Drop shipments and special orders in Business Central

For distributors and resellers, fulfilling customer orders without holding inventory is a real cost-of-doing-business advantage. Business Central supports two related patterns natively: drop shipments and special orders.

Drop shipments

A drop shipment is a sales transaction where the goods never enter the seller's warehouse. The vendor ships directly to the customer. From the seller's perspective: a sales order is placed, a corresponding purchase order is placed with the vendor, the vendor ships, the seller invoices the customer, and the vendor invoices the seller. No item ledger inbound entries for the seller; no warehouse handling.

Special orders

A special order is similar — a sales order driving a purchase order — but the goods do enter the seller's warehouse first before being shipped to the customer. The seller takes possession briefly. Used for items that must be inspected, repackaged, kitted, or labelled before shipping.

The mechanism — drop shipment.

1. On a sales order line, the user marks Drop Shipment. The line stops behaving like a normal sales line — it doesn't try to ship from inventory.
2. The user runs the Requisition Worksheet with the drop-shipment view, which lists sales lines marked for drop shipment.
3. The user assigns a vendor and runs Carry Out Action Message, which creates a purchase order linked to the sales line.
4. On the purchase order, the Drop Shipment field is set, and the Ship-to address auto-populates from the sales order's ship-to.
5. When the vendor confirms shipment, the user posts the purchase receipt — which simultaneously posts the sales shipment (no inventory entries, just the matching ledger movements).
6. Both invoices post against the related documents normally.

The mechanism — special order.

1. On a sales order line, the user runs Special Order from the Functions menu.
2. The system creates a purchase order linked to the sales line, with the seller's warehouse as ship-to.
3. The purchase order receives normally, into stock.
4. When the goods are ready, the sales shipment is posted normally — but the link to the purchase order ensures the inbound and outbound transactions are reconciled cost-accurately.

Why the linkage matters

Without the link, you could just create a purchase order manually for each sales order and it would kind of work. The linkage adds:

• Cost accuracy. The purchase cost flows to the sales line's COGS automatically when posted.
• Reservation. The incoming purchase is reserved for the sales line, so warehouse staff can't accidentally allocate it elsewhere.
• Visibility. Both documents show the linked counterpart; status, dates, and quantities reconcile.
• Cancellation safety. If the sales order is cancelled, the purchase order is flagged for review.

Pitfalls.

• Partial deliveries require careful matching — the sales and purchase quantities must align or the linkage gets confused.
• Currency mismatches between sales (customer currency) and purchase (vendor currency) need FX handling; supported but adds reconciliation effort.
• Returns of drop-shipped goods are awkward — the goods may or may not come back to the seller's warehouse. Handle by case.

Reporting

A standard Drop Shipment Status report shows open sales-purchase pairs; useful in customer service for "where's my order" responses.