Seems IFS Solution 239960 discuss this issue 

Please check the below answer of that solution.

“Symptom :Cannot undo delivery in an inter site flow, the system gives the error 'Cannot undo delivery
for internal customer orders' Consequences/Value Customer had situations where delivered quantities
were wrong.”

“This functionality to cancel a customer order delivery was introduced in APP 9 Update 1. In those specific developments we have not considered the cancellation of delivery in the following instances. • Multisite deliveries. (Supply code Int Purch Trans is allowed when demand code is null.) • Rental order lines. Customer Order created from Service Order, Service Contract and Work Orders, etc. Therefore that specific functionality will only be available for the external customer orders in which the demand code is zero.
But when it comes to the internal customer orders it is not available and the error message will pop
up as “Cannot undo delivery for internal customer orders”. This is a huge implementation which is beyond the support scope hence should be corrected by projects as a development. So it is advisable to bring forward this issue in the Idea Wall as a standard enhancement request.  Submitted of the IFS IDEA
WALL via solution# 242992 : Customer requests that to possibility of undo the direct deliveries when
it happening in inter-site or multi-site setup.” 

https://ideawall.ifsworld.com/ideas/5817b2712818700767f71875

Hope this info helps.

Dear Kelum,

Do you know if this IDEA was ever implemented ?

Hi @geminirajesh 
Sorry.
I’ve no idea about it.