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27 Feb 2017

Khaos Control Training Webinar – Drop Shipping

Drop Shipping Webinar

This training webinar dives into the various ways in which Khaos Control allows you to make use of drop shipping.

Drop shipping means passing orders to suppliers, who ship them on your behalf. And while it has been around for a while with respect to bulky items, it has only recently exploded with the rise of eCommerce.

Shoppers are increasingly demand the fast delivery drop shipping allows, and for those embarking on an eCommerce career, it almost eliminates inventory risk.

That’s why we’re delighted to present a webinar on this powerful aspect of modern order fulfillment. It’ll cover:

  • Configuring your system and products for Drop Shipping
  • A range of scenarios, including:
    • Drop ship items only (without auto create BO/PO)
    • Drop ship and non-drop ship items (with auto create BO/PO)
    • Drop ship items from different suppliers, with auto book-in
    • Drop shipping items, only when they’re out of stock
  • Invoice Rules and how they can impact the way you process drop ship orders
  • Creation of drop ship sales reports

If you would like to know more about Khaos Control, get in contact. Our notes from the session follow below for reference.

Introduction

Good morning and welcome to this Khaos Control Webinar.

In this session, we’ll explore the different ways in which you can drop ship goods directly from your supplier(s) to your customers.

Drop shipping – also known as Direct Delivery – comes in many forms and flavours, from trialling new lines, to outsourcing the fulfilment of bulky or high volume products.

We’ll go through and see how Khaos Control can help in all of these situations and more.

TIME: 0:35

Points to Note

Before we get started there are a few housekeeping points to note:

  1. The navigation/options bar on the right of the screen
  2. If you have any questions during this Webinar, then please put your hands up or alternatively email us via training@khaoscontrol.com
  3. There is no need to take notes as we will be uploading a recording of this webinar after the event and will also forward you a copy of our notes.

TIME: 2:12

What are we going to cover?

So, what are we going to cover during this session?

Firstly, we’re going to look at how stock items are set up as drop ship items and how System Values settings affect the way drop ship orders are handled. We’ll also take a look at how Invoice Rules can be set up to modify the way drop ship orders are processed.

We’ll then look at some examples of how Khaos Control deals with some actual sales orders involving drop ship items

The scenarios are:

  1. An order containing drop ship items only (with and without auto create BO/PO)
  2. An order containing both drop ship and non-drop ship items (auto create BO/PO)
  3. An order containing drop ship items from different suppliers, with auto book-in
  4. Drop shipping out of stock items
  5. Stopping the automatic creation of Purchase Orders for Customers outside their terms.

Finally, we’ll look at how you can report on your outstanding drop ship back orders.

If you have any other examples you would like to share during this webinar, then please use the chat facility, email us via training@khaoscontrol.com.

TIME: 3:32

Creating a Drop Ship Stock Item

What is Drop Ship?

Drop ship is the delivery of goods direct from the supplier or other third party to the customer (also known as direct delivery).

To identify an item as drop ship, we’ll need to tick the Drop-Ship item check box in the options screen, as you can see in the item GGJ (Giant Garden Jenga)

  • Load Stock Item GGJ (Giant Garden Jenga) and go to Options tab.

A stock controlled drop-ship item will not have stock assigned to it and will go into the Backorder lists even if there is stock available.

A drop-ship stock item is treated differently depending whether it is stock controlled:

  • Stock Controlled drop-ship item – the sales order goes into Awaiting Stock and the invoice is £0.00. This will wait here until the stock items are booked into stock even though they are ‘virtual’ for example if the supplier informs you that the goods have been despatched. The sales order is then processed and the invoice has the correct amount listed
  • Non-Stock Controlled drop-ship item – the sales order goes into staging and has the appropriate price listed on the invoice. The sales order can be processed but will have zero amount of stock assigned.

TIME: 6:01

System Values

So now that we’ve looked at how a drop ship stock item is created, let’s look at how the system can be configured to handle drop ship orders. We do this in System Values | Sales | Backorders

  • Open System Values | Sales | Backorders.

The first thing we can do is to decide whether to automatically book in Purchase Orders created by the system as the result of the sale of a drop ship item, or, for that matter, any out of stock item.

We can either turn this option off (Show Drop Down), or turn it on for drop ship items only or for backorder and dropship.

Ticking the Drop ship direct option will use the customer’s address as the delivery address for back-ordered purchase orders – we’ll see how this works later.

Ticking the Dropship only when out of stock option will mean that if you have stock of a drop ship item (for example as a result of a customer return), then it will be supplied from your stock, rather than drop-shipped. You’ll still have the option to drop ship on an order by order basis, if you wish.

Ticking the Auto Create BO/PO (Dropship) option will automatically create a Purchase Order for drop ship items when the sales order is saved. Don’t forget you can use this in conjunction with the option we saw earlier and automatically book the purchase order in as well!

Note that for this to work, the item must have only one preferred supplier and the order must be fully pre-paid. The system can be set to ignore the payment restriction – just let support know if you want this option enabled.

Stop Auto PO creation when outside payment terms will prevent automatic creation of Purchase Orders when the customer’s order would go into terms hold, for example if a customer is over their credit limit or is overdue with an invoice payment.

Allow Auto PO creation when Sales Order is on Account will treat orders from account customers as fully paid for the purposes of creating Purchase Orders, unless they have triggered a terms hold rule.

Split Drop Ship Direct Purchase Orders will split auto-created drop ship and back order Purchase Orders so that the dropship POs will have the direct delivery address, and the backorder POs will be non-direct delivery. This can be useful if you have a varied mix of drop ship and non-drop ship stock items.

TIME: 10:05

Other things to consider when setting up

  • Check you have valid email addresses recorded against your suppliers
  • Create your email templates – we’ll see an example of this later
  • Ensure that all your drop ship stock items have a preferred supplier set.

TIME: 11:20

Let’s have a look at some examples:

Scenario One (a) – Order with Dropship Item (without auto create BO/PO)

In this very basic example, we’ll create an order for an item marked as drop ship that we don’t carry stock of, without the auto create BO/PO option enabled.

  • Create a New Sales Order for [JG] Jayne Griffin
  • Add Item [GGJ] Giant Jenga
  • Note the orange highlight – this indicates a drop ship item
  • Save the Order

Note the Order has gone into awaiting stock in the Sales Invoice Manager.

  • If we go to the Back Orders (Stock Assignment) screen (right click on the item and select Goto | Backorder Assignment | for Stock Item), we notice 2 things:
    • The assignment for this order is postponed as it is drop ship and won’t have stock assigned from our stock
    • There is a note in the availability column identifying the item as being delivered direct from the manufacturer (this is set up in the Availability field in the stock item’s record).
  • In this scenario, we would go back to the Sales Order, green select the item and click the BO/PO button to create the Purchase Order (show)
  • Select the Supplier DABS in the lookup
  • Answer ‘Yes’ in the popup asking if we want the items delivered direct to the customer
  • Check out the delivery address in the created PO by printing the PO
  • Ctrl + L – clear screen.

When using this scenario with a non-stock controlled drop ship item, it’s important to remember to use the BO/PO button, as otherwise the system will treat the order as 100% fulfilled and allow it to be processed.

Scenario One (b) – Order with Drop Ship Item (With Auto Create BO/PO Enabled)

If we enable Auto Create PO/BO, we don’t have to remember to do this! – let’s take a look:

  • Enable auto create BO/PO (dropship) in system values. (no need to restart)
  • Create a New Sales Order for [JG] Jayne Griffin
  • Add Item [GGJ] Giant Jenga
  • Save the Order
  • You’ll see that the system has automatically created the necessary Purchase Order
  • The order still goes into Awaiting Stock in Sales Invoice Manager as the Purchase Order has not yet been booked in
  • Print the Purchase Order and check out the delivery address
  • Ctrl + L – clear screen.

TIME: 17:30

Scenario Two – A Sales Order with Drop Ship and Non-Drop Ship Items (with auto create PO/BO – account customer)

In this example, we’ll enable the auto creation of BO/PO for drop ship items only and create a mixed sales order of a drop ship item and a non-drop ship item that’s out of stock. We’ll also enable the option that enables us to auto create purchase orders for account customers

  • Enable Split Dropship Direct Purchase Orders and Allow Auto PO Creation when Sales Order is on Account in system values (no need to restart)
  • Create new sales order for [UE] Universal Export Ltd
  • Add 1 x [GGJ] Giant Garden Jenga (drop ship)
  • Add 1 x [FFDK] Duvet Case King (non-drop ship)
  • Save The Order
  • The system will create a purchase order for the drop ship item only
  • Going to the Sales Invoice Manager (Ctrl + i), the order is now in awaiting stock and is 0% fulfilled
  • Let’s book in the newly created Purchase Order (check out the delivery address)
  • (Go to the PO, create Delivery Note and book in.)
  • By refreshing the awaiting stock screen in Sales Invoice Manager, we can see that the order is now 50% fulfilled
  • The non-drop-ship item will now be on back order as normal
  • Ctrl + L.

TIME: 20:25

By enabling the auto book-in option, we can automate the process still further so the order can potentially be released as soon as the Purchase Order is created.

Scenario Three – A Sales Order with Dropship Items from Different Suppliers, with auto book-in of BO/PO Purchase Orders

Now we’ll create a sales order containing drop ship items from different suppliers with auto book-in enabled.

  • Enable Auto Book In for Drop Ship Direct Purchase Orders Only in System Values *(Khaos Control needs restarting)*
  • Create a new Sales Order for [UE] Universal Export Ltd
  • Add 1 x [805] Giant Draughts
  • Add 1 x [GGJ] Giant Jenga
  • Goto the Stock Items and show they have different suppliers
  • Save the Sales Order.

Note that 2 POs have been created

  • Go to one of the POs, (right click on the item and Goto Purchase Order BO) – right click in the PO grid and Goto Delivery Note – this has been auto-delivered in
  • Order immediately goes to the released stage in Sales Invoice Manager as the booked in stock has been assigned. The order can now be processed through Sales Invoice Manager
  • Open Sales Invoice Manager
  • Use F4 Filter to Filter for Drop Ship Invoices
  • The order(s) can then be selected and dropped straight into issue (drag and drop to Issue)
  • The invoice(s) can then be printed (Click on Order Stage Reports and Print Invoices)
  • The order can then be issued
  • Ctrl + L.

TIME: 25:30

Scenario Four – Drop Shipping an out of stock item

You can arrange for an out of stock item to be drop shipped to the customer, even if the item is not normally flagged as a drop ship item.

  • Create a new Sales Order for [JG] Jayne Griffin
  • Add Item [TM024] Large Linen Box
  • Save the Order
  • Green select the item and click the BO/PO button
  • Select JDS in the supplier lookup
  • AnswerYes’ in the popup asking if we want the items delivered direct to the customer
  • AnswerYes’ in the popup asking if we want to book the goods in automatically
  • Check out the delivery address on the PO.

Note that the Sales Order will now be in the Released stage in Sales Invoice Manager

  • Ctrl + L.

TIME: 27:30

Stop Auto PO When Outside terms

You might not want to commit to creating a purchase order for a customer who is already breach of their credit terms. Fortunately, the system can prevent this from happening.

  • Enable Stop Auto PO Creation when outside payment terms [Terms Hold] in System Values (no need to restart)
  • Go to Sales Invoice Manager / Edit Invoice Rules – Terms Enforcement Tab
  • We need to set up a terms enforcement rule that the system will assess the order against in order to prevent the purchase order being created
  • Set a rule to move orders into terms hold if the customer is more than 5% over their credit limit
  • Create a new sales order for [CD] Computing Department
  • Add item [GGJ] Giant Garden Jenga
  • Save the Order.

Note that no Purchase Order is created and a warning pops up to say that the order has been moved to Terms Hold

  • Ctrl + L.

TIME: 30:40

Invoice Rules

You can use Invoice Rules to specify how Drop Ship orders are handled – for example you could create a rule to send all drop-ship orders over a certain value, or with a delivery date far in the future to manual hold or awaiting date.

Let’s see an example.

  • Create an Invoice Rule to move all drop ship orders from Business customers into Manual Hold so that they can be verified by a member of management
  • Create a new Sales Order for [RAG] RA Global Ltd
  • Add 1 x item [GGJ] Giant Garden Jenga
  • The order will go straight to Manual Hold in Sales Invoice Manager.

TIME: 33:00

How Do We Keep Our Customers Informed?

Let’s imagine we’ve raised some drop ship orders with a supplier, and we want to let our customers know when the items have been despatched. The first thing we need to do is create an email template. Here’s a simple example:

  • Show the DS Desp Template in email manager.

Notice we’ve used the Invoice trigger type.

In the message, we’ve used the tags to create a simple message to confirm to the customer what is being delivered. If required, you can create a more complex template to include details of items to follow – in the case of a part shipped order, for example.

We’ll also need to set up a trigger rule.

  • Show the DS Conf trigger rule in email manager.

Here we’ve linked the trigger rule to the template we saw a moment ago. We’ve also created an invoice priority to identify our orders as drop ship, so that the rule will only apply to those orders. If you deal with exclusively drop ship orders, you won’t need to do this. This rule will trigger the email as soon as a drop ship order moves out of the ‘Released’ stage.

In the example we’re about to see, we’ve set up the system to auto-create purchase orders for drop ship items, but not to automatically book them in. We have 3 drop ship orders from the same supplier, and the supplier has just sent us notification that the orders have been despatched to the customers.

  • Open Sales Invoice Manager and go to the Awaiting Stock.

You can see our 3 orders are in Awaiting Stock, as we have not yet booked in the purchase orders on the system.

We can now go to our Purchase Orders screen where we’ll see the 3 Purchase Orders that were raised on the back of these SalesOorders.

  • Go to Purchase Order list screen.

We’ll now book these Purchase Orders in.

  • Open each Purchase Order in turn, right click in the grid, go to Create Delivery Note, move the items into the upper grid on the Delivery note and

The 3 orders will now be released, as the stock has been allocated and the system recognises them as 100% fulfilled.

  • Re-open or refresh the Sales Invoice Manager screen and go to the released stage.

It’s possible to filter this stage to show just your drop ship orders

  • Click on the F4 filter button and filter for drop ship invoices only.

If you decide to use an invoice priority to identify your drop ship orders, as we have, you could use that filter instead.

We can now green select our filtered orders and batch-generate the customers’ invoices.

  • Green-select the filtered invoices
  • Click the Order Stage Reports button
  • Select Reports to Customer | Invoices (batch)
  • Close the preview.

We could now drag and drop the orders straight to the Issue stage (don’t do this yet). If you remember from our email trigger rule, as soon as the orders leave the Released stage, the despatch confirmation email will be triggered.

If you prefer not to have this email sent automatically, you can use the same template to send the emails manually by right-clicking on the green-selected orders in the grid.

  • Right-click on the green-selected orders
  • Select Email | Email (template) (selection).

You can see that our DS Desp template is in the drop down, and by selecting Send Email Immediately, you could send the confirmation email to the customers for all the orders you have selected.

In our case, though, we’ll let the system trigger the emails automatically, in accordance with the rule we have set up.

  • Drag and drop the green selected orders into the Issue stage
  • Go to the Issue stage
  • Green select the orders
  • Click the Issue button.

Let’s have a look at the emails that have now been generated

  • Go to Email Manager
  • Click the Display Sent Emails checkbox
  • Click the Go button
  • Focus on any of the 3 emails sent using the DS Conf rule code
  • Show the message in the bottom pane.

There are lots more ways of using email rules and templates to keep your customers informed and you’ll find some useful examples on our wiki.

TIME: 41:50

Reporting

Outstanding back orders for drop ship items can be viewed on the Stock Reordering (standard screen) using the show Drop Ship Items option.

TIME: 43:15

Options Available with Development

There are some further options available which can be enabled by contacting our development team:

  • Drop Ship items can be excluded from Courier Banding weight calculations – particularly useful with mixed drop ship and non-drop ship orders. It means that the weight of any drop ship items on the order will be disregarded when calculating shipping costs based on weight
  • Drop ship items can be excluded from combined picking sheets
  • Drop ship purchase orders can be set to pint the Customer’s Order Ref instead of the Supplier Ref.
  • FTP communication of XML / csv Purchase Order files to.

If you are interested in having any of this functionality enabled on your system, please contact our development team, who will be happy to help.

TIME: 49:00

What have we Covered?

During this webinar, we’ve taken you through how to set up the different option that control how drop ship orders are handled by your system, how they are used in practice and how you can report on your outstanding drop ship back orders.

TIME: 49:35

Questions

We are now going to spend some time answering your questions. If you have any questions regarding the topics we covered or any other areas of Khaos Control please use the Chat facility to queue them up. If a question occurs to you after we’ve finished, or you’re watching this ‘on demand’, them please email training@khaoscontrol.com or tweet us @KhaosERP.

Thank you for the questions you have already asked during the webinar. As the session has been so popular we have not been able to answer all of them but we will aim to reply to everyone by the end of the week.

TIME: 54:00

Future Webinars

The next webinar will cover the new functionality introduced during last year’s Roadshow.

Details on how to sign up will follow soon and hopefully I will see you then.

If you have any suggestions for topics you would like to see in future webinars please let us know by emailing training@khaoscontrol.com.

Thank you for watching.

Wiki Links

The following Wiki links are for pages that describe the functionality covered during this session:

http://www.khaoscontrol.com/wiki_kcx/index.php?title=System_Values_-_Sales_-_Backorders

http://www.khaoscontrol.com/wiki_kcx/index.php?title=How_To:_Create_a_Drop_Ship_Stock_Item

http://www.khaoscontrol.com/wiki_kcx/index.php?title=How_To:_Create_a_Drop_Ship_Sales_Order

http://www.khaoscontrol.com/wiki_kcx/index.php?title=How_To:_Create_a_Purchase_Order_for_a_Drop_Ship_Item

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