Understanding Drop Shipping

aACE supports drop shipping (sometimes called "non-receiving purchase orders"). This method involves sending a purchase order to a vendor, including shipping information for the customer. The vendor then ships the item directly to the customer and typically sends you the invoice. In effect, your organization handles the purchase for the customer. This method can be useful when an item is more easily or cost-effectively shipped directly from the supplier to your customer.

You can mark individual items for drop shipping (DS) while the order is in Pending status. However, if an order is already in Open status, the aACE inventory integration has run, so you cannot directly apply drop shipping. Instead you must void the item that should be drop shipped, then add a new item, marking the DS flag for that item.

When you mark an item on a sales order as drop shipped, it affects some processes:

  • Excludes the item from aACE inventory integration. aACE treats that item for that order as non-inventoried. 
  • Auto-generates a purchase order record for the DS item when you open the order. You can review these POs on both the order's Procurement tab and Shipping tab.
  • Opening the DS item's purchase record triggers other automated processes (e.g. generating the invoice).
  • Entering the vendor invoice on the purchase record is regarded as a shipping event.
    Note: You can drag digital copies of an invoice to the invoice paperclip to easily attach a file.

The aACE modules include various screens to help you track DS items:

  • On the order, click Management tab > Shipping sub-tab. The Non-Receiving POs section shows the auto-generated record for the drop shipped items.
  • On the PO, you can review the two destinations. When your staff emails the order, the PO will be sent to the vendor. When the vendor ships the item, it will be delivered to the customer.

Additional Preferences for Drop Shipping

System administrators can customize the DS workflow with these settings:

  • System Admin > Preferences:
    • Billing > Auto-generate invoices for drop shipment purchases — When a vendor invoice is recorded on the purchase, an invoice for the drop shipped product is created automatically.
    • Billing > Leave auto-generated invoices pending — This enables aACE to update invoices as complex orders are gradually completed.
    • Shipping > Manage receiving for drop shipments — Activates receiving functionality even though items are marked for drop shipping. This allows you to create shipment records to capture additional information. This option is useful when the actual product is drop shipped, but there are additional details that need to be managed (e.g. special containers, insurance papers, serial numbers, paying shipping costs for a client, etc). However, the drop shipped item is still excluded from inventory processes.
    • Shipping > Drop ship products to customers by default — Flags the Drop Ship (DS) checkbox automatically for all order items. Team members can clear the flag manually, as needed.
  • CRM & Sales > Companies > detail view > Vendor Details tab:
    • Only allow drop shipments — Requires drop shipping on all order items handled by this specific vendor. Often used when the vendor's policies only allow drop shipping or when slim margins make it more cost effective to not receive the item at your facilities.
    • Do not allow drop shipments — Prevents any drop shipping from this vendor. After this flag is marked, aACE displays a notification when users try to mark the vendor's products for drop shipping. Can be useful to reduce vendor interactions with your customers.