drop shipment

[Former Member]

What do you mean by drop shipment and in which situations is it used and what are the necessary configurations to be done ? pls reply........ will def reward

[Former Member · Accepted solution]

Hi Vinayak,

Factory shipment: Items shipped directly from the factory, which are noted as Freight-On-Board (FOB), are billed an additional cost for shipping and handling. FOB shipping charges may depend on destination as well as weight.

Drop shipment : It is a type of retailing where the retailer does not keep goods in stock, but instead passes the customer's order and shipment details to the wholesaler, who then dispatches the goods to the customer directly. The retailer makes their profit on the difference between the wholesale and retail price.

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Thanks and Regards,

Sateesh.Kandula

[Former Member]

Hi

In third-party order processing, your company does not deliver the items requested by a customer. Instead, you pass the order along to a third-party vendor who then ships the goods directly to the customer and bills you. The standard sales order automatically creates a purchase requisition for the materials to be delivered by the third-party vendor.

In this scenario, the vendor sends a shipping notification. The incoming invoice from the vendor updates the billing quantity, so that the customer-billing document is only possible after entering the invoice from the vendor.

If the customer does not accept the delivered goods from the third party vendor, the customer disposes of the goods. A credit memo is issued to the customer reversing the revenue and cost of goods sold. Then a MM credit memo is created for the third party vendor. A statistical goods receipt reversal is performed for the goods in order to close out the original purchase order. The vendor credit memo may initially be blocked for payment, if previous agreement for this with vendor exists.

Thanks

[Former Member]

Drop shipment is when for example you have 3 companies: A B & C

Suppose you are company B

Company A delivers the goods directly to C while company A bills B and B bills C on its turn. This means that there are no incming goods in B (so no PO actually).

It is the same as Third-party drop shipments (also called "triangular deals").

one of the things is that you need to tick the box of EU triangular in your sales order from B to C. In one of the tabs (i think billing), there is a tickbox eu triangular.

Drop shipment (also known as dropship) is a type of order fulfillment in which the seller does not keep goods in stock. Instead, it passes the customer's order and shipment details to the manufacturer or a vendor, who then dispatches the goods to the customer directly. The retailer makes a profit on the difference between the vendor wholesale price and retail price. The drop shipment method of offering goods allows anyone to sell products without buying and stocking an inventory of those products.

Although the drop shipment concept has existed for quite some time, a growing trend toward outsourced manufacturing, specifically in the high-tech industry, has sparked a recent increase in its practice. Drop shipment is facilitated by all versions of R/3, beginning with 3.1I. In the SAP ERP Central Component, drop shipment is available in a preconfigured business scenario as "third party with shipping notification" and "third party without shipping notification." Many companies, therefore, have had the systems resources in place, but they are inexperienced at putting them to work. I offer a simplified approach to implementing drop shipment processes and show you how to take advantage of the standard features provided by SAP.

check also this link (business scenario) :http://help.sap.com/bp_blv1500/BL_US/html/Scenarios/V4G_Scen_EN_US.htm

hope this helpds

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kr

hakan