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Microsoft Dynamics® AX 2012 Drop
Shipment
Minimizing inventory carrying cost and mitigating the risk of holding unsold products is critical to
many companies. Drop shipment is a fulfillment method that allows companies to achieve such
objectives while eliminating the cost of packing and shipping operations. Drop shipment is a
fulfillment method in which the seller does not keep goods in inventory. Instead, the seller passes the
customer’s requirements and receiving details to the vendor, who then ships the goods to the
customer directly. Drop shipment as a fulfillment method is commonly applied by many Internetbased retailers. However, drop shipment also is applied by traditional brick-and-mortar companies
within distribution, wholesale, and manufacturing with distributed selling and central manufacturing
and distribution.
Microsoft Dynamics AX 2012 helps companies to execute their drop shipment process with a high
degree of efficiency—whether as a vendor performing the drop shipment or the seller creating the
initial sales order.
DROP SHIPMENT
Drop shipment in Microsoft Dynamics AX 2012 is implemented through sales and
purchase orders and lines.
Drop shipment can be created as a result of a business policy that the company never
carries any inventory, such as in the case of a sales subsidiary. Or it can be an ad hoc
business sourcing decision where the company is out of stock and short delivery lead time
is critical to the sale. The drop shipment action is called from the sales order line demand,
automatically creating a purchase order; the purchase order and line communicates the
sales order line demand to the vendor. Customer delivery information is synchronized
from the sales order and line to the purchase order and line. When delivery notification is
received from the vendor documenting that the goods have been delivered to the
customer, the purchase order and line is updated, automatically updating the sales order
and line to “delivered.” The sales order is subsequently released for customer invoicing.
Following are drop shipment highlights:
Automatically create an order chain construct of a purchase order and line supplying
a sales order and line demand.
Automatic synchronization of delivery information from sales order and line to
purchase order and line.
Complete visibility and tracing of sales order line demand to purchase order line
supply, logistically as well as financially.
Update of the purchase order and line from vendor delivery notification automatically
updates the status of the sales order and line to “delivered,” releasing the sales order
for customer invoicing.
DROP SHIPMENT AND INTERCOMPANY TRADE
The process gains are particularly significant when drop shipment is applied within an
intercompany trade context. Drop shipment and intercompany trade are typically applied
in business scenarios where a sales subsidiary never carries inventories and all deliveries
are made directly from a central distribution center. Here it is possible to have all process
updates to the orders in the selling company (the sales subsidiary) being executed
automatically based on business events in the delivering company (the distribution
center).
Following are the highlights of drop shipment when applied within an intercompany
context:
Business events in the delivering company automatically trigger updates in the selling
company, ensuring that the orders and lines are always in synchronization while
ensuring minimum process cost.
Business policies for intercompany drop shipment allow for the tailoring of data
synchronization, printing of business documents, and process execution to the needs
of the business.
For more information on Intercompany and drop shipment please consult the datasheet
on Microsoft Dynamics AX 2012 Intercompany Trade.
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business decisions with greater confidence. Microsoft Dynamics works like and with familiar Microsoft software, automating and
streamlining financial, customer relationship and supply chain processes in a way that helps you drive business success.
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CCAX2012BV056