Direct Delivery on Sales Order:

Create a Sales Order with required item details.

Click on Direct delivery button.

A new form create direct delivery opens,then select vendor name and click OK.

A Info log is shown that purchase order is created, now click on Show button to open created purchase order.

Remember, you can not change quantity field but you can change unit price of the item.
Status of PO will be direct delivery that you can check under setup.

In case of direct delivery, system consider customers address(same as sales order) as delivery address in purchase order.

Confirm the Purchase Order and then generate Product Receipt.

You can see change in status,

1. Before product receipt of PO, status of Sales Order is Open.

2. After product receipt of PO, status of Sales Order is changed automatically to  delivered.

After receiving you can invoice PO and SO separately.