Professional Documents
Culture Documents
Table Of Contents
1. INTRODUCTION ........................................................... 1
3. IMPLEMENTATION ................................................... 3
3.1. Distributed Order Capture .................................................................. 4
3.2. Distributed Order Fulfillment ............................................................. 5
3.2.1. Flow: POs To 3rd Party Systems, ASNs Back .......................... 6
3.2.2. Change Management................................................................... 37
3.2.3. Support For Configurations And Kits ..................................... 43
3.2.4. Accounting ................................................................................... 43
3.3. Frequently Asked Questions ............................................................. 55
3.3.1. Automating Requisition Import → PO Approval Flow ........ 55
3.3.2. Automating ASN Import → Logical Receipt Flow ................ 55
3.3.3. Arrival And Ship Sets .................................................................. 55
3.3.4. Item Setup For DOM ................................................................. 55
Distributed Order Management
1. INTRODUCTION
A Distributed Order Management system integrates the fragmented demand and supply
chains to capture demand from all channels, brokers the demand to multiple internal and
external fulfillment systems, and monitors and manages the fulfillment process across the
supply chain. Oracle E-Business Suite fully supports Distributed Order Management.
The benefits of the Distributed Order Management (DOM), the problems it solves, and an
overview of support for DOM in Oracle’s E-Business Suite are explained in the technical
brief titled ‘Distributed Order Management’. This topical essay is more detailed and is
targeted towards customers and consultants implementing DOM systems. The document
explains the capabilities Oracle E-Business Suite provides to solve Distributed Order
Management requirements.
2. BUSINESS CASE
The promise of a DOM system is that is unifies customer fulfillment process across
company’s fragmented systems (ERP systems, legacy systems) and across transactions with
trading partners (Drop Ship, 3PLs, Carriers). The E-Business Suite delivers on this promise
(Figure 1 - DOM architecture).
Oracle supports capturing orders from all channels and decomposing them into purchase,
manufacturing, service, and distribution orders. Once an order is decomposed, it can be
fulfilled in a number of ways. Accordingly, fulfillment flows are divided into:
Internal fulfillment flows using Oracle’s E-Business Suite modules are already well
documented, as are external fulfillment flows, such as Drop Ship, where orders are brokered
to trading partners for fulfillment. This topical essay addresses the requirements of a typical
DOM system for internal fulfillment by brokering orders to 3rd Party Systems. The essay
shows how Oracle E-Business Suite framework for drop ship orders can be used to model a
Distributed Order Management flow.
This document focuses on the internal fulfillment flows where orders are brokered to 3rd
Party Systems (SAP, Peoplesoft, Legacy). We first explain how E-Business suite captures
orders from all demand channels. Then, we examine in detail the most common DOM
fulfillment flow where Oracle E-Business instance captures the order, generates a Purchase
Order (PO), sends it for a fulfillment to a 3rd Party System using industry standard XML,
and tracks its progress. Finally, we explain change management features in the DOM
fulfillment flow, support for configurations and kits, accounting issues, and address some
frequently asked questions.
As shown in Figure 1, E-Business Suite supports capturing orders from all channels. There is
a built-in integration for orders captured through E-Business Suite front-ends – Call Center,
iStore, Sales. In addition, the orders may be captured from 3rd Party System front-ends
(Siebel, SAP, legacy) or directly from customers and distributors through either EDI or
OAGI-compliant XML using standard Order Import feature of Oracle Order Management.
The Order Import together with E-Business Suite’s central repository of all customer and
items (see data layer in Figure 1) enables capturing orders from any channel.
For more information on Order Import and central repository of customers and items, please
refer to Oracle Order Management, Oracle Trading Community Architecture, and Oracle
Inventory documentation.
In this section, we discuss in detail the most common DOM flow where Oracle E-Business
instance captures the order, generates a Purchase Order (PO), sends it for a fulfillment to a
3rd Party System using industry standard XML, and tracks its progress. The minimum
requirement for these flows is Oracle E-Business Suite 11i.9. In the document, we note
enhancement introduced in 11i.10.
We start the section with a flow that covers capturing an order from a customer and sending it
for fulfillment to a 3rd Party System in the form of a PO. Then, we explain change
management features, support for configurations and kits, and accounting issues.
The Figure 2 shows the DOM flow where orders are captured from multiple channels and
brokered for fulfillment in a form of a PO to 3rd Party Systems. Note that the flow is
modeled using standard Drop Ship flow of Oracle Order Management. The only difference
is that 3rd Party System is modeled as a supplier.
To demonstrate this flow, we setup two ERP instances (Figure 3):
The order can be either created through one of E-Business Suite front-ends, or it can
be imported through EDI/XML from customers, distributors, or 3rd Party Systems.
For demo purposes, we create the order using standard Oracle Order Management
UI.
For items shipped through DOM/Drop Ship flow, the source type can be defaulted
to ‘External’ by setting organizational item attribute ‘Default SO Source Type’ to
External (Organization Item window, Order Management Tab). The initial sequence
for defaulting the Source Type is:
The workflow stopped at the Create Supply – Line subprocess. The Create Supply –
Line subprocess below shows that the workflow proceeded down the ‘Drop Ship’
branch because the order line source type was ‘External’.
The next step after Requisition is imported is to create Purchase Order from the
Requisition. Navigate to Purchasing → AutoCreate form and type in the Requisition
number.
• Shipping Instructions
• Packing Instructions
• Customer PO
• Customer PO Number
The next step is to approve the PO (screenshots below). Note that steps 2-4, from
Requisition Import to PO Approval can be automated as explained in section 3.3.1.
Once the PO is approved, the next step is to transmit the PO document to the 3rd
Party System. PO supports both industry standard XML (OAGI
PROCESS_PO_007) and EDI (850) as delivery mechanisms. For more information
see Oracle XML Gateway User’s Guide and Oracle e–Commerce Gateway User’s
Guide.
The 3rd Party System needs to be setup in the XML Gateway in order to be able to
receive Purchase Orders. Like in the case of the Drop Ship flow, we model the 3rd
Party System as a supplier ‘Star Gate Ltd’ in the XML Gateway setup (screenshots
below).
Step 6: Import PO
(3rd Party System)
Note that in the 3rd Party System, the central DOM instance is modeled as a
customer Vision Operations.
With the correct XML Gateway setup, Oracle Order Import can import Purchase
Orders as shown in the workflow below.
The imported Sales Order can be found in the 3rd Party System by querying for the
PO generated in the central DOM instance.
Note that the Order Import incorrectly defaults the ship-to address at the line level to
the address at the header level (screenshot below). As explained earlier, this is caused
by the missing PARTNRIDX field in the generated PO XML document. This
problem needs to be fixed in the Purchasing. Note, however, that other 3rd Party
Systems and future versions of Oracle E-Business Suite may be able to able to import
In this step, 3rd Party System fulfills the order. This may include getting the items
from stock or manufacturing them or any other form of fulfillment. The items on
the order are then shipped to the customer (Business World) and an ASN is sent to
the central DOM instance to inform it of the items shipped.
Oracle Purchasing supports several ways for importing ASNs from 3rd Party
Systems: XML, EDI, iSupplier Portal. The ASN is used to perform a logical receipt
for invoicing and costing purposes. The receipt is a logical receipt because the items
are not physically sent to the central DOM instance but to the end customer.
For the demo of ASN functionality, we used Oracle iSupplier Portal. Note,
however, that for real DOM implementation you may want to use EDI of XML in
order to eliminate the need for users of 3rd Party Systems to interact with the
iSupplier Portal running on the Central DOM Instance. Following screenshots show
how ASNs are created in the iSupplier portal.
Once an ASN is received through either XML, EDI, or iSupplier Portal and stored
in Receiving interface tables, the Receiving Transaction Processor needs to be run to
transfer records from Receiving interface table to headers and lines table. At
customer sites, Receiving Transaction Processor should be setup to run in regular
time intervals. In our demo, we manually run the Receiving Transaction Processor
(with Purchasing responsibility) as shown below.
After ASN has been imported into the central DOM instance, a logical receipt can
be performed in the Receiving. The receipt is logical because physical transfer of
items is performed from the 3rd Party System to the customer and not from the 3rd
Party System to the Central DOM Instance.
Note that steps 10-11, from ASN Import to Logical Receipt can be automated as
explained in section 3.3.2.
Drop Ship Tab of the ‘Additional Line Information’ Action shows that quantity 1 of
’00 Drop Ship Item’ has been received.
Invoicing of DOM orders works in the same way as invoicing of standard orders
because the same order line workflow is used.
Currently, there is no support for importing freight charges incurred by the supplier
(3rd Party System) and any such charges would need to be manually entered in OM
as standard charges.
After invoicing is done, the Order Line workflow closes the order line, which in turn
triggers the closing of the whole order (once all the lines are closed).
While we put checking of the order progress as the last step in the flow, the
customer (Business World) can check the order progress in the Oracle Order
Information Portal at any point in the flow as soon as the order is entered.
Note that Shipment details are currently not available in the Order Information
Portal for Drop Ship flow and consequently for the DOM flow. This gap should be
fixed in one of the subsequent releases.
This was the last step of the DOM flow. In the next section, we explain how Oracle
Order Management supports change management for DOM orders.
In this section, we explain the change management features that are available with
11i.9 and 11i.10 for each of the four possible change management scenarios in
Distributed Order Management flows:
In 11i.9, data changes are not synchronized between Order Management and
Purchasing. All changes, except split and delete operations, are allowed on the Sales
Order Line irrespective of the status of the Requisition or PO in the Purchasing
system. Similarly, Purchasing allows most of the changes on the Requisitions and
Purchase Orders. Order Management “Sales Order and Purchase Order
Discrepancy Report” is used to view the difference between Sales Orders and
associated Purchase Orders in order to identify where manual changes need to be
made.
In 11i.10, the time consuming manual process of changing both the Sales Order and
Purchase Order (PO) is replaced with the automated change management where
user initiated changes on the Sales Order trigger changes on the associated
Requisitions and POs. For example, changes made on Sales Order Lines, such as
Ship To Location and Quantity, are propagated to Requisitions and Purchase
Orders. If a change cannot be performed on the Requisition or Purchase Order due
to the document status, then the user change will be rejected and a message
explaining the reason for failure will be issued. Sales Order changes are supported as
long as the Purchase Order can be changed. If the Requisition import is not run and
the Requisition request is still in the Requisition interface, then the interface record
will be updated. If a Requisition or Purchase Order exists for the Order Line, OM
will call a PO API that will accept the updated data elements and cascade the change
to the Requisition or PO.
Update will be allowed under the Requisitio Requisition PO Shipment If multiple Supply Source exists
following conditions: n Interface Line and and Distribution (Example: Multiple Requisitions/POs
row will be Distribution quantity will be linked to the same Sales Order Line),
Requisition: not canceled or finally updated will be updated with the then special logic is used to select
closed with updated revised quantity. Requisitions that need to be changed.
PO Line quantity Special Logic:
revised with revised
will be updated - First, change the Requisitions
PO Header: must not be in canceled, quantity. quantity. to reflect the new that do not have PO's
frozen, finally closed or In Process
shipment - Second, change the PO's that
quantity. are not approved or partially received or
PO Line: must not be canceled, finally ASN received.
closed. - Last, change the PO's for
Quantity PO revision
number will be which the changes are allowed. Note that
Increase/ PO Shipment: must not be canceled. there could be earlier quantity decreases
incremented.
Decrease that could have resulted in canceled
Additional Validation for Quantity Requisitions.
If the PO was
Decrease: originally in an
New quantity must be greater than or approved state, OM added a removable constraint that
equal to the greater of quantity received disallows a change if the PO or Release is
Change Order
or quantity billed or quantity approved. If there are multiple Req’s
workflow will be and PO’s, then change is not allowed if
shipped(ASN received) for the shipment.
invoked to all the PO’s or Releases are approved.
approve and
communicate
change to the 3rd
Party System.
Same as above. Requisitio Requisition PO Shipment If multiple Supply Source exists(
n interface line will be will be canceled. Multiple Requisitions/POs linked to the
PO Header: can be in approved, rejected, row will be canceled same Sales Order Line) , then all of them
Complete are canceled.
frozen, reserved, closed for receiving or deleted. PO revision
Cancellation closed for invoicing state number will be OM added a removable constraint that
incremented. disallows a change if any one of the
PO Shipment and Distribution: The related PO’s or Releases is approved.
In 11i.9, Purchasing can communicate Purchase Order changes to 3rd Party System
through either iSupplier portal or XML/EDI Change PO transactions. For more
information refer to the following documentation: Oracle Purchasing User Guide,
Oracle Purchasing 11i XML Transaction Delivery Setup Guide, Oracle XML
Gateway User’s Guide, and Oracle e–Commerce Gateway User’s Guide.
In 11i.10, the change management functionality has been enhanced to incorporate
new attributes propagated to Purchase Order from the associated DOM or Drop
Ship Sales Order:
• Shipping Instructions
• Packing Instructions
• Customer PO
• Customer PO Number
Once a 3rd Party System agrees to fulfill the Purchase Order by sending PO
Acknowledgement, it cannot directly modify the Purchase Order in the central
instance. Instead, all Purchase Order changes need to be made to the original Sales
Order Line.
In 11i.9, data changes are not synchronized between Order Management and
Purchasing, and Purchasing allows most of the changes on Requisitions and
Purchase Orders. Order Management Sales Order and Purchase Order Discrepancy
Report is used to view the difference between Sales Orders and associated Purchase
Orders in order to identify where manual changes need to be made.
In 11i.10, DOM/Drop Ship Sales Orders and associated Purchase Orders are
synchronized, and certain types of changes like Ship To Location are no longer
allowed. Changes to the Purchase Order in DOM/Drop Ship flows should be made
indirectly by modifying the associated Sales Order and having the changes propagate
to the Purchase Order.
Buyer cannot change the following data elements on Requisitions and Purchase
Orders that are linked to a Drop Ship Sales Order:
• Inventory Item
• Need By Date
Support for PTO Models, ATO Models, and Kits for Distributed Order
Management flows is the same as for the Drop Ship flows.
Individual lines under PTO Models and Kits can be sourced and shipped from
different suppliers (3rd Party Systems) or shipped internally based on the sourcing
rules for each of the items.
However, Ship Model Complete PTO Models are not supported for two reasons: •
Since each line may be sourced from a different supplier (3rd Party System),
directly to the customer, it is not possible to enforce the ‘Ship Model Complete’
constraint
• Schedule date on each line may be different if some lines are sourced
internally and some externally; Ship Model Complete lines by definition need to be
scheduled for the same date.
For ATO Models, the configured item (either created or matched to an existing one)
follows its own seeded flow. Like the standard item flow, configured item flow is
Drop Ship/DOM enabled making it possible for 3rd Party Systems to fulfill orders
that contain configured items. Communicating configuration details to the supplier
(3rd Party System) is supported through iSupplier Portal, EDI, and XML.
For ATO Models, changes to the source type are always done at the top level Model
line, and are then cascaded to the child lines. Changes of the source type for the
option /class level lines are not allowed. The source type for the top level ATO
Model line is defaulted as specified by the defaulting rules.
3.2.4. Accounting
Logical receipt
Financial Flow
Physical Flow
In this flow, the physical transfer of goods occurs between the 3rd Party System
modeled as a Logical Supplier and the Customer. The associated financial flow
includes two additional nodes: (1) a Fulfillment Org in the Oracle Central Instance
setup to represent the Fulfillment Org in the 3rd Party System for I/C accounting
purposes, and (2) a Sales Org in the Oracle Central Instance that captures the
Customer’s order.
In order to enable I/C transactions and I/C invoicing in the Inter Company DOM
flow, I/C Relations need to be setup in ‘Intercompany Relations’ form (Inventory >
Setup > Organizations > Intercompany Relations). An I/C relation needs to be
MMT: Fulfillment
Org → Sales Org
(Accounting txn)
(I/C Invoicing)
(Logical I/C (Cost Processor) Dr I/C Receivable 10
shipment) Dr OU1 Inventory 10 Cr I/C Revenue 10
(Logical I/C receipt) Cr I/C Accrual 10
(Cost processor)
(I/C Invoicing) Dr I/C COGS 5
Dr I/C Accrual 10 Cr OU2 Inventory 5
Cr I/C Payable 10
Transaction T1 - Sale and Shipment in the Fulfillment Org – OU2 (3rd Party System)
At the time of sale and shipment in the 3rd Party System, OU2 Inventory account is
credited and an Internal COGS account debited with the amount of cost of goods
sold. In addition, an Internal Receivable account is debited and an Internal Revenue
account credited at the PO price. Note that accounts for COGS, Receivables, and
Revenues need to be specially designated as Internal accounts because the sale is
made within the same OU– from Fulfillment Org in the 3rd Party System to
Fulfillment Org in the Oracle Central Instance. For the same reason, the PO price
should always be the same as the COGS in the 3rd Party System.
Internal COGS, Receivables, and Revenues should not be included in the company’s
overall COGS, Receivables, and Revenue accounts. They should be setup as
separate natural accounts and should not be included in summary accounts or
account hierarchies for company’s COGS, Receivables, and Revenues. Transaction
T2 - Receipt in Fulfillment Org – OU2 (Oracle Central Instance)
The Fulfillment Org in the Oracle Central Instance is a logical organization
representing the actual Fulfillment Org in the 3rd Party System. It is necessary to
have this logical Fulfillment Org in order to enable the automatic Inter Company
accounting and invoicing. The logical Fulfillment Org in the Oracle Central Instance
and the actual Fulfillment Org in the 3rd Party System should use the same value for
the company segment in their accounts and accounting entries should be imported
into the same Set of Books (sharing the same Chart of Accounts and Accounting
Calendar).
• (Cost Processor) OU2 Inventory account credited and I/C COGS account
debited at the PO price.
• (Cost Processor) OU1 Inventory debited and I/C Accrual account credited at
the Transfer price
• (I/C Invoicing) OU2 I/C Revenues credited and I/C Receivables debited at
Transfer price
Intra Company accounting flows apply to the case where the Sales Organization and
Fulfillment Organization are in the same Operating Unit and there are no Inter
Company Payables, Receivables, Revenues, or COGS. Intra Company flows are
further divided based on whether accounting entries in the 3rd Party System are
recorded or not:
In this scenario, accounting entries are recorded in the Fulfillment Org (3rd Party
System) and are imported into the same General Ledger and Set of Books as the
accounting entries of the Sales Org (Oracle Central Instance). The accounting
entries need to be imported into the same General Ledger because Fulfillment Org
and Sales Org belong to the same Operating Unit.
In the Intra Company accounting flow shown in the Figure 6, physical transfer of
goods occurs between the 3rd Party System (modeled as a Logical Supplier) and the
Logical receipt
Financial Flow
Physical Flow
Now, let’s examine accounting entries in the Intra Company DOM flow (Figure 7).
Time Transaction Description Sales Org Fulfillment Org
Accounting – OU1 Accounting – OU1
(Oracle Central Inst.) (3rd Party System)
T1 Sale and Shipment Dr OU1 Internal Receivable 5
in the Fulfillment Cr OU1 Internal Revenue 5
Org 3rd Party
Dr OU1 Internal COGS 5
System
Cr OU1 Inventory 5
T2 Receipt in Sales RT: Receipt in (Receiving Processor)
Sales Org Dr OU1 Clearing 5
Org Oracle Central
Cr OU1 Internal Accrual 5
Inst - Receiving Oracle Central Inst
Desktop Form
T3 Deliver in Sales RT: Deliver in
Org Oracle Central Sales Org
Inst - Receiving Oracle Central
Desktop Form Inst
MMT: PO receipt
in Sales Org
(Accounting txn) (Cost processor)
(Logical PO Dr OU1 Inventory 5
receipt) Cr OU1 Clearing 5
(AR Invoice)
OU1 Reconciliation
Dr Internal COGS 5
Dr COGS 5
Dr Internal Receivable 5
Dr Receivable 20
Cr Inventory 5
Cr Internal Accrual 5
Cr Internal Revenue 5
Cr Revenue 20
Transaction T1 - Sale and Shipment in the Fulfillment Org (3rd Party System)
At the time of sale and shipment in the 3rd Party System Fulfillment Org, Inventory
account is credited and an Internal COGS account debited with the amount of cost
of goods sold. In addition, an Internal Receivable account is debited and an Internal
Revenue account credited at the PO price. Note that accounts for COGS,
Receivables, and Revenues need to be specially designated as Internal accounts
because the sale is made within the same Operating Unit – from Fulfillment Org in
the 3rd Party System to Sales Org in the Oracle Central Instance. For the same
reason, the PO price should always be the same as the COGS in the 3rd Party
System.
Internal COGS, Receivables, and Revenues should not be included in the company’s
overall COGS, Receivables, and Revenue accounts. They should be setup as
separate natural accounts and should not be included in summary accounts or
account hierarchies for company’s COGS, Receivables, and Revenues.
Figure 8 Intra Company Accounting Flow (For 3PW Based DOM Flow)
The accounting entries made in the Sales Org are the same as for the case of
shipping from an internal warehouse (Figure 9).
Time Transaction Description Sales Org
Accounting – OU1
(Oracle Central Inst.)
T1 Sale and
Shipment in the Dr OU1 Receivable 20
Sales Org Cr OU1 Revenue 20
Oracle Central
Dr OU1 COGS 5
Instance
Cr OU1 Inventory 5
Figure 9 Intra Company Accounting Entries (3PW Based DOM Flow)
Transaction T1 - Sale and Shipment in the Sales Org (Oracle Central Instance)
• 3PW based DOM flow is not suitable for scenarios where 3rd Party System
needs to perform functions in addition to shipping items from the warehouse
o In many scenarios, 3rd Party Systems will perform activities in
addition to shipping the goods from the warehouse. For example,
3rd Party System may be responsible for manufacturing the item or
providing additional services based on the original Customer order.
Typically, 3rd Party Systems would start order management
workflows to perform these additional activities upon receiving a
Purchase Order. In contrast, receiving Shipment Request (940)
will typically trigger only shipping of the goods that already exist in
the warehouse.
Given these limitations, the 3PW based DOM flow is most suitable for situations
where the 3rd Party System already supports Shipment Requests (940) and Shipment
Arrival and ship sets are not supported for Drop Ship/DOM orders.
• Purchased (PO)
• Purchasable (PO)
• Stockable (INV)
• OE Transactable (OM)
• Shippable (OM)
Optional Item Attributes:
• Reservable (INV)
Oracle Corporation
World Headquarters
500 Oracle Parkway Redwood
Shores, CA 94065 U.S.A.
Worldwide Inquiries:
Phone: +1.650.506.7000
Fax: +1.650.506.7200
Web: www.oracle.com