Order fulfillment is everything that a company does from the moment an order for a product is received, to the customer having their purchase in their hands. It also includes the processes involved in receiving products to sell, storing those products (climate-controlled warehousing is optional for products that are temperature sensitive), and providing inventory control of those products. Order fulfillment is crucial because it is the last link in the supply chain, and in some cases, the only direct contact with the end customer.
Drop Ship Fulfillment is a supply chain technique in which the manufacturer's customer does not keep goods in stock. Rather their customer orders and shipment details are transferred to the manufacturer who then ships the goods directly to their end user. See Fig. A below.
An example of this would be to build the customer's product, send an invoice, and then move the finished materials to a distribution department. Upon receiving a request to drop ship finished materials to end customers, the sales order would be entered and the product would be shipped out. Invoice the company and the process is complete.