Discover Drop Ship Process in Business Central to Optimize Supply Chain
According to a recent study by Grand View Research, the global drop shipping market was valued at USD 225.99 billion in 2022 with an expected compound annual growth rate (CAGR) of 23.4% from 2023 to 2030. Coupled with the current increasing trend in online shopping in the post-pandemic world and the globalization of e-commerce trade, drop shipping is at an all-time rise.
Many businesses have started opting for drop shipping operations to fulfill their sales operations. It is a great way to boost sales and generate higher revenue without having a large investment.
Here, the supplier or manufacturer holds the actual inventory and ships the products directly to the customer. Your company will simply act as a mediator and manage all the orders. And the best part is that you can brand these goods with your company’s name, allowing you to expand your selling operations.
So, if you’re looking for a way to create and sustain a startup enterprise at low startup costs drop shipping is the way to go. Plus, you can sell a wide product range, reduce inventory risk, and manage your operations effectively.
Benefits of using ERP Systems for Drop Shipping
Drop shipping minimizes risk and aids in testing business ideas and integrating it with ERP systems can increase revenue. Cloud ERPs like Microsoft Dynamics 365 Business Central have dedicated modules that will allow businesses to reach new levels. Some of the benefits you can leverage by implementing a Cloud ERP in drop shipping are:
- Businesses can lower startup costs and avoid costs incurred for warehousing.
- Enterprises can offer a more comprehensive product range and access to new customers through wholesale partners.
- Companies can save resources such as time and money by eliminating inventory management and order fulfillment hassles.
- Businesses can support flexible and scalable growth, with suppliers handling additional orders and reducing workload.
- Companies can manage orders and oversee the drop shipping process anywhere, whether from a home office or on the go.
- ERP systems help manage and fulfill sales orders, create quotes, list items and corresponding prices, apply discounts, check inventory, and make shipments.
- Enterprises can also track the status of drop ship orders at any time to ensure on-time delivery.
Relevance of Dynamics Business Central to Boost Sales and Drop Shipping Operations
Successful drop shipping requires effective sourcing, strong marketing, and top-notch customer service to build a profitable online retail business with low overhead costs. You must focus on the following tasks to ensure smooth supply and operations.
- Online Store: You must set up an online store or e-commerce platform where they list products for sale. These products can come from various suppliers or manufacturers.
- Markup Pricing: You need to list markup pricing for the products uploaded to their online store. This markup covers their operating costs and desired profit.
- Customer Orders: When customers visit your online store and place product orders, you can try to automate and manage the process. It makes the process more efficient, allowing you to dispatch the items for on-time delivery. And, you can ensure satisfactory customer service!
- Order Forwarding: Since you’re not required to stock the products in-house, you must create an effective system in place. This will help you to forward the customer’s order and shipping information to the supplier or manufacturer.
- Supplier Fulfillment: The supplier or manufacturer will then ship the products directly to the customer using your brand name. Your enterprise will oversee and manage all buying and selling processes for smooth operations.
- Customer Receipt: The customer receives the product with your branding and packaging, even though the supplier shipped it.
How to Streamline and Manage Drop Shipping Using Business Central?
Dynamics 365 Business Central allows you to simplify drop shipping operations by creating a systematic database and an effective management system. With just a few steps, you can seamlessly create sales and purchase orders, drop-ship items to customers, and post invoices.
1. Creating a Sales Order
- Enter details like order type, sales organization, distribution channel, and division selection.
- Navigate to the ‘Actions’ section in the top right corner for easy access.
- Click on “Sales Order” to access a blank sales order screen.
- Input customer information, item details, and quantities accurately.
2. Creating a Purchase Order
- After completing the sales order, generate a Purchase Order.
- Modify the option from the ‘Ship-to’ dropdown to ‘Customer Address’. Then, select the customer from the dropdown menu.
3. Drop Shipping Setup In Business Central
- Access a list of sales orders for specific customers by choosing “Drop Shipment” and selecting “Get Sales Order.”
- Identify the correct sales order and confirm it.
- Complete the process by clicking “Post,” ensuring the “Receive” option is chosen.
4. Posting the Sales Order
- Post the sales order in Business Central by clicking “Sales Orders” under the ‘Ongoing Sales’ section.
- Open the relevant sales order and click “Post and Send” from the ribbon.
- Choose the “Invoice” option to generate an invoice for the customer.
5. Posting the Purchase Invoice
- To finish, post the purchase invoice.
- Now, navigate to the Business Central dashboard. Then, select “Purchase Orders” under the ‘Ongoing Purchases’ section.
- Choose the relevant purchase order, click “Post,” like the “Invoice” option, and click “OK.”
How to use Dynamics Business Central to fulfill Special Orders?
You can also use Business Central to apply filters and configure special orders for effective sales and management. Special orders will allow you to deliver a specific item catalog from an order list to a specific customer.
This becomes useful in case of multiple orders from the same buyer but to different locations or multiple customers. It also helps in sending and managing orders from customers to ensure you’re delivering the right product to the right person.
1. Creating A Special Sales Order
- Enter the customer number in the header.
- Select the item in the line and choose the ‘Drop Shipment’ box.
2. Creating a Purchase Order
- Create a purchase order after adding items and quantities to the sales order.
- Go to Purchase Orders and click ‘+ New’ for a straightforward process.
3. Connecting Purchase Order to Drop Shipment
- In the purchase order, specify the vendor number, name, and invoice number optionally.
- Choose Customer Address in the Ship-to field in the Shipping and Payment tab.
- Click ‘More Options,’ ‘Actions,’ ‘Functions,’ ‘Drop Shipment,’ and ‘Get Sales Order’ in the header. Select the sales order to associate with the purchase order.
- Purchase order lines will auto-populate.
- To confirm, go to the ‘Lines’, click ‘Order,’ ‘Drop Shipment,’ and ‘Purchase Order’ to view the corresponding purchase order.
4. Posting the Drop Shipment Using the Location Code
- Complete the drop shipment by posting either the sales order or receipt on the purchase order.
- Enable the Location Mandatory field during setup to improve precision of your drop shipment handling.
5. Creating Drop Shipments Using A Requisition Worksheet
- Use the Requisition Worksheet to generate a purchase order from a sales order.
- It allows you to distinguish drop-shipments from the Planning Worksheet.
- Find the relevant sales order, and use ‘Process’ followed by Carry Out Action Message’ to create the purchase order.
- Select the ‘Special Order’ function and apply filters if required.
6. Creating Special Sales Orders Using Appropriate Filters
- Use these special orders to link purchase and sales orders for inventory stock reservation or pre-ordering.
- Create a sales order using the customer number and item number.
- Customize the page using the ‘Purchasing Code’ and ‘Special Order’ fields.
- Input a special-order value in the Purchasing Code field and file through the Special-Order field for line-by-line handling.
7. Creating a Purchase Order for Special Orders
- To generate a purchase order, specify the vendor and set the ‘Ship-to’ field to ‘Customer Address.’
- Click ‘More Options’, then go to ‘Actions’. Click on ‘Functions’ followed by ‘Special Order’ and ‘Get Sales Order.’
- Update the shipment address and select the order.
Reach Out To AdCirrus For Effective ERP Solutions And Streamlined Drop Shipping Operations
With Business Central, AdCirrus ERP can help you streamline drop shipping operations effectively. Whether you’re an e-commerce startup or a seasoned player in the field, we will leverage these Cloud ERP solutions from Business Central to help you maximize operational efficiency.
With the right ERP strategy in place, we will help you understand and navigate the complexities and challenges you will face during business operations. Embark on your journey to achieving industrial success in Drop Shipping with AdCirrus ERP. We offer customized ERP implementation from Business Central, tailoring to your unique goals!