Sales with Drop Shipping: Process Activity

In the following activity, you will learn how to prepare and process to completion a sales order with items marked for drop shipping.

Story

Suppose that the FourStar Coffee & Sweets Shop (COFFEESHOP) customer ordered a variety of green, black, and fruit teas at the SweetLife’s retail store. Although the tea varieties are presented in SweetLife’s website catalog, the company does not keep tea in the wholesale or retail warehouse. When a customer orders tea, SweetLife drop-ships it from the Tea & Spices (TEACOMPANY) vendor directly to the customer who ordered the tea. To complete the customer’s request, acting as the sales manager of the SweetLife store, you need to process a drop shipment.

Configuration Overview

In the U100 dataset, for the purposes of this activity, the following tasks have been performed:

• On the Enable/Disable Features (CS100000) form, the following features have been enabled:
  • Inventory and Order Management, which provides the standard functionality of inventory and order management
  • Inventory, which gives you the ability to maintain stock items by using forms related to the inventory functionality and to create and process sales and purchase documents that include stock items
  • Drop Shipments, which provides the ability to create and process drop-shipped orders
• On the Customers (AP303000) form, the COFFEESHOP customer has been created.
• On the Vendors (AP303000) form, the TEACOMPANY vendor has been created.
• On the Stock Items (IN202500) form, the GREENTEA06, BLACKTEA06, and FRUITTEA12 stock items have been created. For each of these items, the TEACOMPANY vendor has been added to the Vendors tab.

Process Overview

In this activity, to process a sale with drop shipment, you will create a sales order of the SO order type on the Sales Orders (SO301000) form; on the Details tab, you will add the inventory items ordered by the customer. Because the items are not in stock, you will mark each of them for drop shipping by selecting the check box in the Mark for PO column and selecting Drop-Ship in the PO Source column, which means that the items will be ordered from the vendor and shipped directly to the customer. You will create drop-ship purchase orders by processing Drop-Ship purchase requests on the Create Purchase Orders (PO505000) form. Each drop-ship purchase order generated from purchase requests can be viewed and processed further on the Purchase Orders (PO301000) form and contains links to the related sales order.

After you have received confirmation that the customer has received the goods from the vendor, on the Purchase Receipts (PO302000) form, you will prepare and release the purchase receipt for the drop-ship purchase order. After drop shipping has completed, you will prepare an invoice for the customer by using the Invoices (SO303000) form.

System Preparation

Before you start processing a sale with drop shipping, you should do the following:

1. Launch the MYOB Advanced website with the U100 dataset preloaded, and sign in as purchasing manager Regina Wiley by using the wiley username and the 123 password.
2. In the info area, in the upper-right corner of the top pane of the MYOB Advanced screen, make sure that the business date in your system is set to today’s date. For simplicity, in this activity, you will create and process all documents in the system on this business date.
3. On the Company and Branch Selection menu, in the top pane of the MYOB Advanced screen, select the SweetLife Store branch.

Step 1: Creating a Sales Order

To create a sales order, do the following:

1. On the Sales Orders (SO301000) form, add a new record.
2. In the Summary area, specify the following settings:
   • Order Type: SO
   • Customer: COFFEESHOP
   • Description: Website order #00784 (tea)
3. On the Details tab, add rows with the settings shown in the following table.

   Branch	Inventory ID	Warehouse	Quantity	Unit Price
   RETAIL	GREENTEA06	RETAIL	2	22.99
   RETAIL	BLACKTEA06	RETAIL	1	23.99
   RETAIL	FRUITTEA12	RETAIL	2	32.99

   Notice that the system displays warnings in the Quantity column in each line on the Details tab indicating that the specified quantity is not available in the selected warehouse.

4. On the form toolbar, click Save. The sales order is saved with the Open status.

Step 2: Marking the Items for Drop Shipment

To mark items for drop shipment, do the following:

1. While you are still viewing the sales order on the Sales Orders (SO301000) form, for each of the lines on the Details tab, do the following:
   • Select the Mark for PO check box.
   • Select Drop-Ship in the PO Source column.
2. On the form toolbar, click Save.

Step 3: Creating a Drop-Ship Purchase Order

To create a drop-ship purchase order from purchase requests, do the following:

1. While you are still viewing the sales order on the Sales Orders (SO301000) form, on the More menu, click Create Purchase Order.
2. On the Create Purchase Orders (PO505000) form, which opens, select the unlabeled check boxes in the three lines with SO to Drop-Ship specified as the Plan Type. These are the lines that are related to the sales order that you have prepared earlier in this activity.
3. In all of the lines, specify TEACOMPANY in the Vendor column.
4. On the form toolbar, click Process to process the purchase requests you have selected.

   The system creates a drop-ship purchase order for the TEACOMPANY vendor and opens it on the Purchase Orders (PO301000) form. On the Details tab, in the Sales Order Nbr. column, review the number of the sales order to which this purchase order lines are linked.

5. In the Description box in the Summary area, type Purchase for website order #00784.
6. On the form toolbar, click Remove Hold.

Step 4: Processing the Drop-Ship Purchase Order

To process the drop-ship purchase order to completion, do the following:

1. While you are still viewing the purchase order on the Purchase Orders (PO301000) form, on the form toolbar, click Enter PO Receipt.
2. On the Purchase Receipts (PO302000) form, which the system opens with the created receipt, review the details of the prepared purchase receipt, and make sure that all purchase order lines have been added with the appropriate quantities.
3. In the Summary area, select the Create Bill check box to make the system generate the bill automatically on release of the purchase receipt.
4. On the form toolbar, click Release to release the purchase receipt.

   The system releases the purchase receipt and assigns it the Released status.

5. On the Billing tab, review the only line in the table, which shows the generated bill, and make sure that the bill has the Open status.
6. On the Other tab, notice that IN Ref. Nbr. is empty. No inventory documents need to be generated because the items are shipped directly from the vendor to the customer.

Step 5: Processing the AR Invoice for the Customer

To complete the processing of a sale with drop shipment, you need to generate an invoice to the customer. Do the following:

1. On the Sales Orders (SO301000) form, open the sales order for the COFFEESHOP customer that you have created earlier in this activity.
2. On the form toolbar, click Prepare Invoice.
3. On the Invoices (SO303000) form, which opens, review the details of the invoice to make sure that all items have been included in the invoice.
4. On the form toolbar, click Release to release the invoice.
5. Return to the sales order on the Sales Orders form, and on the Shipments tab, review the only line, which has the shipment for the order. Notice that the purchase receipt that you have processed acts as a shipment for this sales order, and the reference number link to this purchase receipt is shown in the Document Nbr. column in the only line in the table (see the following screenshot).