This is what happens in the video
Drop shipment in Microsoft Dynamics 365 Business Central lets your vendor ship items directly to your customer, so the goods never pass through your own warehouse. You handle the drop shipment by creating a sales order, marking the line as a drop shipment, and then linking it to a purchase order using the Get Sales Orders function.
To set up a drop shipment line, you either tick the Drop Shipment field on the sales line or assign a purchasing code set up for drop shipment. If those columns are not visible, you add them by personalizing the page.
On the purchase order, you must choose the same vendor that is set up on the item card as the supplier for that item. You also change the Ship-to setting to Customer Address and select the customer.
You can post the sales order as normal. You can post the purchase order with the receipt option only, and you cannot invoice the purchase order until the sales order has been invoiced.
What drop shipment is used for
Drop shipment is used when the items are shipped from the vendor directly to the customer. The item never comes back to your own warehouse for you to deliver. This saves handling and shipping in your warehouse, since the vendor takes care of the delivery to the end customer.
Creating the sales order and marking the drop shipment line
Start by creating a sales order for the customer with the item the customer wants to buy. On the item line, you mark that this specific line is a drop shipment line.
You do this in one of two ways: set the mark in the Drop Shipment field, or assign a purchasing code that is configured for drop shipment.
If the Purchasing Code or Drop Shipment columns are not shown on the sales line, you can add them by personalizing the page. You do this from the menu under Personalize.
Once the line is marked, the sales order is ready, and you can create a purchase order based on it.
Creating the purchase order for the drop shipment
Go into Purchase Orders and create a new one. Choose the vendor number you are buying the item from. This must be the same vendor that is set up on the item card as the supplier for that specific item. If the vendor on the purchase order does not match the supplier on the item card, the link will not work.
Scroll down to the Shipping tab. In the Ship-to field, change the value to Customer Address, and in the Customer field, select the customer who will receive the goods.
Retrieving the sales order lines with Get Sales Orders
Now retrieve the lines from the sales order. Go into Actions, then Functions, then Drop Shipment, and choose Get Sales Orders.
A list of all the sales orders for this customer is shown. Mark the document you want to base the drop shipment on and press OK. The item line is then transferred from your sales order to your purchase order.
You can now send the purchase order to the vendor.
Seeing the link between sales order and purchase order
Back on the sales order, you can see the link between the sales order and the purchase order. Mark the line, then go into Order, Drop Shipment, and Purchase Order. Here you see the purchase order that is linked to your sales order.
Posting the drop shipment orders
You can post the sales order as you normally would. You can also post the purchase order, but only with the receipt option, until the sales order has been invoiced. This keeps the invoicing sequence correct between the two linked documents.
Q&A
What is drop shipment in Business Central?
Drop shipment is a process where your vendor ships the items directly to your customer. The goods never pass through your own warehouse. You manage it by linking a sales order to a purchase order.
How do you mark a sales line as a drop shipment?
On the item line of the sales order, either tick the Drop Shipment field or assign a purchasing code that is set up for drop shipment.
What do you do if the Drop Shipment or Purchasing Code columns are not visible?
Add them to the sales line by personalizing the page. Use the Personalize option in the menu.
Which vendor must you use on the drop shipment purchase order?
You must use the same vendor that is set up on the item card as the supplier for that specific item. Otherwise the link will not work correctly.
How do you transfer the sales order lines to the purchase order?
On the purchase order, go to Actions, then Functions, then Drop Shipment, and choose Get Sales Orders. Mark the sales order you want and press OK. The item line is then transferred to the purchase order.
Can you invoice the purchase order before the sales order?
No. You can post the purchase order with the receipt option only, until the sales order has been invoiced.