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How to handle Drop Shipments in Microsoft Dynamics NAV ← Evolution Business Systems

How to handle Drop Shipments in Microsoft Dynamics NAV

It is becoming much more common for companies to ‘drop ship’ goods, or to take ownership of stock without incurring the overheads of warehousing, transport and logistics, and instead leaving this to the supplier.

In a drop ship scenario, the customer will place an order with a company who will act as the middle man between customer and supplier. This company in turn places the order with a supplier with instructions to deliver the goods directly to the customer. This blog will describe a simple version of the Drop Shipment process that can be achieved in Microsoft Dynamics NAV.

Step 1) Create a Sales Order

The first step in the Drop Shipments process is to create the customer’s sales order in Microsoft Dynamics NAV.

A sales order for a Drop Shipment is identical to a standard sales order except that the Drop Shipment field is ticked for each line that will be drop shipped. In the example above, all lines on the sales order will be sent directly to the customer from the vendor.

Step 2) Create the Purchase Order

The next step is to create a purchase order for the vendor who will ship the stock to the customer. This purchase order can be created via the Purchase Order screen or via the Requisition Worksheet.

The end customer is entered into the Shipping FastTab on the purchase order, and if a specific ship-to address is required, it is entered in the field below.

Step 3) Link the Sales Order to the Purchase Order

Now that the two orders have been entered, they are linked together using the Drop Shipment menu on the purchase order:

The sales order is selected and the lines from the sales order are automatically copied into the purchase order:

The purchase order is now released to the vendor, who will handle the shipping of the order to the customer.

Step 4) Goods are shipped

When the vendor has sent notification of the shipment of goods to the customer, the customer can be invoiced. The sales order will be posted and a sales invoice generated.

The purchase order will also be automatically posted as ‘Received’ when the sales order is posted. When the vendor invoice is received, the purchase order can be posted as ‘Invoiced’ to complete the process.

 

Drop shipments can be very useful in cutting costs and Microsoft Dynamics NAV can help to simplify the drop shipment process.

By Melinda Pankhurst, Dynamics NAV Developer / Consultant

 

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