_1 and line_attribute_6 are linked to
header_id (or order number) and line_id of the orders)

8.Complete Line
In this stage order line leval table get updated with Flow status and open flag.

oe_order_lines_all (flow_status_code shipped, open_flag N )

9.Close Order
This is last step of Order Processing . In this stage only oe_order_lines_all table get updated.
These are the table get affected in this step.

oe_order_lines_all (flow_status_code closed,open_flag N )

These are the typically data flow of a order to cash model for a standard order.