July 12, 2024
A drop shipment is the shipment of goods or products from one of the vendors directly to one of the customers. In this Drop Shipping Strategy, the two documents are linked to tell the vendor to ship directly to the customer when a sales order gets marked for drop shipping. Also, a purchase order is created with the customer’s information in the Sell-to-Customer Number field.
This process can be more efficient and cost-effective for retailers to do business if they are connected to a large number of suppliers or offering an array of products or items.
Drop Shipment in Business Central
Wholesale Distributors can effortlessly manage the sale of goods or products shipped directly from their vendors or suppliers to customers using the Microsoft Dynamics 365 Business Central Drop Shipment process.
This streamlined method ascertains accurate management without the goods or products passing through your warehouse. Business administrators need to understand a concise outline of the measures taken in this efficient process.
- Making an Entry of Sales Orders
- Making a Requisition Worksheet
- Creating a Purchase Order
- Posting a Sales Order
- Getting a Purchase Order Automatically
- Creating an Invoice for a Purchase Order
Benefits of Drop Shipping
Drop Shipment within Dynamics 365 Business Central enables efficient testing of different business ideas with reduced risk. For the most part, Drop Shipments in Business Central allows valuable and actionable insights into product selection and effective marketing strategies.
Quick Start with Less Capital
Drop shipping renders significant advantages as it eliminates the requirement for warehouse management, order fulfillment, inventory tracking, returns handling, and stock management.
This frees up your crucial resources for core business activities. Additionally, retailers and wholesale distributors can quickly launch an e-commerce store without worrying about upfront inventory investment. With such capabilities, you can avail of a diverse product selection and get a rapid entry into the online retail market.
Also, existing players can leverage the solution to expedite their customer service and capitalize on trending growth opportunities.
Extended Customer Reach
By implementing a drop shipping strategy and Order Management within Business Central, businesses can provide a broader range of products without bearing the burden of inventory costs and risks.
For the most part, wholesale partners can showcase your products or goods in their physical or online stores. Such inventive capabilities help reach your customer base with minimal effort. This indirect expansion of your market enables online businesses to extend customer reach and drive growth.
Time and Cost Saving
You can drive robust warehouse management and manage stock levels and the logistics of order fulfillment by leveraging the drop shipping strategy in Dynamics 365 Business Central. Businesses may find it an extensively time-consuming and tiring challenge if done manually.
With Drop shipment in Business Central, you can eliminate the need for a warehouse, packing, and shipping orders, monitoring inventory, handling returns, and tracking stock levels. This solution streamlines operations and saves your valuable, substantial business hours, and resources while minimizing costs.
Flexibility and Scalability
Drop Shipment within Dynamics 365 Business Central offers unrivaled flexibility that conventional business models or legacy systems lack. With drop shipping suppliers, you can easily scale your business as they manage the processing of additional orders.
For the most part, you can expand your business area without experiencing the same level of workload increase. Eventually, it would result in fewer growing pains and reduced incremental work. Furthermore, the drop-shipping model in Microsoft Dynamics 365 Business Central allows for efficient and seamless growth.
Case Study: How NavisionIndia Transformed Business Operations for a Wholesale Distribution Business with Drop Shipments in Microsoft Business Central?
Company Profile
Our client is a well-established wholesale distributor of electronic components, serving manufacturers across diverse industries. Their commitment to competitiveness led them to seek ways to streamline their supply chain and reduce operational expenses. This case study explores how they achieved these goals.
Challenges
- Managing Inventory Costs: Our client struggled with the high costs associated with storing and managing a large inventory of electronic components. Storing these items in their warehouse required substantial resources and expenses.
- Fulfilling Urgent Customer Orders: One recurring challenge was the need to promptly address urgent customer orders, especially when specific items were temporarily out of stock. Delayed order fulfillment posed risks to customer satisfaction and loyalty.
- Handling Expensive and Bespoke Items: Periodically, our client engaged in transactions involving high-value or custom-made electronic components. These items were specialized and difficult to efficiently manage within their inventory system.
Solutions
Our client chose to implement Microsoft Dynamics 365 Business Central to streamline their operations using drop shipments. Drop shipments involve sending goods directly from suppliers to customers, bypassing the need for these items to go through the company’s warehouse. This approach enabled them to respond rapidly to urgent orders and effectively manage high-value or specialized items.
Implementation Process
- Configuring Drop Shipments: The initial phase involved configuring drop shipments within the Business Central platform. This included identifying specific order lines as drop shipments and creating corresponding purchase orders to vendors for these designated items. Proper setup was critical for smooth execution.
- Ad-Hoc Drop Shipments for Urgent Orders: When urgent customer orders arrived for items temporarily out of stock, the team could quickly set up a drop shipment. This allowed them to fulfill orders without waiting for restocking.
- Dedicated Purchasing Method for Special Items: For expensive or bespoke electronic components, the company exclusively used drop shipments as the purchasing method. This eliminated the need to carry these items in inventory.
Benefits Realized
- Cost Savings: The most significant benefit was a substantial reduction in operational costs, especially those related to warehousing and inventory management. By minimizing the need for extensive inventory storage, our client achieved significant cost savings, bolstering their financial position.
- Improved Customer Satisfaction: The ability to fulfill urgent orders swiftly directly enhances customer satisfaction. Prompt order fulfillment built greater customer loyalty and trust, positioning our client as a reliable partner meeting immediate needs.
- Efficient Handling of Special Items: Integrating drop shipments simplified the process of managing expensive or custom-made items. Specialized inventory management for these components became unnecessary, streamlining operations and improving overall efficiency.
- Simplified Inventory Management: Drop shipments eliminated the need for inventory ledgers posted for these transactions, reducing complexity in inventory management and lowering the likelihood of errors and inaccuracies.
Conclusion
The strategic adoption of drop shipments through Microsoft Dynamics 365 Business Central has been transformative for our client. It empowered them to effectively address inventory costs, elevate customer service levels, and efficiently manage specialized items. Embracing drop shipments demonstrates our client’s commitment to innovation and adaptability in an ever-evolving industry.
For more details on Drop Shipment in Business Central, write to us at info@navisionindia.in Or Schedule A Demo