Drop shipping is a process of product fulfillment that occurs when items are shipped directly from the manufacturer or wholesaler to the customer. A third-party retailer facilitates drop shipping through their website and digital marketing efforts, and is able to profit off the margin created by circumventing the traditional retail supply chain.
The biggest difference between dropshipping and the standard retail model is that the selling merchant doesn’t stock or own inventory. Instead, the seller purchases inventory as needed from a third party—usually a wholesaler or manufacturer—to fulfill orders.
Oracle ERP Cloud has simplified the configurations for achieving the dropship flow with minimum steps involved and to enhance the user experience while performing dropshipping with complete view of the order status and next steps to be taken.
Lets go through the configurations required in Oracle ERP Cloud for setting up the dropship cycle and followed by complete cycle from order entry till shipping to customer.
- The following master data has to be created and should be available prior to entering an order:.
a. Customer and customer site
b. Supplier and supplier site
c. Item to be shipped to customer
d. Oracle locations
e. Inventory organization
2. Optionally create a Blanket purchase agreement with the supplier for automating the process of purchase order creation. The BPA is only required when the business do not want to manually create a purchase order.
- Setup up dropship financial flow in oracle as shown below:
Navigator > setup and maintenance > Manage drop ship financial flow
- Run the collections process for collecting all the order reference data which can be used onto the sales order.
Navigator > setup and maintenance > collect planning data
Once the above-mentioned data and configurations are performed, we can create the dropship order in order management and progress it through different stages of fulfillment.
Lets go through a complete cycle for drop ship as shown below:
Step 1. Drop order creation
a. Select the customer to whom the item has to be shipped
b. Select and add the item to the sales order line along with required quantity
c. Navigate to the supply tab and select the supplier and site
d. Submit the order
Step 2. Supply order view
a. Switch to the fulfillment view
b. Navigate the supply details tab
c. Click on the supply order hyperlink
d. View the current status of the supply order.
e. Depending on the BPA/procurement setups, user can view the purchase order number which is generated by system
Step 3. Creating a ASN against the purchase order
a.Oracle cloud has made a business process change from oracle EBS as within EBS a logical receipt and shipping activity was performed. Whereas in oracle cloud the receiving activity is completed once a ASN is created against the purchase order
b. Navigate the inventory management > receipts
c. Create ASN
Step 4. Once the ASN is created the order status will change to SHIPPED and will subsequently change to AWAITING BILLING.