How to use Drop Shipment

What IS 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.


  • 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:

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  • 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 by clicking 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.

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  • Next, retrieve the sales lines from the sales order by linking the purchase order by clicking on functions .

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  • Choose the corresponding sales order intended for drop shipment:
  • Once the Get sales order is selected it will show the list of sales orders, so users need to select the intended order number and click ok. Once selected those so lines will be updated in po lines and there will be a link created with po and so.

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  • Note: if the sales order selected does not contain a drop shipment selected on the sales lines, the system will relay the following message:

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Post Sales Shipment or Purchase order Receipt

  • 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.
  • In Dynamics 365 Business Central, after shipping and receiving, the sales order must be invoiced first before the purchase order. Remaining all process remains same

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