In Business Central, users can employ drop shipments and special orders. I will run through both, starting with drop shipments. I’ll explain what they are before proceeding to demonstrate using them in Business Central. For both, you can create the purchase order manually or by using special actions on the Requisition Worksheet.
What are drop shipments?
Drop shipments are ways of buying goods and shipping them to a customer directly. The stock will never reach your facilities. If you’re purchasing an exact stock quantity to match a sales order requirement, it might be easier for the vendor to deliver the goods on your behalf. This saves one, potentially unnecessary, journey.
If you’d like to read Microsoft’s post on drop shipments in Business Central, I’ve attached a link for that. Their documentation includes a video walkthrough of the process too.
Drop shipments in Business Central
To make a drop shipment in Business Central, firstly make a sales order. After doing so, simply input a Customer No. value in the header.
On the lines, select the Item you wish to sell to the customer. Next, tick the Drop Shipment box. This field isn’t on the line by default, so personalise the page to add it. If you’re unfamiliar with how personalisation works, feel free to read our guide.
Creating a purchase order
At this point, after populating the sales order lines with the item and quantity, create a purchase order. To do this, simply navigate to the Purchase Orders page and click ‘+ New’.
Relating a purchase order to the drop shipment
On the purchase order, input the Vendor No. to indicate who you are buying the goods from. If you have an invoice number, you can input the value. In the Shipping and Payment tab, select the Customer Address value on the Ship-to field.
Next, in the header, click ‘More Options’, ‘Actions’, ‘Functions’, ‘Drop Shipment’, ‘Get Sales Order’.
Clicking this action will generate a screen where you can select the sales order that you want to relate to the purchase order. By selecting the relevant record, the system will retrieve lines and populate the purchase order lines with the same values.
Returning to the sales order, you can check whether you have tied the correct purchase order to it. To do so, click ‘Order’ in the Lines section, ‘Drop Shipment’ and ‘Purchase Order’. This will bring up the purchase order record.
Posting the drop shipment
To post the drop shipment, you can either post the sales order or the Receipt on the purchase order. However, you can’t invoice the purchase order until the sales order is posted.
When trying to post either the purchase or sales order record, you may get this error:
A Common error when trying to post the drop shipment in Business Central
In addition to that error, users may also get this:
You’d think that the Location Code would be fairly redundant for drop shipments in Business Central, and it is. However, when you initially set up your company, you may instinctively enable the Location Mandatory field on the Inventory Setup page.
As a result of enabling this, you won’t be able to post your order without inputting a Location Code value. Despite the Location Code value not being relevant, we generally still recommend inputting a value on the order. The alternative option is to disable the Location Mandatory field. Whilst this is an option, we don’t recommend this as it requires you to modify pre-existing setup, solely to clarify drop shipment postings.
Using the Requisition Worksheet to perform drop shipments
After creating a sales order in the same fashion as you did previously, you can instead use the Requisition Worksheet to create a corresponding purchase order record. If you go to the Requisition Worksheet page, notice there’s a specific function for drop shipments, something which isn’t available on the Planning Worksheet. This marks one of the differences between the two. It also is a useful means of separating out duties. Whilst those involved with purchasing use the Requisition Worksheet, the Planning Worksheet has different functionality tailored towards other aspects of business, like manufacturing.
As there’s not the function specific to drop shipments on the Planning Worksheet, any suggestions would be based on an item’s planning parameters.
On the Requisition Worksheet, click ‘Drop Shipment’ and ‘Get Sales Orders’. By using the filters, you can find the order you are looking for.
In my example, the drop shipment is only filtering by Sell-to Customer No. but this may result in multiple sales order records with drop shipments enabled pulling through. When you’re happy with the filters, click ‘Ok’.
Remember, any lines in the worksheets are suggestions. You can delete lines and amend quantities. If you’re happy with the suggestions, click ‘Process’ and ‘Carry Out Action Message’. This will make the purchase order based on the lines in the Requisition Worksheet. The process after this is the same as before.
What are special orders?
Special orders allow users to ship specific catalogue items to customers. After receiving the goods from the vendor, you subsequently ship the goods to the customer. These goods can be shipped on their own or alongside stock from other orders to the customer. What separates a special order from a traditional sales order is the fact that the purchase order and sales order are linked. A reservation for the stock you purchase is made, tying the purchase and sales order together.
Special Orders in Business Central
Like drop shipments, the process of making special orders in Business Central links a sales order record with a purchase order. Similarly to drop shipments, start on a sales order record and specify the Customer No. value in the header and the Item No. on the lines. On the lines, you may have to personalise the page to add the ‘Purchasing Code’ and ‘Special Order’ fields. By inputting the special order value in the Purchasing Code field, it should tick the Special Order field. These values are handled on a line-by-line basis.
The next step is to make a purchase order. Create a new record, specifying the vendor. Next, go to the Shipping and Payment tab. Like with the drop shipment, set the Ship-to field to Customer Address, matching it with the customer who the sales order is for.
In the header, click ‘More Options’, ‘Actions’, ‘Functions’, ‘Special Order’ and ‘Get Sales Order’.
Afterwards, select the relevant order:
This will update the shipping address to our own address.
The final stop is to post the special order. Unlike with drop shipments in Business Central, special orders allow you to fully post the purchase order before the sales order.
Using the Requisition Worksheet to perform special orders
Instead of creating purchase orders manually, users have the ability to generate the corresponding purchase order using the Requisition Worksheet. After creating the sales order, adding a Customer No., items and assigning the Special Order value in the Purchasing Code, you can employ the Requisition Worksheet to create a purchase order. To do so, go to the Requisition Worksheet page. This time, click the Special Order function instead of Drop Shipment.
Like with drop shipments, you can apply filters to tie the sales order record to the purchase order you’re creating, as part of your special order.
On the Requisition Worksheet, make sure to input a value for the Vendor No. field if it’s not be established on the Item Card setup.
After you click the Carry Out Action Message action, the Requisition Worksheet lines clear. This indicates you have created a purchase order. At this stage, you can post, as demonstrated in the previous special order section.
After you have linked the two orders together, you have the ability to navigate between the two by performing the actions below on either the purchase or sales order:
In conclusion, drop shipments and special orders in Business Central are great ways of managing some of the supply chain issues you may have. They provide simple-to-use mechanisms of managing stock levels and order requirements. If you have comments or queries, contact us here. Lastly, to never miss one of our posts, make sure to follow us on LinkedIn.