For example you might be doing business in appendage for offshore oil-drilling, most of the requested item on a order from a drilling platform can be sourced from your local warehouse, however, the drilling pipes are longer than your average shelve so the decision is made that drilling pipes will be sourced from the supplier/factory directly. In those cases you can use a Drop Shipment method. In the figure below we can see the order, goods and invoice flow for the ordering of those drilling pipes order with a Drop Shipment.
- 1 The customer places a purchase order for x drilling pipes.
- A The order desk receives the order and creates an drop shipment order, the requisition import is done and from the requisition a purchase order is created.
- 2 After approving the purchase order is send to the supplier via mail, e-mail, fax or EDI
- B The supplier receives the purchase order and handles this at their order desk as a normal order
- 3 The supplier ships the goods to your end customer
- 4 The supplier sends an invoice for the goods to you.
- 5 An invoice is send from you to the end customer
By these steps the complete flow is done, your customer has received the goods directly and received a invoice from the goods from you. You have received an invoice from the supplier and by this the goods flow and the financial flow are completed.
To automate this process you have to make use of “Requisition Import” And “Autocreate PO”. By making sure your processes are aligned properly and all data that is required is in the Oracle E-Business suite master you can have completed the process of creating an order until sending a Purchase Order to your supplier in a matter of minutes.When importing your requisitions and generating your Purchase Orders you have the option to group on a couple of parameters. The most used is the “Supplier” parameter. This will group all your requisitions into a single Purchase Order to your supplier. Per line the quantity per ship-to address will be listed. This way you have the ability to send your supplier for example once a day a complete order containing all the required goods from orders from that day.
In short, when you have setup your drop shipment process correctly and it is implemented in a good way this can save you lots of time and work in your day to day work and will keep your customers satisfaction on a higher level due to the fact that you can process their orders even do you do not have it on stock but source the goods via Oracle E-business suite directly from the warehouse of you supplier.