The cycle for Drop Ship starts with an order from your customer. Enter the Sales Order in the normal way, except that when entering the line items – be sure to tick the Drop Ship box on the line. This is the field immediately after the Inventory Item Number field and denoted with a ‘D’.
Then enter a Purchase Order to your supplier to buy the inventory. The first field on the Purchase Order Entry window is ‘Type’. This will default to ‘Standard’, but if you click on the down arrow, you will see ‘Drop Ship’. Select this. This tells Dynamics GP that the inventory on this Purchase Order will be delivered direct to the end customer…therefore you would expect GP to ask for the Customer ID and their Ship To Address?..and that’s exactly what it does – when you select the Supplier ID for the Purchase Order. So far so good.
Now…because the inventory won’t be received into your warehouse, Dynamics GP skips the Inventory Receipt stage in your purchasing cycle, and sends you straight to the Invoice stage. Enter the suppliers invoice and match it to the Drop Ship Purchase Order, and post it. In the background, Microsoft Dynamics GP takes a note that inventory has been delivered to your customer on your behalf.
Now to completing the sale! Open the Sales order and fulfil it in your normal way. Because the line item has been denoted as a drop ship line item, Dynamics GP knows to go and search for a Purchase record of the items being delivered to the customer. This it finds in the Purchase Order / Invoice above. For a positive match to take place, the Customer ID and their Ship To Address on both the Sales Order and Purchase Order must match.
What would happen if you ‘forgot’ to tick the Drop Ship option on the Sales Order line? Dynamics GP would try and fulfil the order from your own warehouse. If you had inventory in the warehouse, the order would be fulfilled. If not (depending on what options you choose), the Sales Order will go on back order. This is interesting: it means that you can enter two sales orders for the same inventory item to the same customer, and using the drop ship functionality, can fulfill one from your own inventory, and one from the drop ship process. It also means that you can combine multiple inventory items on a Sales Order, some of which will be fulfilled from your warehouse and some of which will be delivered direct to the customer by your supplier.
Purchase Order Commitments functionality continues to work in the drop ship process: – as does multicurrency, Non-Inventoried Items, purchase price variance, part fulfillment, Project Accounting…and all of the other goodies within the Dynamics GP merchandising cycle. One thing that is counter intuitive is that you must enter a Site ID on the Purchase Order line. I know, it doesn’t make sense if the stock is going direct to the customer…but it must be entered anyway, no big issue.
Finally, take note that you can designate a special Drop Ship account for inventory in your GL. This is essential to keep track of the value of inventory that has been delivered to customers on your behalf, but that you haven’t (Sales) invoiced out for yet. The set up for this account is maintained in the item’s Inventory Card.