Correct way to manage drop-shipping and remote labour-only subcontracting

Hello all, a use-case question here.

We manufacture in two cities and warehouse in a third. We also have a couple of hundred locations that are not ours but who will receive our goods, install them for our customers, and then bill us for their time. Our goods might sit in their warehouses for days to months, and our customers won’t pay us for the goods plus installation until the job is finished.

We have our two manufacturing locations set up as sites with resource groups etc. We have our warehouse site set up without. We then have a site called “3rdParty” and we use transfer orders to move our goods there until they need to be consumed.

This is very awkward and doesn’t work well, and we’re trying to figure out what the right way to do this would be. Some issues:

  • Production wants to know when they’ve shipped an order, not when some project manager has gotten it installed.

  • RMAs don’t really work with TOs very well

  • These goods are made to order but in reality, they’re only shipping on TOs

  • We don’t have visibility of our installers’ shipping unless we manually do it in Epicor ourselves when they notify us

I know these don’t seem like big deals but they add up to a lot of frustration for a lot of people.

I’m just looking for ideas here - I can’t imagine we’re the only ones using this or a similar model, and I don’t even know how to make Epicor Words about it.

Glad of any thoughts!

Epicor considers this “Consignment”, and it’s discussed pretty briefly in the Inventory Specialized Processing course.

It basically says to do what you’re doing.

I had one client that had HEAVILY CUSTOMIZED Transfer Order, Transfer Shipment, and Transfer Receipt screens just to account for all the data their people wanted. My company didn’t write those customizations (this was in E9) and I told them they were going to have a devil of a time going to E10 (we didn’t get that project… I was glad).

For Production to know when something is shipped (defined as leaving your site and moving to the 3rd Party site), you’d need to create a dashboard. If there’s only one 3rd Party site and a single warehouse/single bin, that’ll be a mess. I don’t know if you have multiple bins or not, and if so how you manage them.

RMAs don’t work at all with Transfer Orders… you haven’t sold it yet so how could it be returned? This would really need to be handled by Non-Conformance… this is still your inventory.

If in reality they’re custom manufactured parts, does each item have a unique part number? That might be a way to determine what will eventually belong to whom.

The client I referred to earlier “owned” the final shipment process… they had excellent relations with their consignment organizations (in this case distribution), who would send daily reports of what had been shipped to customers. They were right on those reports daily so they ALWAYS knew what was there and what had shipped… there isn’t any other way to do it.

It’s a huge deal, but there’s no magic solution that I’ve found.

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Could Customer Managed Inventory work here? I know you can purchase to a CMI bin but not sure if you can make to one. If so, it does tick a lot of the boxes…

Mark W

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The material which are stored in the warehouse of installation team, is against a Sales order which is booked in Epicor
Is it like replenishing the stock in the Hypermarket shelf.

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Hello Prash, the material is always for a specific order, although it could be one bulk shipment covering 100 installations for an end customer’s 100 different vehicles.

@Mark_Wonsil interesting, another feature I hadn’t come across, will investigate

I don’t think so. There’s nothing about it in the documentation, and anything in a Customer Managed bin does not have any value in the GL.

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@Ernie ok, that’s interesting - as the material is shipped for a specific order I hadn’t thought of consignment, but I’ll look into it. You’re right, on the books it isn’t shipped yet and remains our asset. I’ll look into NC, that makes sense.

ah, interesting. So that would be for true shipments I guess.

The way we use consigment is we create the order with the pricing etc., but no qty is shipped. Sales send note to AP to generate the Invoice to customer. Then an inventory transfer is made from regular inventory to the consigment inventory.

When customer needs the parts, we create a new order at zéro $ with the parts shipped from the consigment inventory.

It’s been like that since our beginning with Epicor. When I learned about the process, I was stunned that Epicor was not providing a smoother way to deal with this…

(or if there is a way, no one here knows about it !! :wink: )


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@Hogardy, I think that’s similar to what we have. But it’s interesting enough that I’ve asked our fleet manager to join this group to get his input. He’s better able than me to evaluate the ideas on here.

Really appreciate everyone chiming in!

BTW, This Epicor Ideas Properly implement INCOTERMs (including v2020) | Epicor ERP Ideas ( also includes a note about when ownership is transferred to the customer. It already has future consideration but you may want to add your use case to it.

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done - thanks for the tip.

Create a job subcontract operation “Installation” and add the finished products as the material.
Ship them against the subcontract PO. (goods are now in the installer warehouse)

Once you receive the confirmation of the installation process subcontract receipt.
(installation cost is added to the job)

Ship to customer from job and invoice.

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I hadn’t thought about it like this but in reality, we are subcontracting labour,you’re right.

Time to do some process mapping and fix the business before attempting to fix the software!