Have you ever done a sale where you purchased items from a vendor, but didn’t need to ship them to yourself, but instead, directly to the customer? If you have come across this scenario, this is a drop shipment. This article will explain how to set up drop shipment in Dynamics 365 Business Central (D365 BC).
What is a Drop Shipment?
A drop shipment involves a customer initiating an order, where the items are shipped from a vendor directly to the customer, instead of first housing them at a company location or warehouse. Effectively we are purchasing from the vendor and then shipping directly to the customer based on the customer order.
Set Up a Drop Shipment
To prepare a drop shipment, the user must first create the sales order resulting from a customer order, and indicate on the sales line that the sale is a drop shipment:
With a sales order created, the user can indicate drop shipment for each item selected, if more than one item should be shipped.
If the drop shipment field is not readily available, then it can be added. In the top right corner, click the gear sign and then click personalize to add the field called drop shipment:
Create Purchase Order and Link to Sales Order
Now that the sales order is created, create a purchase order that will be linked to the sales order that the user can then ship and invoice. To do so, first create a purchase order to link.
Once a vendor is selected on the purchase order, change the shipping address to the customer address by selecting the customer from the sales order, under the shipping and payment fast tab, as the items are not being held in inventory and will be shipped directly to the customer.
Next, retrieve the sales lines from the sales order by linking the purchase order:
Choose the corresponding sales order intended for drop shipment:
The same sales lines from the sales order also appear on the purchase order:
Note: if the sales order selected does not contain a drop shipment selected on the sales lines, the system will relay the following message:
Now that the sales order and purchase order are linked, shipping on the purchase order will result in the sales order also receiving, and vice versa. Shipping or receiving on either order is fine.
The purchase order must first be invoiced before the sales order.
Once the orders are invoiced in the correct order, the drop shipment process is complete, and the items will be shipped from the vendor location directly for receipt by the customer.
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