OM Drop Ship Setups and prerequisites:

Inventory, Order Management and Purchasing Setup.

Seeded order type Mixed which has workflow for drop shipments
For customer, enter internal ship to location
All drop ship items must be defined in the item validation organization
User should be setup as a valid PO buyer
Valid item assigned to a price list
Valid customer with ship-to and bill-to locations
Valid OM transaction type for drop ship orders

Check the blog posts:
OM Drop Ship process
OM Drop ship cycle in brief
Drop Shipment Overview
Oracle Drop Ship tables
Inventory setups:
1. Inventory Setup (Define and Maintain The Item)
2. The drop ship inventory organization, item and sub inventory must be setup prior to
creating any drop ship orders.
3. All drop ship sub inventory must have the Reservable box checked.
4. Following are list of the required item attributes for a drop ship item. All of these attributes
MUST be enabled unless otherwise specified.
o Inventory Attributes:
Inventory Item, Stockable, Transactable, Reservable



o Purchasing Attributes:
Purchased, Purchaseable, Assign a purchase price and a default buyer (Optional)



o Costing Attributes:
Costing Enabled this should only be checked for items that are cost enabled, Inventory.
Asset Value this should only be checked for asset items (non-expense items)



o Order Management Attributes:
Customer Ordered, Customer Orders Enabled, OE Transactable, Default SO Source
Type: External




o Receiving Attributes:
Receipt Routing set to Direct this is not required, but preferred since it makes receiving
process one step versus two or three.


Order Management Setups:
1. Make sure the sales order line Source Type is External. If the source type is not External,
workflow will not distinguish the line as being a drop shipment and will not insert any data
into the purchasing modules requisitions interface.
2. Make sure that either the schedule ship date or request date is populated. If both of these
are null, the requisition will not be imported into the purchasing modules requisitions
interface.
3. Make sure there are no holds against the line. If there is a hold, the hold must be removed
and then the order can be progressed or the line must be manually purchased release.
4. Verify in HR, that the employee has an active status and has not been terminated.
PO Setups:
1. Make sure the Import Source parameter list of values contains ORDER ENTRY. If ORDER
ENTRY appears in the Import Source parameter list of values, then it means that the
Workflow Background Processor successfully inserted a requisition into
PO_REQUISITIONS_INTERFACE_ALL.
2. If ORDER ENTRY is not visible in the Import Source parameter list of values, then no rows
were inserted into the table. Review the setup under Order Management.
3. Make sure the Group By parameter is actually set the user wants the requisitions grouped.

Customer setup:
Ensure you have defined the Internal Ship To Locations for your drop shipment customers
(Oracle Receivables Standard Customer window, Business Purpose Details Tab).
1. Create an Internal location for your Inventory Organization.
In the Purchasing Super User responsibility:
Navigate to: Setup>Organizations>Locations







2. Assign the Internal location to the Drop ship customer
In the Accounts Receivable or Order Management Responsibility:
Navigate to: Customers Standard
The Customers - Standard form displays.
Query the Customer being setup in this form.
Navigate to the Addresses Tab and select the address that has been setup as the Ship To
location.
Select the Open button.
The Customers Addresses form displays.
In the Business Purposes Tab select the Ship To Usage.
Select the Open button.
This displays the Business Purposes Detail form:



System Administrator setups:
Change to System Administrator Responsibility
1. Verify profile option: OM: Population of Buyer Code for Dropship Lines
Navigate to Profile -> System.
Query up profile called OM: Population of Buyer Code for Dropship Lines
Set the profile value as follows:
Set value to Null to have system retrieve the buyer information from the master item
Set the value to Order Creator to let the system retrieve the buyer information from the
employee id creating the sales order. Note that the sales people need to be defined as
buyers in PO.



2. Setup PO Buyer to the User name: OPERATIONS
Navigate to Security -> User -> Define.
Query up the user name and make sure it has an employee name assigned to it that is
setup as a buyer.

Difference between "Internal" and "External" Drop-Ship
In Oracle Context External Drop-Shipping means your Oracle Order Management uses purchase orders
to outside suppliers that are automatically generated from sales orders for goods supplied directly
from the supplier. The external supplier ships the goods directly to the 3rd Party customer and
confirms the shipment through the use of an Advanced Shipment Notice(ASN).
You should take a note,Oracle uses this ASN to record a receiving transaction into inventory followed
by an immediate logical shipping transaction. From these transactions, conveyance of title takes place
and the customer can be invoiced and the suppliers invoice can be processed.
where as Internal context Drop-Shipping functions in a similar fashion. The key difference is that no
inventory transactions take place on the books of the selling operating unit; transfer of ownership of
the goods from shipper to seller to customer with the only physical movement of the goods being out
of the shipping organization.
Here is Functional test cases for Drop shipment
1)Enter an order for drop ship item
Responsibility: Order Management
Orders, Returns -> Order Organizer -> New
Under Main tab:
Enter Customer,Order Type and Price List. Verify that any defaulting takes place per rules setup.
Under Line Items tab:
Enter item (must be Purchasable), qty, schedule ship date. Ensure Selling Price populates correctly.
Under the Shipping tab:
Enter Source Type = External
Enter Receiving Org
Save the order.
2)Book the order
Hit the Book Order button.
The order header status should show Booked.
The order line status should be Awaiting Receipt.
This can be verified by viewing the Status field on the sales order line, or by going to
Tools -> Workflow Status
Note: If the line status does not show Awaiting Receipt, try manually progressing the order via:
Actions -> Progress Order
3)Run Requisition Import
Orders, Returns -> Requisition Import
Enter Import Source = Order Entry
Submit the request and verify the sales order. Check for Sales Order is updated with the req number
or not by opening the order and going to the Line Items tab. Select Actions -> Additional Line
Information
Under the Drop Ship tab you will see the requisition information.
4)Create a purchase order from the requisition
within Responsibility: Purchasing
Go to Autocreate
In the Find Requisition Lines window, enter the requisition number, clear the buyer and ship to fields
and click the Find button.In the Autocreate Documents window, select the requisition line and click the
Automatic button. In the New Document window,select the supplier and click the Create button.
Record the PO number.
5)Approve the PO
When you are able to find Purchase Order click the Approve button.Ensure the Submit for Approval
box is checked and click OK.
6)Receive against the PO
Navigate to :Receiving -> Receipts
Once you select organization, find the details by passing PO number.Now Tab through the Receipt
Header window to the Lines window.Complete the details.
7)Initiate Receiving Transaction
Receiving -> Receiving Transactions Summary, In the Find Expected receipts form, enter the PO
number and hit Find button.
You need to check the box to the far left of the Receiving line and enter a Subinventory.Save and
verify that the concurrent program Receiving Transaction Processor completes successfully.
8) Verify the transactions
Receiving -> Transactions -> Summary
Under Supplier and Internal tab, enter receipt number and hit Find button to get the details.
9)Now Verify Sales Order status updated
Responsibility: Order Management
Orders, Returns -> Order Organizer
Find details for order number and navigate to the Lines tab, find out the detail for status , it should be
'Shipped'.Shipped Qty should be updated to reflect the full quantity ordered.
(This test cases for drop shipment flow Adopted from Metalink on reader demand.)
Similar Post on Drop Shipment
Understand Drop Shipment in Order Management?
Understand Drop Shipment in Order Management? -Part II
Drop Shipment, BackOrders and Back to Back Order
Drop Shipment - Functional Setup and flow
"Internal" versus "External" Drop-Ship: Whats the difference?