Overview of the process #
This is the case where a customer orders from one company (typically a sales office) and the product is sent directly from a factory in a different company.
The sequence of events is logically as follows and the sales administrator needs to ensure that the steps are followed accurately and correctly so that the correct orders are completed ready for invoicing and inventory values are correct.
The sales process:
- Enter a sales order from the sales company to the customer, if necessary specifying a different delivery address for the customer. If the goods are going directly from the factory to the customer then this is a “drop shipment” order. Drop shipment is specified by line so it is possible to have a sales order that combines locally supplied items with those of the factory. It is also possible to have the goods delivered to the sales office and not directly to the customer, in which case this can be a back to back order line (not the case illustrated in this document).
- When a drop shipment (or otherwise back to back order) is activated then the user is prompted to create the purchase order. The purchase order is an “inter-company” order from the systems point of view because it is a purchase order to another company in the same Manu Online account.
- When the purchase order is activated, the system sees it as an inter-company order and prompts to automatically create a corresponding sales order in the manufacturing company.
Together these three orders cover the entire process for ordering. In addition there may be work orders for manufacturing or purchase orders for non-manufactured items.
The next stage is the dispatch of the goods to the customer’s deliver address. This will happen directly from the manufacturing company to this address but corresponding receipts and dispatches are needed in the sales company to create the necessary records of inventory changes and invoices. Invoices are needed for both the customer from the sales office and from the manufacturing plant to the sales office.
- A dispatch is made in the manufacturing company with delivery address of the customer. This will complete the sales order from the sales office.
- A receipt is made in the sales office This can be called a “virtual receipt” because it is to record the transaction. The goods have physically gone to the customer directly. This will complete the purchase order
- A dispatch is made in the sales office to complete the sales order to the customer.
Note that there are up to four currencies involved in this process:
- Customer’s currency
- Sales office currency
- Manufacturing company’s currency
- Group currency for reporting.
The following is the process for handling a drop shipment from a manufacturing plant to a customer with the sales booked through a sales office.
- A Manu Online account licensed for multi-company.
- At least two companies created in the account. The companies should be functional for entering orders, so they both need a chart of accounts and at least one stock location. Any currencies that would be in use for either company. (Writing purchase orders with the supplier as the stock location of the other company is how the system identifies a multi-company order).
- User with rights to both companies or two users with rights to each company respectively.
- Customer and product data in the normal way.
Setting the company for orders etc. #
Depending on the user’s settings, the default company of an order or location for a dispatch or receipt may be different from the required. If there are two admin users with different settings then the user may not need to change the value on the order etc. So if the process is implemented with one user then the company of an order or invoice needs to be checked on the header and care must be taken to have the correct stock location set on dispatches and receipts.
The default location of a user is set on Admin – Users screen. This location is inside a business unit and company and so sets the defaults on new orders etc.
Sample process for the order entry #
In this sample a customer in Miami is being sold a product via an “East coast” sales office of a UK manufacturing company.
First create a new sales order in the sales company. Make sure that on each line the drop shipment is selected and the supplier is the stock location of the manufacturing company. (If entering many lines, then the default for new lines can be set on the header.)
Because this is a back to back order, accept the prompt to redirect to the purchase order. This order is from the sales office to the manufacturing company.
Edit any details on the purchase order, such as intercompany pricing and activate the purchase order. The system will understand that it is a multicompany order and will prompt to create the new sales order in the manufacturing company. Click OK for this.
This is the internal intercompany sales order from the manufacturing company to the sales office.
Check and activate the order. At each stage print the necessary order confirmation documents.
Delivery process. #
In a similar way to the order process, the delivery process is in the three stages. In this case because it is a drop shipment, the physical shipment goes directly manufacturing plant to the customer. The system will also support the sales office taking receipt and delivering, ie. Not drop shipment.
In the manufacturing plant create a new dispatch. Select Drop shipment check box to show orders to be dropped shipped.
Fill in other details as needed. Note that the customer is the sales office but the delivery address is the end customer.
Ensure that the dispatch is closed.
If necessary change the menu view to that of the sales office the sales office.
Change the deliver to address to the stock location of the sales office.
Click Add lines and then the check box to view Drop shipments. Check the correct purchase order and add the selected to the receipt.
Create new dispatch (shipment). Check the Drop Shipment box and retrieve. Select the correct customer.
Create a new dispatch. This time do not select drop shipment. Deliver from is the originating stock location. Delivery address is the customer.
On the new dispatch then Add drop shipment and select the sales order that is to be shipped. If the sales order is not listed then check that the correct business unit of the sales office is selected.
Note that the dispatch from location is the manufacturing plant.
Note that the Dispatch from will change to the local sales office location. Remember to Activate then Close the dispatch.
Invoicing process #
In the invoicing section there will now be two orders queued for invoicing.
First for the intercompany order:
Second for the customer from the sales office. You may need to change the business unit of the header or of the main menu to get visibility of the invoicing requirement depending on your default business unit set by location in the user system settings.
Optionally enter the purchase invoice to the Sales office. If the invoice is not entered then the receipt status will stay as “invoice queue”. Enter the purchase invoice if you are exporting purchase invoices to your accounts system.