Why Manual Reservation is Not Needed for Drop Shipment in Business Central

 Why Manual Reservation is Not Needed for Drop Shipment Sales Orders in Business Central

In Microsoft Dynamics 365 Business Central, managing inventory effectively is crucial for smooth operations, especially when dealing with different types of sales orders. One specific scenario where inventory management behaves differently is with drop shipments. Unlike regular sales orders, drop shipment orders do not require manual reservation of inventory. This blog explains why manual reservation is not needed for drop shipment sales orders in Business Central.

What is a Drop Shipment?

A drop shipment is a fulfillment method where the goods ordered by a customer are shipped directly from the supplier to the customer, bypassing the selling company’s inventory. In Business Central, this process automates the flow of orders from sales to purchasing, streamlining the supply chain.

Why is Manual Reservation Not Needed in Drop Shipments?

For regular sales orders, manual reservation is often used to ensure that stock is available for a specific order by linking inventory to that sales order. However, in the case of drop shipments, this step is unnecessary due to the unique nature of how drop shipments work:

1. Direct Link Between Sales Order and Purchase Order:

   • In drop shipments, Business Central creates a direct connection between the sales order and the purchase order. When you create a purchase order and link it to the sales order, Business Central automatically manages the reservation and allocation of the item, ensuring that the supplier knows exactly what needs to be sent to the customer.

2. No Inventory Impact on Your Warehouse:

   • Since the goods never enter your company’s warehouse, there is no need to reserve inventory within your system. The inventory movement occurs only between the supplier and the customer, bypassing your stock entirely.

3. Automatic Coordination Between Orders:

   • Business Central coordinates the fulfillment process between the sales and purchase orders without requiring additional inventory reservations. This seamless linkage ensures that as soon as the purchase order is fulfilled by the supplier, the corresponding sales order is considered fulfilled as well.

Conclusion:

Manual reservations are a critical tool in inventory management but are not needed for drop shipment sales orders in Business Central. The system’s direct linkage between sales and purchase orders streamlines the entire process, automatically coordinating the fulfillment without the need to reserve stock in your warehouse. This setup reduces complexity, prevents errors, and enhances supply chain efficiency, making drop shipments an ideal choice for businesses that want to minimize handling and streamline operations.