Business Central Drop Shipment: Boost Your Supply Efficiency and Save More

Are you tired of the hassle of managing inventory and shipping products to customers?

Have you ever bought items from a supplier but sent them directly to your customers instead of shipping them to yourselves to reduce overhead costs?

In both situations, the word associated is a drop shipment. This article will discuss setting up drop shipments in Business Central.

What is a Drop Shipment?

A drop shipment is when merchandise is shipped from one of your vendors to one of your customers directly without you delivering it from your warehouse. Drop shipment is worth trying for your business, from saving on shipping and storage costs to increasing your supply chain efficiency.

Need for Dynamics 365 Business Central Drop Shipment

Are you using Business Central as your business management solution? Then you are in luck; Dynamics 365 Business Central Drop Shipment feature streamlines the drop shipment process.

To achieve a successful drop shipment, you need streamlined sales and purchase order creation and then post these correctly. With Business Central's user-friendly interface, you can create a sales order, generate a purchase order, drop-ship the products to your customers and post the invoices in no time.

Key benefits of drop shipment in Business Central are:

• Cost efficiency as No inventory holding or warehousing required
• Streamlined operations
• Expanded product offerings
• Lower risk of overstocking or obsolete inventory
• Ideal for Growing and Flexible Businesses
• Faster order fulfillment to customers

To achieve a successful drop shipment, you need streamlined sales and purchase order creation and then post these correctly. With Business Central's user-friendly interface, you can create a sales order, generate a purchase order, drop-ship the products to your customers and post the invoices in no time.

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How to Set Up Drop Shipment in Business Central?

Business Central drop shipment has some easy-to-follow steps to post a drop shipment quickly for your business. Get ready to dive deep into the process of creating drop shipments to streamline your supply chain and save expenses.

The simple process is to create a sales order and then link it to the generated purchase order.

Sales Order Creation

The first step is to create a basic sales order. Firstly, you must specify your customers and then select the items you want to sell on the sales line. You can choose the Drop Shipment checkbox on the sales order line for drop shipment.

However, the Drop Shipment column is not on the sales lines by default. To obtain the Drop Shipment column, you can customise the page to add the check box. You can go to the Settings option and then choose the Personalise option.

Purchase Order Creation

It's time to generate the purchase order after adding the Drop Shipment check box. While creating a purchase order, you must specify to ship the order to your customers, not to you. To make a purchase order, you need not create any purchase lines.

You can choose the customers you sell the items to in the Customer field. The Ship-to field section has the option to select the customer address. After defining the customers, you can go to More Options to select Actions, click on Drop Shipments, and finally choose to Get Sales Order.

Finally, you can choose the sales order created on the Sales List page to generate a sales order for drop shipment and then click the OK button. It's time to inform the vendor to ship the order directly to your customers, as the sales order is inserted on the purchase order lines.

If you want to view your purchase order from the sales order line, select the Drop-Shipment sales order line. Then you can go to Order action to choose Drop Shipment action and finally choose the Purchase Order action.

Drop Shipment Posting

You can add the sales order as shipped after the shipping of items by the vendor. If you want to post the drop shipment, add 'post the sales order' or 'receive the purchase order'. You cannot invoice the purchase order until you post the sales order.

In the Quantity to Ship field in the sales order for drop shipment, you can indicate the number of order quantities you want to ship. Then you can select the Post action or Post and Send action. There is an option to either select the Ship option to invoice later or the Ship and Invoice option to invoice immediately.

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Step-by-Step Guide to Drop Shipments in Business Central

Introduction

A drop shipment is the shipment of items from one of your vendors directly to one of your customers. When a sales order is marked for drop shipment, and you create a purchase order specifying the customer in the Ship-to field (Customer Address), you can link the two documents to instruct the vendor to ship directly to the customer.

1. Create a Sales Order for Drop Shipment

• Create a sales order for an item.
• On the sales order line, select the Drop Shipment checkbox.
• Alternatively, in the Purchasing Code field, select a purchasing code with the Drop Shipment field selected.

2. Create the Purchase Order for Drop Shipment

• Create a purchase order (leave line fields empty initially).
• In the Ship-to field, select Customer Address.
• In the Customer field, select the customer you are selling to.
• Choose Drop Shipments → Get Sales Order.
• Select the prepared sales order and click OK.
• The line information from the sales order is inserted on the purchase order line(s).
• Add vendor details or tracking info as comments if needed.

3. Create Multiple Purchase Orders

• Open Requisition Worksheets.
• Choose Drop Shipments → Get Sales Order.
• Apply filters if needed, then click OK.
• Review purchase order lines and select the vendor in Vendor No..
• Choose Carry Out Action Message to convert lines into purchase orders.

4. View Linked Purchase Orders

On the drop-shipment sales order line: Choose Order → Drop Shipment → Purchase Order.

5. Post a Drop Shipment

• After vendor ships items, open the sales order.
• In Qty. to Ship, specify full or partial quantity.
• Choose Post or Post and Send.
• Select either Ship (invoice later) or Ship and Invoice (invoice immediately).
• Note: Purchase order can only be posted with Receive until the sales order is invoiced.

6. Businesses That Benefit Most

• E-commerce retailers
• Small/start-up businesses
• Niche or seasonal product sellers
• Businesses offering large/bulky items
• B2B suppliers/distributors
• Rapidly scaling businesses

7. Exemplar Illustration

Scenario: An online electronics and home appliance retailer in Australia uses drop shipment to expand product range without holding inventory.

Benefits:

• Lower inventory and storage costs for large electronics
• Faster delivery by shipping directly from suppliers
• Wider product selection without overstocking

8. How Dynamics Square Can Help

As a certified Microsoft partner for Dynamics 365 in Australia, Dynamics Square supports businesses with:

• Business Central configuration for drop shipment workflow
• Integration with e-commerce platforms
• Vendor and supply chain setup in BC
• Reporting and automation for efficiency
• Training and team support

Contact us today to schedule a free consultation and transform your order fulfillment process!

Conclusion

Optimising drop-shipping with Business Central gives your business a competitive edge and enhances customer experience. It can streamline your supply chain effectively and reduce costs to increase business efficiency in this era of cut-throat competition.

Drop-shipping can become a profitable revenue stream for your business with the right innovative solution and support partner. Contact Dynamics Square today to understand all the aspects of drop-shipping with the help of our team of experts.

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