What is drop shipment in SAP IS-HT-DRM - Distributor-Reseller-Management?

SAP Term: drop shipment

• Component: IS-HT-DRM

• Component Name: Distributor-Reseller-Management

• Description: A process whereby distributor/resellers create a sales order and have the manufacturer/supplier ship the material directly to the end customer. The manufacturer/supplier then bills the distributor/resellers who, in turn, bill their resale customer. The returns from a drop shipment go directly to the distributor/reseller.

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• Key Concepts: 
  Drop shipment is a process in SAP IS-HT-DRM Distributor-Reseller-Management that allows a company to ship goods directly from the supplier to the customer, bypassing the company’s own warehouse. This process is beneficial for companies that do not have their own warehouses or do not want to manage the inventory of goods. 
  
  How to use it: 
  In order to use drop shipment, a company must first set up a relationship with its suppliers. The company must then create a purchase order for the goods and specify that the goods should be shipped directly to the customer. The supplier will then ship the goods directly to the customer, and the company will be billed for the goods. 
  
  Tips & Tricks: 
  When setting up a drop shipment process, it is important to ensure that all parties involved are aware of their roles and responsibilities. Additionally, it is important to ensure that all necessary paperwork is completed and that all parties are aware of any applicable taxes or fees. 
  
  Related Information: 
  Drop shipment is similar to consignment, which is another process in SAP IS-HT-DRM Distributor-Reseller-Management that allows a company to ship goods directly from the supplier to the customer. However, in consignment, the supplier retains ownership of the goods until they are sold by the customer.