Dynamics 365 Business Central simplifies and automates the drop shipping process, allowing businesses to fulfill customer orders directly from suppliers without holding inventory. In this scenario, we demonstrate how to execute a drop ship sales order, from creating the sales order to posting the purchase invoice. By automating these steps, companies can improve customer service and optimize inventory management.

1. Creating the Sales Order

The first step in the drop ship process is creating a sales order. In Business Central, this can be done by selecting a customer from the existing list and choosing the desired item for the order. For instance, if you're selling a desk, you select it from the dropdown, and the key action is to mark the order as drop ship in the line item. This change tells the system that the items will be sent directly from the vendor to the customer, bypassing your inventory.

Once the quantity is entered, the sales order is ready, and the next step is to create a linked purchase order to initiate the drop ship.



2. Creating the Purchase Order for Drop Shipment

After the sales order is completed, a purchase order is created to instruct the vendor to fulfill the order. In Business Central, this is streamlined through shortcuts like quick actions, where the purchase order can be generated by selecting the vendor. The critical step here is to change the ship-to address to the customer’s address, ensuring the vendor knows to ship directly to the buyer.

Using the drop ship functionality, the purchase order links to the corresponding sales order, allowing for smooth coordination between the two documents. The line items from the sales order automatically populate in the purchase order, ensuring accuracy. Once this is done, the purchase order can be posted and sent electronically to the vendor for fulfillment.

3. Posting and Invoicing the Sales Order and Purchase Invoice

Once the vendor ships the items directly to the customer, the final steps involve invoicing both the customer and the vendor. In Business Central, you can return to the sales order and confirm shipment details, including shipment dates and quantities. With advanced features like AI-driven payment predictions, you can also assess the risk of delayed payments, adding another layer of intelligence to the process.

Once you’re confident in the order's details, the sales order is posted, and the customer is invoiced. The purchase order is then processed as a purchase invoice, finalizing the financial transactions and ensuring that both the customer and vendor are properly billed.

Benefits of Drop Ship Sales in Dynamics 365 Business Central

• Improved Customer Service: The drop ship process allows you to fulfill orders more quickly by shipping directly from the vendor to the customer, reducing delivery times and improving customer satisfaction.
• Streamlined Inventory Management: Since drop shipments bypass your inventory, you reduce the need to hold stock, freeing up warehouse space and reducing inventory costs.
• Automated Order Linkage: Business Central automatically links sales orders to purchase orders, minimizing errors and ensuring seamless coordination between your sales and procurement teams.
• Enhanced Financial Accuracy: The system ensures that invoices and payments are aligned with the shipment process, providing accurate and timely financial reporting.

By using Dynamics 365 Business Central for drop ship sales, businesses can automate and optimize the process from start to finish, delivering goods more efficiently while keeping operations smooth and error-free.