Introduction to MS Dynamics NAV VII.
Ing.J.Skorkovský,CSc.
MASARYK UNIVERSITY BRNO, Czech Republic
Faculty of economics and business administration
Department of corporate economy

Drop Shipment
•Reasons- benefits
–Direct shipment from Vendor to Customer
–Lower cost of transportation
–Lower costs of warehousing (zero)
–Faster reaction to requirements
–Shorter cash-to-cash cycle  (Customer must be invoiced first)->Also Payment  condition should be
set e.g. like so : PC Vendor >PC Customer (rules) and values :1M>14days

Cash-to-Cash Cycle
     Purchase Order
         (Invoice)
 Sales Order
    (Invoice)
   Payment to
      Vendor
 Income from
   Customer
Days in stock
  Due date
(receivables)
Cash-to-Cash Cycle
  Due date
(payables)

Drop Shipment principles I.
•Drop Shipment principles I.
* Specifies whether your vendor has to  ship the items on the line directly to your customer. * You
use a drop shipment when an item or group of items is shipped directly from your vendor to your
customer and is therefore not physically  received in inventory or shipped from there. I reality
Drop Shipment results in Item Ledger Entry generation (inbound and outbound operation in one
moment)
4
 Wholesaler
Vendor
Customer
5
1
2
3
4
4
6
1
Quote
2
Sales Order
3
Purchase Order
4
Delivery list and delivery itself
5
Sales invoice
6
Purchase invoice

Drop Shipment principles –setup
•Drop Shipment setup
* First place a check mark in the field to indicate that the item on the sales order is a drop
shipment and in the Purchase code field  you have to choose Drop Shipment code
* Then create a purchase order to order the corresponding items from your vendor. You can create
the order directly from the sales order or indirectly rom the Requisition Worksheet. In this model
we will use direct method
*
* When you set up the purchase order, use the function Drop Shipment, Get Sales Order to link to
the relevant sales order. The sales order lines will be copied to the newly-created purchase order.
We will not use Item tracking in this model and if yes - > see next clause
*
* You cannot post a drop shipment order that has item tracking unless item tracking is synchronized
- serial numbers and lot numbers must be the same between the two orders (our model uses
synchronization)
•

*
5

Create new SO and add Drop shipment and Purchase Code



Create new PO
1.CREATE HEADER WITH Vendor=10000
2.Tab Shipping ->Sell-to Customer No. -> 10000
3.Button Order->Drop Shipment->Get Sales order ->see next   slide

Created PO after Sales lines were transferred to PO lines



Posting PO (only Ship)
Purchase line after Ship
Sales line after Ship
automatically cretaed
Shippment as well as
Item Ldger Entries

Item Ledger Entries



Post PO – only Invoice



Entries
General Ledger Entries
Item Ledger Entries

End of the section VII.