Open the Customer Order.
Scroll down to Shipments and click on "+" to add a new.
Save the shipment.
Click Pick all items or pick individually, and then confirm in the pop-up alert. This will take the items from stock and update the Shipment status to “Shipped”.
Along with this, the corresponding CO is updated to “Shipped & Invoiced”, if all items are now shipped for the CO.
Read more on how to ship products to customers.