©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 Agenda Introduction Drop shipment process Back to back order process

©2004 Deloitte Drop Shipment and Back to Back Order Processes 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

©2004 Deloitte Drop Shipment and Back to Back Order Processes 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

©2004 Deloitte Drop Shipment and Back to Back Order Processes Drop Shipment Process Flow : Standard Item

©2004 Deloitte Drop Shipment and Back to Back Order Processes Drop Shipment Features: Sales Order Line Source type determines whether item is internally sourced or drop shipped

©2004 Deloitte Drop Shipment and Back to Back Order Processes Drop Shipment Features: Sales Order Line-> Additional Line Information PO/Requisition details can be seen from Order Organizer

©2004 Deloitte Drop Shipment and Back to Back Order Processes Drop Shipment Features: Purchase Order Purchase Order: Note that header level ‘ship-to’ is not used

©2004 Deloitte Drop Shipment and Back to Back Order Processes Drop Shipment Features: Purchase Order Line -> Shipment Shipment level Ship to information is used by supplier

©2004 Deloitte Drop Shipment and Back to Back Order Processes 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

©2004 Deloitte Drop Shipment and Back to Back Order Processes 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

©2004 Deloitte Drop Shipment and Back to Back Order Processes 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.

©2004 Deloitte Drop Shipment and Back to Back Order Processes Agenda Introduction Drop shipment process Back to back order process

©2004 Deloitte Drop Shipment and Back to Back Order Processes 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

©2004 Deloitte Drop Shipment and Back to Back Order Processes 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

©2004 Deloitte Drop Shipment and Back to Back Order Processes 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

©2004 Deloitte Drop Shipment and Back to Back Order Processes Back to Back Order: Process flow

©2004 Deloitte Drop Shipment and Back to Back Order Processes 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

©2004 Deloitte Drop Shipment and Back to Back Order Processes Back to Back Orders: Item Master Setup

©2004 Deloitte Drop Shipment and Back to Back Order Processes Back to Back Order: Item Master Setup

©2004 Deloitte Drop Shipment and Back to Back Order Processes Back to Back Order: ASL Setup Specify Item Name Specify supplier and supplier site

©2004 Deloitte Drop Shipment and Back to Back Order Processes Back to Back Order: Key Process Elements Sales order line: New line status

©2004 Deloitte Drop Shipment and Back to Back Order Processes Back to Back Order: Key Process Elements Sales order line: Reservation Details

©2004 Deloitte Drop Shipment and Back to Back Order Processes Back to Back Order: Key Process Elements Purchase req line: Note to buyer is automatically populated

©2004 Deloitte Drop Shipment and Back to Back Order Processes 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

©2004 Deloitte Drop Shipment and Back to Back Order Processes Contact Information Kaushik Bakhandi Deloitte Consulting Ph:

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