2.4.2. Purchase process – Drop shipping

 

The purchase process for drop-shipping is divided into 2 cases:

Case 1: Draft Purchase Agreement

The purchase requisition is set up as Purchase Agreement that have two types: (1) Purchase Tender and (2) Blanket Order.

The first allows users to create as many Requests for Quotation as possible to different suppliers to select the best price (the vendor with the best offer will get the deal). While the latter is used to negotiate a discounted price over a period of time with one vendor (but is able to take multiple smaller deliveries during the settled period).

PURCHASE TENDER

BLANKET ORDER

    • Sent to different suppliers
    • Not especially high volume
    • Quantities set automatically on PO
    • One PO in the end
    • One supplier  
    • High volume
    • Quantities set manually on PO 
    • Multiples PO in the end
    • Multiple deliveries

Technically, Purchase Tenders is for the purpose of having better prices from competing suppliers, whereas Blanket Order is for the purpose of managing delivery dates with a supplier.

To enable the Purchase Agreement feature in KIU BMP, users must activate the option by going to Purchase > Configuration > Settings > Call for Tenders

    • This allows users to call for tenders to get quotes from multiple suppliers (advanced)

Go to Purchase > Configuration > Settings‣Location & Warehouse

    •  Allows suppliers to deliver directly to your customers

In agreement  with the purchase configuration, all items bought or sold in drop-shipping flow must be set up as below.

Go to Purchases > Purchase > Product Variants and search for the product. Click on the product to open its configuration form.

In  Inventory > Routes

    •  Drop Shipping

In Inventory > Procurement

    •  Propose a call for tender

Case 2: Draft Purchase Order

Enable the function “Draft Purchase Order” to partner one indicated supplier. This type allows a user to draw up an initial Request for Quotation to the identified vendor offering the most acceptable price, which is based on the list of vendor’s price set up in the product configuration.

Go to Purchase > Configuration > Settings > Calls for Tender

    • Purchase propositions trigger draft purchase orders from a single supplier

Go to Purchase > Configuration > Settings > Location & Warehouse

    • Allows suppliers to deliver directly to your customers

In conjunction with purchase configuration, all items bought or sold in drop-shipping flow must be set up as below.

Go to Purchases > Purchase > Product Variants and search for the product. Click on the product to open its configuration form.

On Inventory > Routes tab click Drop-shipping, on the tab Inventory > Procurement, click Create a draft purchase order and on tab Invoicing > Expense Account, choose account number 632 Cost of goods sold.

On the tab Inventory > Vendors, click “Add an item” to fill the vendor list of price.

Fill the necessary fields as guided below

Fill in the information of Vendor: vendor product name, product code, delivery lead time, minimal quantity (the lowest quantity of the product that a supplier is willing to sell), price as well as the period of time in which the price is valid.

Sales module

Enable Order Routing

Go to Sales‣Configuration‣Settings‣Quotation & Sales‣Order Routing

    • Choose specific routes on sales order lines (advanced)

When all the mentioned items are properly checked, start recording all the documents to setup the business process.

 

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