Drop shipping is a method of delivering goods to the customer where a company does not keep products in stock. Instead, when a company receives an order from a customer, the product is purchased from a third-party vendor who directly ships the product to the customer. No physical inventory is managed at the company level. Vendor will raise the invoice to the company and Company will raise the invoice to the Customer. Flow Diagram Sales Order Creation (VA01) Item Cat TAS ↓ Automatic Purchase Requisition Generation ↓ Purchase Order Creation (ME21N) ↓ Vendor Delivers Goods to Customer ↓ Goods Receipt Posting (Non-stock, MIGO) ↓ Vendor Invoice Verification (MIRO) ↓ Customer Invoice Generation (VF01) 1.Sales Order Creation (SAP SD) - A customer places an order. - Create a sales order T-Code VA01. -  Item Category (TAS) to indicate a third-party process. 2. Automatic Purchase Requisition Generation - Based on the sales order, system will automatically generates a purchase requisition. 3. Purchase Order Creation - Convert the purchase requisition into a purchase order using transaction ME21N. - Include the customer's delivery address in the purchase order. 4. Vendor Delivers Goods Directly to Customer - The Vendor ships the goods directly to the customer's location as specified in the purchase order. - Company does not handle or store the goods. 5. Goods Receipt Posting (Non-Stock Item) - Post a goods receipt in MIGO. - Since the goods are delivered directly to the customer, this is a non-stock item posting. 6. Vendor Invoice Verification - The Vendor sends an invoice for the goods delivered. - Verify and post the invoice using in MIRO. 7. Customer Invoice Generation - Generate an invoice for the customer in VF01.