Unable to use IB Trackable with Drop-ship Sales orders

We have a scenario where drop-ship items needs to be tracked in Installed Base.

To configure this in the system, we set the relevant attributes in Item Master --> Service tab,  create a drop-ship sales order and book it. After the order is booked, the workflow automatically completes the ship steps, and proceeds to close the order line. The drop-ship requisition / PO etc. steps are by-passed. The same item was working with the same order type in the drop-ship context before we enabled the IB attributes.

Has anyone used IB trackable items in a drop-ship scenaroi? Any suggestions / tips are much appreciated.