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This was yet another query asked by one of the reader..so thought to combine in a post so that
others can also understand.
Lets try to understand these key terms from Oracle Apps Product side:
Back Orders
Drop Shipment
Drop shipment on the other hand is a method of order fulfillment where the
organization taking the order does NOT maintain their own inventory for the drop-
shipped product, but fulfill their orders through 3rd party vendors who directly ship
to the end customer ordering the product.
For example,
In Back to Back order the shipment process is also completed through OM as a standard order
after the item is received against a PO.
In B2B the source will be internal but the item would be procured after the order is
created or after the demand is made.
In Drop Ship the source will be external
In Drop Ship orders, material is directly shipped to the customer from the supplier.
Thus, inventory is not affected. In this case, only logical receiving is done. But in the
case of Back-to-Back orders, material is taken from inventory.
Drop Ship orders may have many Purchase Orders connected to them. In Back-to-
Back orders one PO is tied to one Sales Order.
The entire Drop shipment process flow can be best understood as figure below:
Order line attribute: Source Type (need to be external). You can be defaulted from item or
order type
o Menu -> Responsibility Order Entry Super User/setup/Orders/Types
o Setup an order type using the cycle defined in the previous step (a),an order
number source, a valid standard value rule set.
Item attributes (OM and Purchasing)
As mention above this is ability to create specific supply orders for customer sales orders.
These are main features avaible in EBS