Processing drop shipments with SAP
Automate route processing from call-off to billing
In drop shipments, it is not you but your suppliers who supply your customer. However, you receive the call-offs and must issue an invoice to your customer at the end. To ensure that all steps are invoiced correctly in your SAP system, you need to pay attention to a few things - especially if you work with a consignment warehouse or an external service provider.
What does drop shipment mean?
With drop shipments, your customer orders goods from you, but is supplied by drop suppliers rather than you. You therefore outsource both material procurement and delivery logistics. However, the visible contractual business relationship still exists between your customer and you. The physical movement of goods only takes place between your supplier and your customer.
What are the different types of route handling?
In practice, there are various options:
- Drop shipments with individual orders
- Drop shipments with delivery schedules
- Combination with finishing process: The finisher delivers the end product to the customer himself.
- Combination with consignment warehouse or external service provider (EDL): The goods are not delivered to the end customer, but to an EDL warehouse.
- Internal third-party process: For example, internal forwarding of delivery call-offs to individual production sites
- Combinations of the options mentioned here (for example, a finishing process with delivery to an EDL)
What can the SAP standard do for drop shipments?
The SAP standard has a separate process for third-party processing. However, this only provides for third-party business with individual orders. As soon as scheduling agreements come into play, the SAP standard reaches its limits. Various combinations with finishing or EDL processes also cause difficulties for most SAP users.
Where are there problems with route processing with SAP?
If you do not receive individual orders from your customers, but rather delivery schedules and call-offs, drop shipments become complicated. The delivery schedules in such constellations contain more information than just a single order. The same materials are called off again and again over the long term. You must pass this information on to your suppliers during third-party processing. When a delivery is made, you receive a copy of the shipping notification, which you must invoice correctly in your system. This means that you must have correctly stored which items and quantities from your delivery call-offs have already been fulfilled and which have not. Correct transmission in your system is crucial, not least for invoicing (including by credit note procedure).
The SAP standard does not provide for this processing. You can only store information manually in your system. For the progress of your delivered goods, you may need to make a list outside of your SAP systems to track how many goods should have been delivered to your customers. Not only can errors occur. You can also not be 100% sure that your data is correct in all systems. This is particularly problematic if you are - without knowing it - behind with your deliveries.
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