Depending on the goods, the logistics and your business partners, certain items are sometimes shipped directly to the customer without passing through your warehouse first. This can be a convenient arrangement, however these items are part of inventory and require the appropriate documentation. For such processes, SAP Business One enables you to define a virtual warehouse:
Drop-ship warehouse can also be used for managing serial and batch numbers – just select the “Manage Serial Numbers and Batches.” When creating documents for items in drop-ship warehouse, no inventory transactions are created for those items. Note that after a document involving drop-ship warehouse is posted, you cannot reverse this setting.
Available in SAP Business One, version for SAP HANA and SAP Business One.
Source: Ari Schapira | SAP Business One – The Tip of the Week