A drop shipment in Microsoft Dynamics 365 Business Central links a purchase order line and a sales order line so the vendor ships the item directly to your customer. You never handle the item yourself. When you post the receipt on the purchase order, Business Central automatically posts the matching sales order shipment.
You register the shipment on the purchase order line, not the sales order line. If the vendor only ships part of the quantity, you fill in the quantity to receive on the purchase order, and both the purchase and sales sides update accordingly.
What a drop shipment is in Business Central
A drop shipment is a shipment that binds a purchase order line and a sales order line together. When you post the purchase order, the sales order is posted automatically. The point is that you never see the item, because the vendor ships it directly to the customer.
In a typical example, you have an item line with a quantity of 10. On the sales order line, the quantity to ship is 10 and the quantity shipped is zero. The shipment itself is registered on the purchase order line, not the sales order line.
How to post a drop shipment from the purchase order
When the vendor tells you the item has been shipped to the customer, you post it in the system. Go to the purchase order and fill in the quantity to receive.
You don’t have to receive the full quantity. If the vendor only shipped 7 of the 10 items to the customer, you enter 7 as the quantity to receive, just as you would on a normal purchase order. Then go to Process and post the receipt.
Posting the purchase order receipt posts both the purchase order line and the corresponding sales order line at the same time.
How partial drop shipments update the sales order
After posting, the quantity received on the purchase order is 7. When you go back to the sales order line, the quantity to ship is now the remaining 3, and the quantity shipped is 7.
The two order lines stay bound together automatically through the drop shipment, so you don’t have to update the sales order manually.
Q&A
What is a drop shipment in Business Central?
A drop shipment links a purchase order line and a sales order line so the vendor ships the item directly to your customer. When you post the purchase order, the sales order is posted automatically, and you never handle the item yourself.
Where do you register the shipment for a drop shipment?
You register the shipment on the purchase order line. When you post the purchase order receipt, both the purchase order line and the corresponding sales order line are posted.
Can you post a partial drop shipment?
Yes. You fill in the quantity to receive on the purchase order, just as on a normal purchase order. If the vendor shipped 7 of 10 items, you post 7. The sales order line then shows 7 as shipped and 3 as remaining to ship.
Do you need to update the sales order manually after a drop shipment?
No. The purchase order line and sales order line are bound together automatically. Posting the purchase order receipt updates the sales order shipment for you.