Setting Up Drop Shipping

When you drop ship an item, the item is sent directly from your vendor to your customer. The item is not processed in your inventory.

To set up the drop ship feature, do the following:

• Enabling the Drop Shipments and Special Orders Feature

• Setting up Your Drop Ship Preferences

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 > Enable Features.

2. Click the Items and Inventory subtab.

3. Check the Drop Shipments & Special Orders box.

4. Click Save.

Note:

Drop Shipments are a function of the Drop Shipments and Special Orders feature. After you enable the feature, an item can be either a drop ship or special order, but not both.

The table below explains the differences between special order and drop ship items:

Function	Drop Shipment	Special Order
Sales revenue tracked in NetSuite	YES	YES
Purchase order form	Drop Ship PO form	Preferred PO form
P.O. links to sale	YES	YES
Vendor ships to	your customer's address	your company's address
Inventory impact	None—when it is not received into inventory	Impacts Asset and Cost of Goods Sold (COGS) accounts upon receipt and fulfillment
Item commitment	Drop shipments do not commit.	A special order item always commits upon receipt of the linked PO—it is not committed from stock on hand.
Can be used for inventory items and non-inventory for resale items	YES	YES
Item record can default to this method	YES	YES
Item Fulfillment	Can be marked as fulfilled before or after the linked purchase order has been received.	Can be fulfilled only after the linked purchase order has been received.

Setting up Your 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.

   Note:

   The drop ship email is generated only if you update the purchase order directly. It is not generated if the purchase order is updated based on a sales order change.

5. Check the Queue Drop Ship P.O.s for Printing box to automatically queue drop ship purchase orders for printing.

   To print these purchase orders, go to Transactions > Management > Print Checks and Forms > Purchase Orders, and then click Purchase Orders.

6. 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.

7. 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.

8. 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.

9. 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

   For more information, see Drop Shipping Preferences.

10. Click Save.

After drop ship features are enabled and preferences set, you can drop ship inventory items or non-inventory for resale items.

To drop ship an item, mark the item record as a drop ship item. When the item is entered on a sales order it defaults to drop ship. For more information, see Marking an Item for Drop Shipment.

After an order with an item marked for drop shipment is approved, the purchase order is automatically created.

Related Topics

Viewing a Drop Ship Item

Selling a Drop Ship Item

Drop Ship Items

General Notices