Drop Shipments of Non-Stock Items: Process Activity

The following activity will walk you through the process of preparing a sales order with non-stock items marked for drop shipping and processing this sales order to completion.

Story

Suppose that the FourStar Coffee & Sweets Shop (COFFEESHOP) customer has ordered two rare teas at SweetLife’s Store. Although these teas are presented in SweetLife’s website catalog, the company does not keep them in the wholesale or retail warehouse; they are defined in MYOB Advanced as non-stock items. When a customer orders these teas, SweetLife drop-ships them from the Tea & Spices (TEACOMPANY) vendor, which regularly stocks these teas, directly to the customer who ordered the teas. To fulfill the customer’s request, acting as the sales manager of the SweetLife Store, you need to process a drop shipment.

Configuration Overview

For the purposes of this activity, the Drop Shipments feature, which provides the ability to create and process sales orders with drop shipment, has been enabled on the Enable/Disable Features (CS101000) form.

The following entities, which you will use in this activity, have been predefined in the system:

• On the Customers (AP303000) form, the COFFEESHOP customer has been configured.
• On the Vendors (AP303000) form, the TEACOMPANY vendor has been configured.
• On the Non-Stock Items (IN202000) form, the EMPTEA and KINGTEA non-stock items have been configured. For each of these items, the TEACOMPANY vendor has been added to the Vendors tab. Also, the Require Receipt and Require Shipment check boxes have been selected for these items on the General tab. These settings are required to process drop-ship sales.

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 items ordered by the customer. Because the items are not kept 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 then create a drop-ship purchase order by processing purchase requests of the Drop-Ship plan type on the Create Purchase Orders (PO505000) form. The drop-ship purchase order generated from purchase requests, which can be viewed and processed further on the Purchase Orders (PO301000) form, contains links to the related sales order.

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

System Preparation

Do the following:

1. Launch the MYOB Advanced website with the U100 dataset preloaded and sign in to the system as a sales and purchasing manager by using the wiley username and 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 #00785 (tea)
3. On the Details tab, add rows with the settings shown in the following table.

   Branch	Inventory ID	Warehouse	Quantity	Unit Price
   RETAIL	EMPTEA	RETAIL	10	47.99
   RETAIL	KINGTEA	RETAIL	10	54.99

4. Click Save on the form toolbar to save the sales order with the Open status.

Step 2: Marking the Items for Drop Shipment

To mark items for drop shipment, while you are still viewing the sales order on the Sales Orders (SO301000) form, do the following:

1. For each of the lines on the Details tab, select the Mark for PO check box and 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. On the More menu of the Sales Orders (SO301000) form while you are still viewing the sales order, click Create Purchase Order.
2. On the Create Purchase Orders (PO505000) form, which opens, select the unlabeled check boxes in the two rows with SO to Drop-Ship specified as the Plan Type (which are the lines that are related to the sales order that you have prepared).
3. In both of the rows, make sure that TEACOMPANY is specified 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.

5. On the Details tab of this form, review the Sales Order Nbr. column, which shows the number of the sales order to which this purchase order lines are linked.
6. In the Description box of the Summary area, type Purchase for website order #00785.
7. On the form toolbar, click Remove Hold.

Step 4: Processing the Drop-Ship Purchase Order

Suppose that you have been notified that the customer has received the ordered teas. 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, click Enter PO Receipt on the form toolbar.
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 both 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 the bill has a status of Closed.

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, make sure that both 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 notice the Completed status (shown in the following screenshot), which reflects that you have processed the sales order to completion. Then on the Shipments tab, review the only row (also shown in the following screenshot), which indicates the shipment for the order. Notice that the purchase receipt that you have processed is listed as a shipment for this sales order and that the reference number of this purchase receipt is shown in the Document Nbr. column of the row (see the following screenshot).