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Drop-ship Order Flow


Before you enter an order that you intend to source externally, verify that you have set up appropriate order cycles and order types. If you plan only to fulfill orders that are either purely drop-shipped or sourced internally, create an order cycle for each case. If you plan to fulfill orders with some drop-shipped lines and some internally sourced lines, you must create an order cycle that includes Purchase Release for externally sourced lines, as well as the Pick Release, Ship Confirm, and Inventory Interface cycle actions for internally fulfilled lines. Assign these order cycles to order types.

Note: You can create a custom API to define whether your default order source type will be Internal or External.

Entry and Booking

Enter, copy, or import an order. Ensure that the order type you select includes the cycle steps necessary to process the order completely. If your order type's order cycle is for drop-ship sales orders only, Oracle Order Entry/Shipping defaults External in the Source Type field for each line and makes available the Receiving Organization field. If your order type's order cycle allows for both externally and internally fulfilled orders, you must designate a source type of External or Internal on each line.

Only standard items may be drop-shipped; kits and models cannot be drop-shipped.

Depending on how your order cycle is defined, you can change the source type until the line has been processed by either Purchase Release or Pick Release. You can book an order without specifying a source type, but Purchase Release and Pick Release will not process lines lacking that information.

Purchase Release and Requisition Import

In order for Oracle Purchasing to generate requisitions for the ship-to location entered on your sales order, you need to associate the ship-to location with the appropriate Purchasing receiving location before you run Purchase Release.

The Purchase Release concurrent program processes eligible lines with a source type of External and passes information to Oracle Purchasing. Run Purchasing's Requisition Import program to create purchase requisitions based on this information. When you submit the program, ensure that you set Requisition Import's Multiple Distributions parameter to No. After Requisition Import completes successfully, you can approve the requisitions to generate purchase orders.

If the buyer makes changes to the requisition or purchase order in Oracle Purchasing after Purchase Release has been run, use the Sales Order and Purchase Order Discrepancy Report to note differences between the original sales order and its associated purchase order.

Shipment and Receipt

Standard Oracle Purchasing functionality confirms that your supplier has completed the drop shipment. Confirmation may be as simple as a phone call, or it may include Electronic Data Interchange (EDI) documents, such as an Advance Shipment Notice (ASN).

When you receive shipment confirmation, enter a receipt in Oracle Purchasing, even if the drop-shipped item is not transactable. This creates inbound and outbound material transactions in your system for accounting purposes.

You must receive drop-ship items in a logical organization. If you use Oracle Master Scheduling/MRP and Oracle Supply Chain Planning, to avoid miscounting supply you may not want to include logical organizations in your planning. If you choose to include logical organizations, ensure that doing so does not cause planning and forecasting complications.

If your supplier should send only an invoice, you need to enter a passive receipt.


After your system's inventory has a record of the transaction, run the Receivables Interface and AutoInvoice programs to generate an invoice for your customer. You may want to pass on any landing or special charges that your supplier imposed on the drop shipment. Such charges must be applied manually to the invoice.


After all lines on the order have completed all applicable cycle actions and after you have invoiced your customer, run the Close Orders program.

See Also

Sample Order Cycles

Viewing Orders and Returns

Overview of Sales Orders

Drop Shipments

Copying Orders


Associating Ship-to and Receiving Locations

Purchase Release

Requisition Import Process

Overview of Receiving

Receivables Interface

Importing Invoice Information Using AutoInvoice

Closing Orders

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