Answer / naveen s

SAP Business One (SBO)
A transfer of goods directly from a wholesaler or
manufacturer to a third-party customer.

A drop shipment is based on an order from a customer to a
distributor. The distributor initiates the shipment by
informing the wholesaler and then bills the customer for
the goods.

Answer / rohan

Hi,

I will try explaining this with a trading goods example:

Normally customer places the order on the distributor and
then the distributor will place the order on the vendor or
the manufacturer. Once the material is shipped from the
vendor it reaches the distributor and then the distributor
bills the material to the customer.

Now incase the material is directly billed by the vendor or
the manufacturer to the customer then we call this
transaction as drop shipment. (NO INVOLVEMENT OF THE
DISTRIBUTOR)

Thanks

Answer / anurag

Drop shipment:
Sales order processing will remain the same till the global
availability of stock.
•If the customer accepts partial / multiple deliveries or
all products are available in one plant, then the CSR will
change the delivering plant (belonging to different legal
entity) in the sales order for each line item.
•System will create the delivery on the delivering plant
(plant of another legal entity).
•Shipping process like picking, PDI, packing and Post Goods
Issue from the delivering plant will take place.
•Goods will be dispatched to the customer directly from
this delivering plant.
•After dispatch, selling sales organization (from the sales
order) will create the invoice to the customer.
•The customer invoice now triggers a inter company billing
between delivering legal entity and selling legal entity
based on the transfer price.
•An automatic accounts payable invoice is created on the
selling entity’s books of account showing delivering entity
as vendor.

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