©2004 deloitte drop shipment and back to back order processes in oracle 11i july 19, 2004

©2004 Deloitte

Drop Shipment and Back to Back

Order Processes in Oracle 11i

July 19, 2004

Drop Shipment and Back to Back Order Processes ©2004 Deloitte

Agenda

•Introduction•Drop shipment process

•Back to back order process


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 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 Shipment Process Flow : Standard Item

Customerrequestsproduct

Place PO

Create OracleSales order

Specify line isDrop shipped &

Book order

Customer receivesitem

Cus

tom

erO

racl

ePu

rcha

sing

Supp

lier

Fina

nce

Customer Invoice(AR)

Managecollections

Ora

cle

Inve

ntor

yO

racl

e O

M

Logical receipt intoDrop ship location

(EDI, manual)

Shipment ofproduct tocustomer

PurchaseRequisition (PR)

created

Autocreate POfrom PR (Can beautomated using

BPA and Release)

Approve PO &communicate to

supplier (Via EDI,fax, email etc

Communicate ASN

Supplier invoice(AP)

Payment


Drop Shipment Features: Sales Order Line

Source type determines whether

item is internally sourced or drop

shipped


Drop Shipment Features: Sales Order Line-> Additional Line Information

PO/Requisition details can be seen

from Order Organizer


Drop Shipment Features: Purchase Order

Purchase Order: Note that header

level ‘ship-to’ is not used


Drop Shipment Features: Purchase Order Line -> Shipment

Shipment level Ship to

information is used by supplier


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


Implementation Considerations

• Order line attribute: Source Type (need to be external). Can be defaulted from item or order type

• Item attributes (OM and Purchasing)

• 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 Shipment: Limitations

• Sales order changes need to be manually updated in PO

• Sourcing an item from multiple supplier

• Drop shipment across operating unit is not possible– Cannot create sales order in OU A but receive PO into OU B

• 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.


Agenda

•Introduction•Drop shipment process

•Back to back order process


Back to Back Order

• Able to create specific supply orders for customer sales orders.

• Key Business Drivers– Lower inventory cycle time and cost

– Link supply to specific demand


Back to Back Order: Features

• Designate specific items as “B-to-B” orderable

• Enter sales order lines for these items, and have the supply automatically created via a requisition

• 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 Buyer’ field in the requisition captures the Sales order information


Back to Back Order: Features

• 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


Back to Back Order: Process flow

Customerrequestsproduct

Place PO

Create OracleSales order

Specify line itemenabled for Back-to-Back orders &

Book order

Customer receivesitem

Cus

tom

erO

racl

ePu

rcha

sing

Supp

lier

Fina

nce

Supplier Invoice(AP)

Payment

Ora

cle

Logi

stic

sO

racl

e O

M

Receive itemsagainst the PO

linked to the salesorder

Shipment ofproduct to theorganization

PurchaseRequisition (PR)

created

Autocreate POfrom PR (Can beautomated using

BPA and Release)

Approve PO &communicate to

supplier (Via EDI,fax, email etc

Communicate ASN

Customer Invoice(AR)

ManageCollections

Pick Release SO Ship ConfirmDecrementInventory


Back to Back Order: Setup

• Item attributes Assemble to Order, Build in WIP

• Item attributes Customer Orderable and Purchasable

• Sourcing Rule need to be setup

• BPA may be setup optionally


Back to Back Orders: Item Master Setup


Back to Back Order: Item Master Setup


Back to Back Order: ASL Setup

Specify Item Name

Specify supplier and supplier site


Back to Back Order: Key Process Elements

Sales order line: New line status



Sales order line: Reservation

Details



Purchase req line: Note to buyer is automatically

populated


Back to Back Order: Limitations

• Only one sourcing rule can be defined for Back-to-Back orderable items

• Cannot use a combination of ‘Buy from’ and ‘Make’ sourcing rules within the assignment set

• Sales order changes need to be manually updated in PO

• Cannot create Internal Requisitions from Back-to-Back orders


Contact Information

Kaushik Bakhandi

Deloitte Consulting

[email protected]

Ph: 650 372-4769


Q&A / Open ForumTHANK YOU!

©2004 deloitte drop shipment and back to back order processes in oracle 11i july 19, 2004

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