- Drop shipments are movements of goods from a supplier to a customer that don't transit through a company's warehouse.
- Drop shipments are used by companies to reduce inventory and storage costs.
- Drop shipments differ from direct delivery, as goods are shipped from a vendor site and received by a customer in the same transaction.
- Drop shipments do not account for goods in transit after the vendor shipment but before the customer receives the goods.
- Drop shipments are used to fulfill urgent customer orders when items are unavailable and for expensive or bespoke items for which holding stock is inconvenient.
- The first step in the drop shipment process is creating the sales order, with the option to set up specific order lines as drop shipments.
- The next step is to create the related purchase order, either manually or using the requisition worksheet.
- Drop shipments can be shipped and received, with the sales shipment or purchase receipt automatically updating the corresponding document lines.
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