Drop Shipments (Feature enabling and Set Up)

Drop Shipping: To ship (goods) from a manufacturer or wholesaler directly to a customer instead of to the retailer who took the order. In other words, Drop shipments are orders that are shipped directly from the vendor to the customer, without ever being physically received by the seller. When a sales order is received, an associated purchase order is generated and submitted to the vendor with the customer’s address listed as the shipping address. Depending on the seller’s requirements, the vendor commonly ships the drop shipments “blind” (without any information that would identify the vendor) or with the seller’s branded packing slip enclosed.

Since drop shipments will never reach your warehouse, there is no receiving step for drop shipment purchase orders. Instead, you will use the “Mark Shipped” button on the purchase order to simultaneously indicate that the line item has been shipped to the customer and fulfilled by the vendor so that it is eligible for invoicing and billing.

Enabling the Drop Shipments and Special Orders Feature

Use the following procedure to enable the Drop Shipments and Special Orders feature.

To enable the Drop Shipments and Special Orders feature:

1. Go to Setup > Company > Setup Tasks > Enable Features.
2. Click the Items and Inventory subtab.
3. Check the Drop Shipments & Special Orders box.
4. Click Save.

Setting up Drop Ship Preferences

Use the following procedure to set up your drop ship preferences.

To set up your drop ship preferences:

1. Go to Setup > Accounting > Preferences > Accounting Preferences.
2. Click the Order Management subtab.
3. In the Drop Ship P.O. Form list, select the default form to use for drop ship purchase orders.
4. Check the Automatically Email Drop Ship P.O.s box to automatically email your drop ship item purchase orders to the preferred vendor. To use this preference, enter the preferred vendor’s email address on that vendor record.

1. Check the Queue Drop Ship P.O.s for Printing box to automatically queue drop ship purchase orders for printing.
2. To print these purchase orders, go to Transactions > Management > Print Checks and Forms, and then click Purchase Orders.
3. Check the Automatically Fax Drop Ship P.O.s box to automatically fax drop ship item purchase orders to the preferred vendor. To use this preference, enter a preferred vendor on the item record and a vendor fax number on the vendor record. The Limit Vendor List on Items preference filters available vendors on sales orders and the order items page. If enabled, only vendors associated with an item appear in the Vendor list. If disabled, the list displays all vendors.
4. To drop ship or special order an inventory item where part of the ordered quantity is unavailable, choose a setting to Include Committed Quantities. The quantity ordered from the vendor depends on your setting for this preference:
   • When Disabled, click the Drop Ship/Special Order link to create a purchase order for only the backordered quantity.
   • When Enabled, click the Drop Ship/Special Order link to create a purchase order for the entire quantity ordered, not the backordered quantity.
5. To skip the sales order approval process by default, in the Default Sales Order Status list, select Pending Fulfillment. You can still change the status on each sales order you create. If Pending Fulfillment is the default sales order status, the status field on sales orders is unavailable and sales orders can no longer be edited.
   1. To edit the status of a sales order in pending fulfillment status, open the sales order and then click the History subtab.
   2. On the Fulfillments & Invoices subtab, click the Date column link to open the transaction for editing.
6. Choose a setting for the following preferences:
   • Update Drop Ship Order Quantities Automatically Prior to Shipment
   • Drop Ship Fulfillment Quantity Validation
   • Allow Both Mark Shipped Fulfillments and Receipts on a Drop Shipment Line
7. Click Save.