Drop Shipment And Back To Back Order Processes In Oracle 11i

Drop Shipment and Back to Back Order Processes in Oracle 11i July 19, 2004

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Agenda •Introduction •Drop shipment process •Back to back order process

Drop Shipment and Back to Back Order Processes

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Drop Shipment • Drop shipment enables to take order from customer and fulfill it directly from a supplier • Key Business Drivers –

Low inventory cost

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Reduced shipment time to customer

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Can offer a variety of product to customer

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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 and Back to Back Order Processes

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Drop Shipment • Functionality Overview –

Order processing is managed using workflow

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Links Order Management and purchasing to provide visibility through entire supply chain

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Drop ship functionality is based on source type of an order line (Internal/External)

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Automatic PO/BPA release creation based on ASL/sourcing rule information

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Drop ship process uses standard OM workflows. Hold and approval steps can be added to order processing flow.

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Use Sales order Purchase order discrepancy report to identify discrepancies between the SO and the PO

Drop Shipment and Back to Back Order Processes

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Place PO

Create Oracle Sales order

Purchase Requisition (PR) created

Logical receipt into Drop ship location (EDI, manual)

Finance

Supplier

Oracle Purchasing

Customer requests product

Oracle Inventory

Oracle OM

Customer

Drop Shipment Process Flow : Standard Item Customer receives item

Specify line is Drop shipped & Book order

Autocreate PO from PR (Can be automated using BPA and Release)

Shipment of product to customer

Communicate ASN

Customer Invoice (AR)

Approve PO & communicate to supplier (Via EDI, fax, email etc

Manage collections

Drop Shipment and Back to Back Order Processes

Supplier invoice (AP)

Payment

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Drop Shipment Features: Sales Order Line

Source type determines whether item is internally sourced or drop shipped

Drop Shipment and Back to Back Order Processes

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Drop Shipment Features: Sales Order Line-> Additional Line Information PO/Requisition details can be seen from Order Organizer

Drop Shipment and Back to Back Order Processes

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Drop Shipment Features: Purchase Order Purchase Order: Note that header level ‘ship-to’ is not used

Drop Shipment and Back to Back Order Processes

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Drop Shipment Features: Purchase Order Line -> Shipment

Shipment level Ship to information is used by supplier

Drop Shipment and Back to Back Order Processes

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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 Shipment and Back to Back Order Processes

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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 and Back to Back Order Processes

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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.

Drop Shipment and Back to Back Order Processes

©2004 Deloitte

Agenda •Introduction •Drop shipment process •Back to back order process

Drop Shipment and Back to Back Order Processes

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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

Drop Shipment and Back to Back Order Processes

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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

Drop Shipment and Back to Back Order Processes

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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

Drop Shipment and Back to Back Order Processes

©2004 Deloitte

Place PO

Create Oracle Sales order

Purchase Requisition (PR) created

Receive items against the PO linked to the sales order

Finance

Supplier

Oracle Purchasing

Customer requests product

Oracle Logistics

Oracle OM

Customer

Back to Back Order: Process flow

Customer receives item

Specify line item enabled for Backto-Back orders & Book order

Autocreate PO from PR (Can be automated using BPA and Release)

Approve PO & communicate to supplier (Via EDI, fax, email etc

Pick Release SO

Drop Shipment and Back to Back Order Processes

Decrement Inventory

Shipment of product to the organization

Communicate ASN

Supplier Invoice (AP)

Ship Confirm

Payment

Customer Invoice (AR)

Manage Collections

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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

Drop Shipment and Back to Back Order Processes

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Back to Back Orders: Item Master Setup

Drop Shipment and Back to Back Order Processes

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Back to Back Order: Item Master Setup

Drop Shipment and Back to Back Order Processes

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Back to Back Order: ASL Setup Specify Item Name

Specify supplier and supplier site

Drop Shipment and Back to Back Order Processes

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Back to Back Order: Key Process Elements Sales order line: New line status

Drop Shipment and Back to Back Order Processes

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Back to Back Order: Key Process Elements

Sales order line: Reservation Details

Drop Shipment and Back to Back Order Processes

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Back to Back Order: Key Process Elements

Purchase req line: Note to buyer is automatically populated

Drop Shipment and Back to Back Order Processes

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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

Drop Shipment and Back to Back Order Processes

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Contact Information • Kaushik Bakhandi • Deloitte Consulting • [email protected] • Ph: 650 372-4769

Drop Shipment and Back to Back Order Processes

©2004 Deloitte

Q&A / Open Forum THANK YOU!

Drop Shipment and Back to Back Order Processes

©2004 Deloitte