Using Drop Ship Purchase Orders

The drop ship process handles sales/purchasing situations where material does not flow through the stockroom, but ships directly from Vendor to Customer. These orders are received, invoiced, paid, and cancelled (if needed) like any other Purchase Order. Once the Drop Shipment has been received, the system will automatically ship the Drop Ship Sales Order to which it is linked. Note that, prior to version 16.02.002, if one of the orders has been modified after the initial linking occurred, it's possible that the Drop Ship Sales Order will not be automatically shipped after the Purchase Order is received. See the steps in the diagnostic tips for help. Beginning with version 16.02.002, quantity changes made on the purchase order will be automatically updated on the linked drop shipment sales order. Likewise, changes made to the quantities on the drop shipment sales order will automatically update the linked purchase order. Line extensions and order totals will also be updated accordingly.

  • If a Drop Shipment is marked as "Canceled" in the "Order Type" field, the system automatically prompts the user to cancel any Drop Ship Sales Orders that are linked to the Purchase Order.
  • If a backorder Purchase Order from a drop shipment is received, the backorder Sales Order that was created for that drop shipment is also shipped.

When Drop Shipments are created, the system checks to see if an existing Ship To Location exists that matches the name of the Ship-to Company from the Drop Shipment Sales Order. If a match is found, this Ship To Location will be used to populate the "Ship-To" field on the Misc 1 tab of the Purchase Order header. If one does not exist, the system will create a new Ship To Location, link it to the Ship-to Company using this field, and populate the "Ship-to" field on the Misc 1 tab of the Purchase Order header with the new Ship To Location.

Configuration

Customers, Vendors, and Items must exist prior to entering an order for a Drop Shipment. The configuration of these items are typically completed as part of the initial Implementation process, but is documented in Managing Customers, Vendor Creation, and Designing a Part Numbering System and Creating Parts.

The "Drop Shipment Order Type" - This field, added in version 17.01.014 via Purchasing > Options, supports Work Flow functionality for Drop Shipments. Options for this field are "Purchase Order" (default) and "Requisition". See the link in the previous sentence for additional information.

Process

  1. Create a Sales Order with an Order Type of "Drop Shipment". Set the Ship-to Customer to be the destination for the drop ship order and enter lines for each item included in the shipment. Additional information regarding the sales portion of this process can be obtained via Entering Sales Orders. When creating a Drop Shipment Sales Order, the assumption is that all items will be purchased from the same Vendor.
  2. Navigate to Purchasing > Drop Shipments to view the list of open "Drop Shipment" Sales Orders in the system. This list can be filtered by Facility if desired. Using the mover form, move all the drop shipments to the right side of the screen that will be included in a single Purchase Order and click the "Apply" button. Note that the system will create a separate Purchase Order for each Ship-to Customer included in the group of Drop Ship Sales Orders in the right side of the form. Thus, if two orders are selected that each have the same Ship-to Customer, one Purchase Order will be created for the order. But, if two orders are selected that have different Ship-to Customers, two Purchase Orders will be created.
  3. Select the appropriate Vendor. This will automatically create and save a new Purchase Order for the items included in the selected drop shipments. When the Purchase Order is created, the system checks to see if an existing Ship-to Location exists that matches the name of the Ship-to Customer from the Drop Ship Sales Order. If a match is found, this ship-to location will be used to populate the "Ship-to" field on the Misc 1 tab of the Purchase Order header. If one does not exist, the system will create a new ship-to location, link it to the Ship-to Customer, and populate the "Ship-to" field on the Misc 1 tab. Additional information on ship to locations is available via Purchasing > Maintenance > Ship to Locations. Note: If any selected items have the "Vendor Part Required for Purchase" property checked on the Item Master record, and do not have a Vendor Part Cross Reference for the Vendor selected, the user will be prompted. At this point, the Purchase Order cannot be created until a Vendor Part Cross Reference is created or the property flag is unchecked on the appropriate items.
  4. If necessary, modify the line items on the order to set the Vendor pricing. If a change to the price is made, the system will automatically update the Sales Order standard cost for corrected profit reports. However, quantities on the Purchase Orders should be left unchanged to match what was sold to the customer. Note: Beginning in version 16.02.002, quantity changes made on the purchase order will automatically update the quantities on the linked drop shipment sales order.
  5. Receive the Purchase Order via Purchasing > Receive. Once the Purchase Order has been received, the linked Sales Order will automatically be shipped. If the amount received is different than the amount ordered, the system will automatically adjust the shipped amount on the linked Drop Shipment Sales Order to match what was received on the Purchase Order.

FAQ & Diagnostic Tips

The linked Drop Ship Sales Order did not ship after the Drop Shipment was received. How can I fix this?

This can be caused when the Sales Order or Purchase Order is modified after the initial linking occurred. Follow the steps below to fix the issue:

  1. Un-receive and cancel the Drop Shipment. This will also un-ship and cancel the linked Sales Order.
  2. Modify the Sales Order and delete existing lines.
  3. Add lines back on to the Sales Order.
  4. Change the Order Type back to "Drop Shipment" and save.
  5. Begin the drop shipment process again.

Note: The 'Sales History' button from the Edit Sales Order Line window displays Drop Shipment order detail history in addition to Sales Order detail history.