A special-order inventory purchase arrives at your warehouse before customer fulfillment. A normal drop shipment goes from the vendor to the customer and uses Mark Shipped on the linked PO. In this example, special-order fulfillment posts inventory and COGS, drop-ship fulfillment has no GL posting, and the drop-ship vendor bill posts the configured direct-shipment cost and payable.
Birch Point Services orders seven AX-860 mounting kits through the warehouse and seven DX-930 enclosures on a separate drop-ship order. North Mesa Components supplies both. Alex Morgan and Example Supply Co. are fictional person and operating-company names.
Before you start
Enable Drop Shipments & Special Orders and use eligible inventory items with a preferred vendor, purchase price and valid subsidiary/currency setup. This example uses Advanced Receiving and Advanced Shipping. Review the account’s drop-ship PO form and document-handling preferences with the administrator. Check role permissions and approval rules for each transaction. The warehouse item is non-numbered and needs no bin assignment in this example; other items may require bins, lots, serial numbers or inventory status. Non-inventory items, intercompany flows, costing methods and custom GL rules can produce different postings.
1. Compare the item defaults
Under Lists > Accounting > Items, open AX-860 mounting kit. Confirm Special Order Item is selected and Drop Ship Item is clear. Review the preferred vendor and purchase price. On DX-930 enclosure, verify the opposite procurement default and its vendor setup. The item checkbox supplies a default; the sales-order line’s Create PO value determines that line’s procurement method. The two item defaults are mutually exclusive. Review the item’s Inventory Asset and COGS accounts. For ordinary external drop shipments, verify Default Dropship Expense Account in Accounting Preferences separately.
2. Trace the special-order PO
Open the Birch Point Services order for seven AX-860 units. Confirm Create PO is Special Order and check for an existing PO link. Complete sales-order approval if required, then follow the generated purchase-order link. Check North Mesa Components, the item and quantity, the originating order and the warehouse destination. PO approval may require a separate step.
3. Receive, fulfill and inspect cost
When the goods arrive, choose Receive on the linked PO. Review location, quantity and any required inventory detail, then save the item receipt. In the ordinary flow, receipt increases inventory against the receiving/accrual account; this walkthrough inspects fulfillment GL Impact separately. Return through the PO to the originating sales order. When the quantity is eligible for fulfillment, choose Fulfill, check the warehouse, item, quantity and shipping details, record the shipment and save.
Open Actions > GL Impact on the saved fulfillment. In this example, the saved posting debits 5100 Cost of Goods Sold and credits 1200 Inventory Asset by $252.00. Accounts, amounts and timing vary with costing method, currency and accounting configuration. Read the saved transaction cost; multiplying a PO price is not evidence of the actual cost posting.
4. Follow the separate drop shipment
Open the seven-unit DX-930 sales order and confirm Create PO is Drop Shipment. Complete any required approval and open its generated PO. Check the vendor, originating order and customer ship-to address. Use Mark Shipped for this external drop shipment; Receive would change its inventory and accounting treatment. After the vendor confirms shipment, choose Mark Shipped, review the resulting fulfillment and save the Shipped record.
Open Actions > GL Impact on the saved fulfillment. The replay shows No Search Results Match Your Criteria. In this ordinary external drop shipment, the fulfillment has no GL posting and no warehouse receipt was entered. Investigate an unexpected posting in your account.
5. Save the vendor bill and compare
When the vendor invoice is available, return to the drop-ship PO and choose Bill. Review the invoice reference, date, posting period, seven-unit quantity, rates, taxes and required classifications. Save through the configured approval process. A bill pending approval may not post yet.
Open the bill’s GL Impact. Here it debits 5150 Direct Shipment Costs and credits 2000 Accounts Payable by $364.00. This is the demonstrated posting, not proof of how the account was sourced. Verify the Default Dropship Expense Account preference and actual transaction configuration; do not attribute the result to the item-level intercompany field. A drop-ship bill does not always debit an account named COGS. The warehouse branch recognized cost on fulfillment; the direct-shipment branch showed its configured cost on the vendor bill. Customer invoicing and the special-order vendor bill remain outside this walkthrough.
Common questions
What is the difference between a special order and a drop shipment?
A special-order inventory purchase arrives at the warehouse, is received, and is then fulfilled to the customer. In an ordinary external drop shipment, the vendor sends the goods directly to the customer; Mark Shipped opens the related fulfillment for review and saving.
What GL impact does special-order fulfillment have?
In this example, fulfillment of seven AX-860 units debits 5100 Cost of Goods Sold and credits 1200 Inventory Asset by $252.00. Check the actual saved GL Impact in your account because costing and accounting configuration affect the posting.
Why does the drop-ship fulfillment have no GL impact?
The normal external drop-shipment route shown here does not receive the goods into warehouse inventory. Its fulfillment has no GL posting. The approved vendor bill separately debits 5150 Direct Shipment Costs and credits 2000 Accounts Payable by $364.00 in the example.
Which expense account should I check for an external drop shipment?
Verify the Default Dropship Expense Account accounting preference and the saved bill’s GL Impact. The item-level Dropship Expense Account field is documented for Automated Intercompany Drop Ship; its presence on an item does not establish the source of an ordinary external-vendor bill’s posting.
Supporting source
Oracle documents Default Dropship Expense Account in accounting preferences and the separate intercompany scope of the item-level field.