This article is relevant if you are using NetSuite’s OneWorld ERP system to perform intercompany ordering and fulfillment using drop ship practices.
Background
NetSuite’s OneWorld is a powerful application supporting multiple companies with the ability to perform buy and selling between subsidiaries. One popular multi-company configuration contains two entities: a selling subsidiary and a fulfilling subsidiary. I often see this when one company is a sales organization (effectively a distributor) and the other company is a brand or manufacturing company focused on a specific line of products.
In these scenarios, the selling organization does not stock inventory. Instead, it wants to “drop ship” the customer order by effectively purchasing it from the fulfilling subsidiary and have that company send the goods directly to the customer on behalf of the selling company. This practice is very common in eCommerce and other direct response business models.
The OneWorld Shipping Method Challenge
In NetSuite, shipping methods, such as UPS Ground or Air, are defined at the subsidiary level. This allows each subsidiary the ability to design their own routing and costing rules for their internal shipping practices.
NetSuite offers a mechanism to automatically create intercompany sales orders based on respective purchases orders derived from a customer’s sales order. Transaction management generally works well but additional logic is required to map the shipping methods between the selling and fulfilling company if anything is different from defaults.
See the following outline to make the situation clearer:
- The Customer Sale: A customer purchases from the selling subsidiary with a non default shipping method (such as 2nd Day Air).
- The Drop Ship PO:The selling subsidiary purchases from fulfilling subsidiary by generating a drop ship purchase order.
- Generate new Sales Orders: Internal operations run NetSuite’s “Manage Intercompany Sales Order” function to generate new Sales Orders in the fulfillment subsidiary. Basically, the selling subsidiary’s drop ship purchase order is a template for the fulfilling company’s sales order.
- The Challenge: NetSuite selects the ship method in the fulfilling subsidiary’s sales order based on the default. But instead, it needs to communicate the customer’s requested ship method to the fulfilling subsidiary automatically.
Solving the NetSuite Cross Company Shipping Method Challenge
We then update the fulfilling subsidiary’s shipping method by performing a lookup to our cross reference table to get the right value.
Enhance NetSuite for your Logic
Marty Zigman
Holding all three official certifications, Marty is regarded as the top NetSuite expert and leads a team of senior professionals at Prolecto Resources, Inc. He is a former Deloitte & Touche CPA and has held CTO roles. For over 30 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.
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