Oracle Cloud’s Order Management and Procurement Solutions: Taking Your Supplier Drop Shipments to the Next Level

In today’s dynamic business landscape, finance professionals, accountants, procurement managers, and supply chain managers need robust tools to streamline their operations. Oracle Cloud’s Order Management and Procurement systems provide an integrated solution that optimizes business processes, increasing productivity and ensuring seamless transactions.

In this three-part series, we will explore various aspects of Oracle Cloud Order Management and Procurement solutions that will help transform your operations, creating efficient processes, utilizing automation, and enhancing user experience.

Supplier-sourced sales orders, commonly known as drop shipments, provide a way to fulfill sales orders directly from supplier to customer. This article will help you gain benefits beyond the standard drop ship solution by (1) diving deeper into available features within Oracle Cloud’s Order Management and Procurement to achieve greater automation and (2) taking a broader view across adjoining applications to secure more efficient end-to-end flows using Oracle Cloud solutions.

Why Integrate Order Management and Procurement?

Oracle Cloud‘s Order Management and Procurement systems offer a comprehensive drop shipment solution that can handle complex transactions to enhance overall efficiency. Integrating these modules allows for better communication between sales and procurement teams.

Sales orders directly initiate procurement requisitions and purchase orders, leading to faster fulfillment times and reduced errors.  These transactions are directly linked, making it easy to associate a sales order line with its related purchase order line for inquiry and traceability purposes.  An internal change order process ensures that updates to quantities and dates on the sales order will automatically update on the purchase order and vice versa, depending on where the order is in its lifecycle.  This degree of integration ensures that all departments have the most up-to-date information, which enables more effective communication through consistent and accurate transactions.

Additionally, this integration helps in better managing supplier relationships. When your supplier is ready to fulfill the purchase order by shipping material directly to your customer, an Advanced Shipment Notice (ASN) must be created in Oracle Procurement.  An ASN is a transaction that resolves the purchase order and sales order lines simultaneously by receiving against the PO and generating the SO shipment to customer, while your business partner experiences a single, seamless event.

Traditionally, a warehouse manager would log into Oracle Inventory to create the ASN on behalf of the supplier. Instead, your supplier can sign into Oracle’s Supplier Portal page and enter or upload the ASN information directly.  By automating and streamlining interactions with suppliers in this way, you can ensure timely deliveries and maintain solid business relationships. This is particularly important for procurement managers who need to manage multiple suppliers simultaneously.

Now, let us take a deeper dive into features that can help deliver an even better drop ship solution using Oracle Cloud solutions.

The Power of Automation

One of the standout features of Oracle Cloud’s Order Management and Procurement systems is the level of automation available. From sales order submission to supplier purchase order creation and approval, this automation can significantly reduce manual labor and the risk of human error.

These two main flows can be broken down into more discrete steps, offering several opportunities for process automation:

• In creating sales orders, reduce data entry time by defaulting sales order data using Oracle Order Management extensions or transformation rules
• In pricing sales orders, derive the pricing strategy and price list from customer classification or the order’s sales channel through service mappings
• In scheduling sales order demand, enable the self-healing of scheduling interruptions by running the collections and order recovery programs regularly
• In generating purchase orders from requisition lines, use the Generate Orders program rather than building documents manually and enable grouping by sales order via the procurement business function
• In approving purchase orders, configure approval rules specific to the drop ship flow for purchase orders as well as the change order flow to maximize benefits from approval automation

Fig 1.  The Drop Ship Flow

Automation ensures that each step of the sales order and purchase order processes is executed efficiently, resulting in more consistent, repeatable processes that save time and enable your teams to focus on more strategic tasks.  Building in more automation also speeds up the overall time to closure. This is particularly beneficial for finance professionals managing cash flow throughout a truly end-to-end process.

Meeting Supplier Pricing Needs

Oracle Cloud excels at meeting your supplier pricing needs using features including blanket or contract agreements.  Yet there are times when your drop ship order requires more granularity in pricing.  By deriving purchase order line prices from factors captured on the sales order, you can ensure that the pricing information is consistent and accurate per specific requirements.

Through features like service mappings, Oracle Order Management can pass information from the sales order directly into the procurement system. This means that a sales order-specific price that you negotiated with your supplier can be captured in a sales order line extensible flexfield, passed automatically to the purchase requisition line’s price and ultimately become the purchase order line’s price, eliminating the need for manual intervention.  Include the Negotiated by Preparer Flag since pricing is coming from the order line and not an agreement or the item master.  Optionally include Note To Buyer when sending information through the Service Mapping to the purchase order line.

This feature is particularly useful for procurement managers who need to ensure that they are always getting the best possible deal from suppliers.  It also helps in maintaining accurate financial records, which is crucial for accountants and finance professionals.

Linking Legacy Purchase Orders to Drop Ship Purchase Orders

One of the challenges with converting open sales orders is associating the legacy purchase order with the new drop ship purchase order

Oracle Order Management successfully meets this challenge through service mappings, similar to the technique described in the previous section.  By configuring a service mapping that passes the legacy PO number from an extensible flexfield on your sales order line to a descriptive flexfield on the purchase requisition line, Oracle will automatically copy it to a descriptive flexfield on the purchase order line if your Procurement profile option is set to allow this.  Ultimately this will enable you to directly associate the legacy purchase order and the new purchase orders coming from your sales order drop shipment.

Using Oracle Order Management service mappings in this way can deliver a clear trail of documentation for every transaction. It facilitates auditing and ensures that all financial records are accurate and easily traceable. This is particularly beneficial for finance professionals for maintaining compliance with regulations.

Learn more about how Apps Associates and our team of Oracle SCM experts can help you derive the maximum benefit and gain efficiencies in your operations in Part II of this blog series.