RE: Dropship Warehouse

[Former Member]

Hi,

Can some one give me inputs on dropship warehouse will be helpful in which business senarios

[former_member380634]

OK, now let's talk accounting....

Normally, when material is received into inventory from a vendor, SAP posts a debit to Inventory and a credit to "Accounts payable Holding" or some other such holding account. When the invoice and all inventory receiving documents are given to accounting, accounting creates the AP invoice and SAP posts a debit to "AP holding" thus erasing the holding value, and then posts a credit to the liability Accounts Payable, awaiting the payment. The net result is an increase in inventory and a decrease in cash when it is paid.

Now, please explain to me how the Drop Shipment directly from our book vendor to our customer will do this? I need to post a debit to "AP Holding" when I pay the invoice since there is no expense until a inventory item is sold, but if our Warehouse Manager did not receive the books into inventory, then there is no "AP Holding" credit in SAP to erase.

Thanks.

[Former Member]

Hi,

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.

Dropship warehouse will be helpful in which business scenarios?

A 'Drop Ship' warehouse is used when the company does not manage inventory, but receives commission for every order. This setup is selected in Administration -> Setup -> Inventory -> Warehouses.

In this scenario, the stock items are not received into the company's physical warehouse. Instead they are directly delivered by the supplier to the company's customers.

In SAP Business One, when a 'Drop Ship' warehouse is used in Sales Delivery and Purchase Receipt transactions, there are no cost of sales and stock receipts recorded in the accounts. Accordingly, there are no effects on the stocks and their valuation costs.

To determine the gross profit from Drop Ship transactions, the Sales Invoice has to be associated with its corresponding Purchase Invoice. A 'User-Defined field' (UDF) can be created in the Sales and Purchase documents to serve as an identifier for both documents.

Thanks,

Harshal

[DipenShah]

Hi Harshal,

Thanks for Understanding on Drop Ship.

Thanks and Regards,

Dipen Shah

[lorna_real]

Hello,

A 'Drop Ship' warehouse is used when the company does not manage

inventory, but receives commission for every order. This setup is

selected in Administration -> Setup -> Stock Management -> Warehouses.

In this scenario, the stock items are not received into the company's

physical warehouse. Instead they are directly delivered by the supplier

to the company's customers.

In SAP Business One, when a 'Drop Ship' warehouse is used in Sales

Delivery and Purchase Receipt transactions, there are no cost of sales

and stock receipts recorded in the accounts. Accordingly, there are no

effects on the stocks and their valuation costs.

To determine the gross profit from Drop Ship transactions, the Sales

Invoice has to be associated with its corresponding Purchase Invoice. A

'User-Defined field' (UDF) can be created in the Sales and Purchase

documents to serve as an identifier for both documents.

The above is described in Note 1087005.

Hope this helps.

Regards,

Lorna Real

[Former Member]

Dear Lorna,

In my scenario,

We just receive commision from the principal (manufacturer) for a sale.

We raise a sales order to customer and intimate the principal about the lead.

The principal delivers the product and directly raises the ar invoice to customer.

We raise a commison invoice( only the commision) to the principal for the sale given by us..

Is it possible to satisy this using drop ship warehouse?

Issue is, we dont purchase the item from the principal where as dropship forces to raise a purchase order for dropship warehouse items.

What are the financial implications in dropship warehouse?

[Former Member]

Look for the Expert Empowerment Session

on

26/02/2007 Drop Ship - Multi topic Session by Gerhard Terpelle

on SAP Portal to know more about DropShip.

[Former Member]

Hi Lorna,

I tried to view note 1087005, and I'm having trouble finding it on the portal. Is this the correct note number?

Thank you in advance for your help.

Amanda

[Former Member]

Hie Amanda,

you may refer to below links for more information in regards with Drop-shipment warehouse

[https://websmp201.sap-ag.de/~sapidb/011000358700000511412007E/CW09_Dropship_EES.pdf]

[https://websmp201.sap-ag.de/~sapidb/011000358700000165962007E/Drop_Ship_Warehouse.wrf]

you will require an S-User Id to view the above link content.

Regards,

Kuldeep

[helen_sun]

Hi

Drop shipping is when a product is shipped directly from your vendor to your customer without you holding inventory.

To work with drop ship in SAP Business One you must create a drop ship warehouse. A drop-ship warehouse does not actually contain items. It is a "virtual" warehouse for goods shipped directly from your vendors to your customers.The moment the goods "enter" the drop-ship warehouse they are shipped to the customer.

No stock postings are recorded when selecting drop-ship warehouses in documents.

When working with a perpetual inventory system, journal entries created by documents in which drop-ship warehouses are selected will not reflect the inventory value of the items received or released from a drop ship warehouse.

When you select a drop-ship warehouse in sales orders, SAP Business One opens a purchase order immediately for ordering the goods from one of the company's vendor

If you any futher concern regarding the functionality in Business One system

you could use the help file for more detailed information.

Hope this can be helpful

Best Regards

Helen Sun

[Former Member]

can some one help me how to activate the drop ship check box in ware house creation.