Cost Carrying Over in Drop Ship Processing

[zal_parchem2]

Hello Experts...

When doing a drop ship sales order, this is the following situation. Item A has cost at Warehouse 01 (stock warehouse) of $400 and cost at Warehouse 03 (drop ship warehouse) of $425.

When doing a drop ship sales order, the correct cost of $400 from WH 1 is displayed initially until the WH is changed to WH 3, then it displays WH3 cost of $425. However, when the Purchase Order Confirmation Screen is displayed, the cost reverts back to $400. We have done a test 15 times in the Demo SAP B1 and even more information is not passed on using the "Copy To" function (for example, the Delivery does not pick up any costs - it is blank when processing a drop ship).

Of course it could be changed at the Purchase Order Confirmation Screen, BUT a real simple statement comes up of why does a Sales Person have to change it when the cost is in the system and is displaying correctly on the Sales Order. From a common sense perspective of financial matters and productivity, it takes the statement even further - why even put a cost on the Drop Ship Warehouse when the system does not pick it up. It gets even worse when the Gross Profit comes out to being 100%. The whole drop ship process seems to be a mystery in the SAP Documentation.

QUESTION: Is there some setting that needs to be changed so that the correct drop ship cost is carried throughout the system automatically and all of this wasted time is cut out?

The user guide published on Februrary 2009 covering this topic does not say anything about COMPLETE drop ship processing and cuts off at the display of the Purchase Order Confirmation Screen on page 6.

Thanks - Zal

[Former Member · Accepted solution]

Hi Zal,

Thanks for your trust. For drop ship processing, I understand it only applies to consignment sales. Is that on your case?

Gordon

[zal_parchem2 · Accepted solution]

Thanks for reply, Gordon - this gets more interesting the more I look into this...

There are two warehouses set up on the Demo DB SAP B1 provides - "consignment" (actually called "ConsigmentL") of warehouse 40 and "drop ship" of warehouse 30. The difference between them is that the "Drop Ship" box is checked on WH40, but not WH30. From my understanding consigments sales are different than drop ship sales (at least that is the way it was explained to me).

Definitions - consigment = I have the product in my warehouse and I am selling it for a particular entity in a contractual agreement for a certain percentage of what I generate on the sales order ("Nettable" box is checked on WH Set Up Window), drop ship = I do not have the product in my warehouse but I am purchasing the product direct from the vendor and want him to NOT send it directly to me, but ship it directly to the customer ("Drop Ship" box is checked on WH Set Up Window). Sometimes a drop ship is called a "Bounce" order. The difference in the consignment and drop ship scenarios is that drop ship requires a Purchase Order and a Sales Order connection, but consignment does not.

Since drop ship requires a purchase order and sales order connection, the dollars of the COST of the product on the sales order should equal the dollars of the COST of the product on the purchase order and the costs should roll up in the Purchasing and Sales functions as normal with the "Copy To" function, but they do not roll up - wonder why?

Hope that anwers your question, but do you know of any documentation that explains all of this? Is the "Copy To" function not working properly? There has to be some kind of reason for this happening, don't you think?

Geez - over 80 folks have looked at this and very few comments - drop ship is a pretty normal every day occurance...I have to be doing something wrong...

Thanks again - Zal

[Former Member · Accepted solution]

Your comments are correct to me. The drop ship would not = consignment. However, for the cost concern, it also relates to all your other setting such us valuation method and if it is by warehouse etc.

[Former Member · Accepted solution]

What version are you using? I have just tested this on SP01 PL07 (latest) and Item Cost does come through to both Delivery and Invoice?

[Former Member · Accepted solution]

PS: In the PO Confirmation screen, the amount there will pull from the Price List attached to the vendor, not the Item Cost, as in any Purchase Order.

[zal_parchem2 · Accepted solution]

Hello Julie - thanks for your reply...version is 2007 SP01 PL05...

Maybe the problem with the cost being carried over with "Copy To" was corrected in PL07? Will go to the release notes...

This is getting to be a comedy - again, I am using and testing this function on SAP's provided "vanilla" Demo database with no changes, so if SAP cannot set up drop ship functioning properly on their own Demo, who can???

OK - yes, the cost of the product is pulled from the associated vendor which is problem number one - for companies that sell both inventoried and drop ship items on a regular basis, the cost of that product is never the same. For vendors, onsies and twosies being shipped to our customers incurs a higher expense than a shipment to one site of 100 or 200 items and they will quote a different cost to cover those expenses. It just makes common sense that the vendor's incurred expenses to fill the drop ship versus shipment to our waregouse is going to be different, doesn't it? Therefore the actual cost and dollars paid for the product will be different from WH01 over WH03 (or any other area - Base Price versus Discount Purchase Price), and the gross profit is going to be different between the two versions of a sales process. Creating a thousand different price lists certainly is not the answer!

And this begs a very simple question then - why even put in an item cost on the Item Inventory Tab for the drop ship warehouse AND why does the system pull the WH 03 dollar amount into the Sales Quotation/Order Gross Profit Base Price field but not transfer it to the Purchase Order? Why create a constant flood of erroneous Gross Profit information on drop ship AR invoices unless you are happy to have wasted productivity?

I think the real problem is that this is obviously a very bad design for an SAP B1 function and folks are doing all of these workarounds and extra steps (at least in PL05 so far) to get their work done. I think it is hilarious that when trying to enter a ticket directly to SAP on this, I got the reply that "that is the way the system is designed" (albeit bad design and no effort to direct me to documentation) and had to post my question here according to new SAP B1 support standards.

I am going to close this question as there really is not an answer except "way the system is designed" and this thread is leading nowhere.

Many thanks to everyone who took the time to reply - lol - of course, thanks with points!!!

Take care all - Zal

[zal_parchem2]

Gordon, Kerstin, Suda - any help you folks can provide???

Thanks - Zal