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Drop Ship Order Demoin Oracle Apps
By:Devendra Gulve
http://functionalguy.blogspot.com
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Drop Shipment
Drop shipment enables to take order from customer and fulfill it directly from a supplier●Key Business Drivers
○ Low inventory cost○ Reduced shipment time to customer○ Can offer a variety of product to customer○ Used heavily in contract manufacturing environment where the
product is standardized and the company plans to focus more on product design rather than manufacturing
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Introduction to Drop Ship
Drop shipment 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: (C=Customer, M=Organization, S=Supplier)
○ C orders item x from M○ M orders item x from S○ S ships Item x to C○ S bills M for the order, M bills C for the order○ C pays M for the order, M pays S for the order
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Drop Shipment
Functionality Overview● Order processing is managed using workflow● Links Order Management and purchasing to provide visibility
through entire supply chain● Drop ship functionality is based on source type of an order line
(Internal/External) ● Automatic PO/BPA release creation based on ASL/sourcing rule
information● Drop ship process uses standard OM workflows. Hold and
approval steps can be added to order processing flow.● Use Sales order Purchase order discrepancy report to identify
discrepancies between the SO and the PO
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Drop Shipment New features in 11i
● Internal location relationships need not be maintained● Can drop ship kit, model and configured items excluding
Ship model complete (SMC)■ Within a configuration items can be sourced from different
suppliers■ File attachment can be sent for ATO configurations. Vendor can
also view information using iSupplier portal■ Perform a match and use existing configuration ids
● Item master attribute can be used to identify Drop ship items
● User item description can be sent to Purchasing
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Implementation Considerations
Order line attribute: Source Type (need to be external). Can be defaulted from item or order type● Item attributes (OM and Purchasing): Item should be
Purchasable, BUY and ATO unchecked.● Setup requisition import parameters
■ Typically group by Vendor■ 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
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Steps for Drop-ship order
1. Receive PO from Customer.2. Enter Sales Order against the PO from customer with EXTERNAL
source type.3. Requisition will be generated and then PO for fulfillment/s.4. This PO will be sent to suppler with ship-to address as customer’s
address and Bill-to address as our address.5. Supplier ships material to customer directly and sends shipping
details to us.6. Customer sends us acknowledgment of material received.7. Suppler sends us invoice against PO sent by us8. Receipt will be done against PO sent to suppler
○ no change in on-hand quantity, even we do receipt9. Sales Order gets fulfilled and we can send Invoice to customer
against the sales order.
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Drop Ship Order flow
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Drop Shipment Process Flow : Standard Item
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Enter Order Header
Note the Order# and Ship-to , bill-to address
Note the Order# and Ship-to , bill-to address
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Enter Order Line/s
Now the Line status is Entered
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Enter Order Line/s
Make Sure Source type is “External”
Mention the Organization, where you want to receive the material from External Source
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Book the Order
Order / Line status becomes Booked
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Creating Supply
●Run workflow background○This will process the record/s and will put
eligible records in Interface●Run Requisition import program and make
sure the requisition gets generated○This will pull the records from Interface and
then create requisition/s.
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Requisition Import
This program created one requisition
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Find Requisition
●PO (R) > Requisitions > Requisition Summary
Drop-Ship Order Demohttp://functionalguy.blogspot.com
View Requisition
It is Same as Ship-to address mentioned
on Sales Order
Once PO gets created against this Req. this field will
get populated
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Auto Create PO
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Auto Create PO
●PO (R) > Auto Create
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Auto Create PO
Enter Suppler Details here
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Auto Create PO
Drop-Ship Order Demohttp://functionalguy.blogspot.com
View Requisition
●Here the PO number got Populated for the Requisition
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Open PO
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Approve PO
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Sales Order Line Status
Drop-Ship Order Demohttp://functionalguy.blogspot.com
PO Receipt
●PO (R) > Receiving > Receipts
Enter PO Number
Drop-Ship Order Demohttp://functionalguy.blogspot.com
PO Receipt
●Item is Serial Controlled, so enter Serial Number
Drop-Ship Order Demohttp://functionalguy.blogspot.com
View PO Receipt
● PO (R) > Receiving > Receiving Transaction Summary
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Sales Order Line Status
Just on PO Receipt, Order Line status becomes
“Shipped”. No need to do Shipping activity
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Run workflow background
●Run workflow background○This will process the record/s and will put
eligible records in Receivables Interface
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Sales Order Line Status
Now the Line status became Closed
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Auto-Invoice Program
●This Program will pull records from Receivables Interface and create Invoice for the same
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Mention the Order Number to be invoiced
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Invoice Details
●Receivables (R) > Transactions > Transactions
Drop-Ship Order Demohttp://functionalguy.blogspot.com
●Customer will pay against this receivables Invoice.
●Similarly generate Invoice against the PO/Receipt in Payables and pays money to Supplier.
●Profit margin depends on price difference in these two invoices
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Drop Shipment: Limitations
●Sales order changes need to be manually updated in PO sourcing an item from multiple supplier
●Management of sales order holds and approvals ■ Need to be managed manually after the PO has been created
●Tracking serial number could be a problem. ■ Serial numbers cannot be captured during PO receipt if the item
is serial number control at shipment ■ Serial number control at receipt works fine for manual receipt.
This implies receiving using serial number for all transactions. May be worked around using a logical receiving organization.
Drop-Ship Order Demohttp://functionalguy.blogspot.com
Thank You
●Please post your comments on
● http://functionalguy.blogspot.com/2008/10/drop-ship-order-flow.html