How to Set Up and Process Drop Ship Orders in NetSuite

Process a drop ship order end to end

1. 1Enable the feature at Setup > Company > Enable Features > Transactions > Purchasing, tick Drop Shipments & Special Orders, and save.
2. 2On the item record, set the preferred vendor and purchase price. For non-inventory items for resale, tick Drop Ship Item so the item is always drop shipped.
3. 3Create the sales order. On each drop ship line set the Create PO column to Drop Ship and choose the Vendor if the item has more than one.
4. 4Save and approve the order. NetSuite flags the line for a purchase order; generate it from the order or from the Create POs list under Transactions > Purchases.
5. 5Open the resulting purchase order. The ship-to address is the customer's, and the PO is linked to the sales order. Send it to the vendor.
6. 6When the vendor confirms shipment, click Receive on the purchase order. This records the receipt and marks the sales order line as fulfilled.
7. 7Enter the vendor bill against the purchase order and invoice the customer from the sales order. Match the two for margin review.

Drop ship versus special order

-- SuiteQL: sales order lines with a linked purchase order not yet received
SELECT t.tranid, tl.item, tl.createdpo
FROM transaction t
JOIN transactionline tl ON tl.transaction = t.id
WHERE t.type = 'SalesOrd'
  AND tl.createdpo IS NOT NULL
  AND tl.isfullyshipped = 'F'

Common pitfalls

• !Forgetting to receive the drop ship PO, so the sales order never fulfills and the customer invoice stays pending.
• !Creating a manual item fulfillment on a drop ship line, which duplicates the fulfillment and corrupts quantities.
• !Letting the PO price differ from the sales cost without checking margin, since there is no inventory cost layer to catch it.
• !Not communicating tracking numbers back to the order, so customer service cannot answer where is my order.
• !Mixing drop ship and stock on one line. Split the quantity into separate lines.