Overview: Drop Shipments

You ship items directly from your vendor to your customer or from another branch to your customer. In either case, the system tracks the movement of these items through a drop shipment branch.

This topic has these subtopics:

Drop Shipments from a Vendor
Drop Shipments from Another Branch
Drop Ship Branches

Drop Shipments from a Vendor

A vendor drop shipment is a direct shipment from your vendor to the customer who ordered the item. You may drop ship an item because you do not have it in inventory. You may also drop ship to save time. Your customer needs the item, and your vendor can deliver it faster than you can.

For an item to be eligible for drop shipment:

  • The vendor selected for the Preferred vendor field in the Branch Item Maintenance (IMB) or Enterprise Item Maintenance (IM) program must be active.

  • You must select the Drop ship? field on the sales order line in the Sales Order Maintenance (OE) program. If you routinely drop ship an item, you should select the Drop ship? field in the Branch Item Maintenance (IMB) program. Then the Drop ship? field on the sales order line will be selected by default.

You enter the sales order, create a purchase requisition for the item, and release the requisition. When you enter an invoice for the vender, the system receives the item. You then create a shipment and confirm it, create an invoice for your customer, and process the customer's payment.

Run this sequence of programs to process a drop shipment:

  1. Sales Order Maintenance (OE) to enter a customer sales order.

    1. Select Drop ship? field on the sales order line. If you routinely drop ship an item, you should select the Drop ship? field in that item's record in the Branch Item Maintenance (IMB) program so that the field on the sales order line is selected by default.

    2. After you complete the line, click Obligate and then Purchase. If you are using automatic obligation and have inventory at your branch, you will have to release items from obligation.

If you selected Y for the Disable purchase order firewall? option in the System Options Maintenance (XM) program (Purchasing Options) for your branch, the system creates a purchase order. If you selected N this option, the system creates a purchase requisition. If you selected V, the system creates a purchase order only if you have set up pricing and selected QA approved? field in the Vendor Price Maintenance (VMM) program.

  1. (Conditional) Requisition Maintenance (IRM) to release the purchase requisition and create a purchase order.

  2. AP Invoice Entry (NE) to enter an invoice for the vendor for the drop shipped item.

    Note
    The PO drop ship branch must be in the AP clerk's inventory group.

    1. Enter the purchase order number in the Drop ship PO no field. If this item is serially controlled, the program prompts for the serial numbers.

    2. Run the AP Invoice Register. When the final register prints, the system creates and confirms a shipment for the sales order.

  3. AR Invoice Register (RR) to select confirmed shipments to invoice and print the AR Invoice Register, which creates an invoice for the customer and updates the general ledger.

  4. Invoice Print Queue Maintenance (RPPM) to process the print queue.

OR

Invoice Print (RP) to print or reprint customer invoices.

  1. Cash Receipts Entry (RCE) to apply a payment to the invoice and print the Cash Receipt Register.

Drop Shipments from Another Branch

A drop shipment can be a direct shipment from another branch to a customer who ordered items from your branch. You may drop ship an item because you do not have it in inventory. You may drop ship to save time. Your customer needs the item and another branch can deliver it faster than you can.

To process a drop shipment from another branch:

  • The branch from which you are drop shipping the item must be in the same inventory group as your sales branch.

Run this sequence of programs to process a drop shipment:

  1. Sales Order Maintenance (OE) to enter a customer sales order.

    1. Select Drop ship? field on the sales order line.

    2. After you complete the line, click Obligate and select items at the branch from which you want to ship. If you are using automatic obligation and have inventory at your branch, you will have to release items from obligation.

If you selected the Disable transfer firewall? option in the System Options Maintenance (XM) program (Inventory Control Options) for your branch, the system creates a transfer. If you did not select this option, the system creates a transfer requisition.

  1. (Conditional) Requisition Maintenance (IRM) at the branch that is drop shipping to release the requisition and create a transfer.

  2. Branch Transfer Confirmation (ITS) or Secured Transfer Confirmation (SITS) program at the branch that is drop shipping to create and confirm shipment.

  3. AR Invoice Register (RR) to select confirmed shipments to invoice and print the AR Invoice Register, which creates an invoice for the customer and updates the general ledger. You can run AR Invoice Register from either the local or remote branch because the invoice is created for the branch that processed the sales order.

  4. Invoice Print Queue Maintenance (RPPM) to process the print queue.

OR

Invoice Print (RP) to print or reprint customer invoices.

  1. Cash Receipts Entry (RCE) to apply a payment to the invoice and print the Cash Receipt Register.

Drop Ship Branches

When you create a branch in the Branch Codes Maintenance (TBM) program, you specify a PO drop ship branch and a transfer drop ship branch, neither of which physically exists. The purpose of these branches is to serve as a holding area for drop shipments so that the system can track their movement.

The transfer drop-ship branch number can be either the remote branch or your local branch. The remote branch for a drop ship order simply sees a branch transfer going out. For example, suppose that branch BR-1 has a drop-ship branch set to DS-1.

  • A transfer is created when a drop-shipment occurs where BR-1 tells branch BR-2 to ship directly to a customer.

  • When the BR-2 processes the shipment for the transfer, the inventory on the transfer is "received" at the drop-ship branch for BR-1, which in this example is DS-1.

  • When the system confirms the sales order shipment, the inventory is "shipped" from the drop-ship branch to the customer and an invoice can be created.

  • The drop-ship branch contains only the item that branch BR-1 shipped via a drop shipment.

Each branch must have a PO DS and Transfer DS branch. However, a branch can be its own PO DS and Transfer DS branch. In this case, shipments and drop shipments will be mixed in the sales statistics tracking.