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Back Order’ …
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
The Oracle "term" backorder is a "status" on the order line or delivery line
indicating that you have tried to release an order for picking in your warehouse,
but that the pick release was UNSUCCESSFUL because there was no available
inventory.(Backorder can be partial or complete). The Oracle term backorder does
NOT mean that you have open purchase orders for the out-of-stock item from
your vendors.
The term backorder is also used in business a little differently than in Oracle. The
term "An item is on backorder" usually means that the item is not in stock, but the
shipping company has already placed purchase orders from their suppliers to
restock the item.
Back Order is when you do not fulfill the Sales Order, or if the inventory is out of
stock for delivery to customer.
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.
What is the major difference between drop shipment and back to back order ?
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