Back to back order is also known as automatic PO management. The process eliminates the gap between sales order and purchase process by creating a steady link between the two procedures. Here we will be talking about how back to back order could be used for drop shipments.
The primary objective of any organization is to maximize profit and reduce cost. Thus, most of the industries do not prefer to maintain an inventory that is by slow moving items or involves a larger stock holding cost for businesses. These sought of businesses places the purchase order to suppliers only after the sales order is confirmed and instructs the supplier to send the items directly to the customer. This situation brought up with back order management, which directly ships the items from supplier to customer.
This benefits industry by reducing warehouse carrying cost, delivery late, transportation cost which ultimately results in high gross profit.
SAGE X3 has this functionality and helps to avoid huge inventory carrying costs and avoid delays. Many traditional ERPs do not have this feature and requires an enormous amount of manual adjustments in inventory and finance to achieve the objectives.
Below are the steps to configure/use the Back to back order management in Sage X3:
1.On the product entry screen, under the Sales Tab and check the “Back-to-back order “.
2. Mention the supplier of the product and make the supplier as back-to-back.
3. Create a sales order for the product with the Source of Shipment as “PO-Direct to Customers” at the Line level at the point of confirmation of the sales order.
4. After creation of sales order, click on “Back to Back” from the menu bar.
5. A purchase order will be created and you will get the details in a log.
The financial entries would be executed in the accurate manner, by updating account receivables and accounts payable even though the stocks do not arrive to the organization.
For more information on Sage X3, please reach us at info@rfrgroup-me.com and We will be more than happy to help you!