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Hi! Today is a perfect day to start learning Microsoft Dynamics AX (Axapta). The first module that we will study is Trade and Logistics. This training will help you pass the Microsoft Dynamics AX Trade and Logistics certification exam. In the end of the training, I’m planning to provide you with the examples of questions from this exam. My main goal is to create a simple Axapta tutorial that will help you understand basic Microsoft Dynamics AX business processes and increase your value as a Microsoft Dynamics AX developer or consultant.

I’m going to write several posts each week. The contents of the Trade and Logistics training includes the following topics:

1. Introduction
2. Create new company. Demo data
3. Item setup
   • item group
   • inventory model group
   • inventory dimension group
4. Purchase business process
   • Setup initial data
   • Create Purchase order
   • Item arrival and registration
   • Post the Packing slip
   • Post an Invoice
5. Sales business process
   • Create Sales order
   • Shipment (reservation, picking, loading, release shipment)
   • Post the Packing slip (Shipping carrier interface)
   • Post an Invoice
6. Quarantine management
7. Quality management
8. Transfer orders

Let’s begin.

Why must the ERP have the Trade and Logistics module? Because this module helps people answer these and many other questions:

• Where do we purchase items?
• How will we deliver items from vendors?
• Where are the items stored?
• Whom are we going to sell the items to?
• How will we deliver items to customers?

This module implements the Logistics and Inventory management.

What is Logistics management? Logistics management plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer & legal requirements.

What is Inventory management? The word “inventory” was first recorded in 1601. The French term inventaire, or “detailed list of goods,” dates back to 1415. Inventory management is primarily about specifying the quantity and placement of stocked goods.

In other words, logistics management answers the following questions:

• How can we deliver items to a customer as quickly as possible
• How many items should we buy from vendor so that they are not spoilt in the warehouse?
• Where should warehouse workers pick the goods? What is the optimal path to the item in a warehouse?
• Where should warehouse workers pack the goods?
• What vehicle should load the goods?

As you can see, logistics management controls processes inside a company (warehouse logistics) and outside a company (transport logistics).

Inventory management answers such questions as where an item is stored (aisle, row, shelf, etc.), how many item units are stored in a warehouse and many other item related questions.

Hmm… that’s interesting, if we, for example, transfer an item from one company warehouse to another one, is this Logistics or Inventory management? My answer is Logistics management.

One more term that also confuses a lot of people is Supply Chain Management (SCM). The thing that may confuse you is the difference between the supply chain management and logistics management.

Supply Chain Management is a system of organizations, people, technology, activities, information, and resources involved in moving a product or service from supplier to a customer. Supply chain activities transform natural resources, raw materials, and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable.

So, to extend Logistic management description, we can say that logistics management is the area of a supply chain which plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customer & legal requirements.

Logistics is a channel of a supply chain which adds the value of time and place utility.

Actually Logistics is the physical execution part of Supply Chain Management. SCM deals with more strategic aspects at macro level whereas logistics is nuts and bolts of its implementation.

Supply chain consists of the following areas:

1. Transport
2. Finance
3. Health, safety & Environment
4. Information Technology
5. Education & Training
6. Human Relations
7. Warehousing

Logistics is a logical extension of transportation & warehousing to achieve an efficient & effective goods distribution system.

Summary

This lesson answers the following questions:

• Why ERP software has the Trade and Logistics module.
• What is Logistics, Inventory, and Supply Chain Management and what is the difference between them.

In the next training lesson, we will start working with Axapta. At first we will create a new company and download demo data.

Technorati Tags: Inventory management, Logistic management, Supply Chain management, Trade and Logistics

Hi there! We will study different business processes and their implementation in Microsoft Dynamics AX (Axapta) so we should have one data to work with.

In this training lesson, we will create a new company in Microsoft Dynamics AX and import demo data to it.

Create new company

1. Go to Administration > Common Forms > Company accounts. The Company form opens
2. Create a new record by pressing CTRL+N. In the Company accounts field, type AXT and in the Name of company accounts field, type Dynamics AX Training.
   

   Company account

3. Save the record by pressing CTRL+S.

Good, now our new AXT company is ready to work in.

Switch to AXT company:

1. Click the current company icon located in the bottom right corner of the status bar. The Select company accounts form opens.


Current company

2. Select AXT company, and then click OK.

Microsoft Dynamics AX will change the company from DAT to AXT.

Tip: When you log in into Microsoft Dynamics AX, next time, you need to change the company from DAT to AXT again. You can set up another default company that will always open when you start Microsoft Dynamics AX.

Let’s set up the AXT company as a default company:

1. Click the Microsoft Dynamics AX menu button and then click Tools > Options…
   
   

   Tools menu

2. The Options form opens. On the General tab, find the Start company accounts field and select AXT company from the drop-down list. Close the form.

Import demo data.

1. Download demo file and definition file. Extract and save these files in one folder on your local computer.
2. Return to Microsoft Dynamics AX. Make sure that the current company is AXT. Go to Administration > Periodic > Data export/import > Import. The Import options form opens.
3. In the File name field, enter the path to the downloaded demo file. Click OK.

The process may take up to 10 minutes. When import is finished, the Infolog message appears stating that the file has been imported.

That’s all! Our new AXT company with demo data is now created.

Let’s continue creating our first item and discussing why some fields in the Item form are mandatory and what they are used for.

Technorati Tags: create company, import demo data

All companies have a list of items (goods) to work with. Today, we will create a new item and discuss why some fields are mandatory. In Microsoft Dynamics AX, the list of items is maintained in the Item form located under Inventory management > Common Forms > Item details.

Let’s assume that our company resells bottles and cans, an inventory manager needs to create two new items in the Item form: Bottle and Can.

First, we create the Bottle item. Open the Item form (Inventory management > Common Forms > Item details) and press CTRL+N. In the Item number field, type 1. And, then type Bottle in the Item name field.

create new item

The Item group field contains a red wavy line which means it is a mandatory field. On the General tab, there are some other mandatory fields. They are the Item group, Inventory model group, and Dimension group fields. Refer to the following explanation why these fields are mandatory.

Item group

What should we know about the item Bottle? This question has several answers, for example, we need to know its color, size, price, and inventory unit. But, what is the Item group? We should answer simple questions what general ledger accounts will be used when we post an item transaction. Item transactions are created when an item is, for example, purchased or sold. In Microsoft Dynamics AX, we use the Item group to set up general ledger (or posting) accounts.

What are a general ledger accounts and why should we use them when purchasing or selling an item? This question will be disclosed in the Microsoft Dynamics AX Financial Training. But, before I will create it, you can understand the Financial area yourself. The great training about Accounting is stored here.

Now, I will try to explain some Financial concepts. Look at the following figure, a company from a financial point of view is a circle with assets, liabilities, and equity parts.

Company from financial point of view

Where Assets = Liabilities + Shareholder’s Equity. Assets are items and money that customers should pay to a company – bank accounts, cash, and fixed assets (for example machines that produce goods). Liabilities are money that a company should pay to vendors – payroll (salary to workers), tax amount, insurance, and bank loans. Shareholder’s Equity is the money that a company should pay to company investors or shareholders (amounts invested into the company by the owners plus the cumulative net income of the company that has not been withdrawn or distributed to the owners). Why is the Shareholder’s Equity separated from other parts of the circle? Because it contains the information about the amount of money that a company should return to shareholders (This is the main purpose of all companies =) ).

General ledger accounts are used to store the information (amount of money) about a concrete type of assets, liabilities, or Shareholder’s Equities. For example, in the Microsoft Dynamics AX demo data we have such accounts as Bank Account USD, Bank Account EUR, Accounts receivable (money that a company should pay to vendors), Car audio receipts, DVD player receipts, etc. (The path: General ledger > Common Forms > Chart of Accounts Details). Here, we can always find the information about, for example, how much money we spent for purchasing Bottles for the last month. If we don’t have a general ledger account how could we do this?

General ledger accounts

If a company keeps accurate records, the accounting equation will always be “in balance,” meaning the left side should always equal the right side. The balance is maintained because every business transaction affects at least two of a company’s accounts. For example, when a company borrows money from a bank, the company’s assets will increase and its liabilities will increase by the same amount. When a company purchases inventory for cash, one asset will increase and one asset will decrease. Because there are two or more accounts affected by every transaction, the accounting system is referred to as double entry accounting.

A company keeps track of all of its transactions by recording them in accounts in the company’s general ledger.

Let’s return to our Bottle item. We should create general ledger accounts for this item for any possible case. Luckily, I use the demo data and so do you. So, let’s use the existing Item group for the Bottle item. In my demo data, I select the Packaging item group.

Item group

How can we find out what general ledger accounts are assigned to the item? We can do it by either right-clicking in the Item group field and selecting the Go to the main Table Form option or by opening the Item groups form (Inventory management > Setup > Item groups). In the Item group form, we see different tabs with many fields. All these fields contain the information about which general ledger accounts will be used to store the amount of money for specific item status (sold item, purchased item, purchased but not paid item, applied discount amount, etc.). For example, go to the Purchase order tab, the Invoice field group, Receipt field. This field contains a general ledger account that stores the amount of money that has been spent for purchasing. The Packing slip field contains the general ledger account that stores the amount of money that will be spend for the item that is already in a warehouse (Vendor hasn’t asked to pay for them yet).

Item group form

Don’t be frightened right now as we will understand AX features when we discuss certain business processes.

Training Lesson Summary:

In this lesson we have created a first item, got acquainted with mandatory fields, and given consideration to the Item group.

In the next lesson, we will get acquainted with the Inventory model group and Inventory dimension group.

Technorati Tags: Item setup

In this training lesson, we continue setting up the Bottle item. Now, we will study Inventory model groups.

Inventory model group

Why is this field mandatory? What else should we know about an item? As you understand it is not the size, weight, or color – it is something that all items must have. Let’s assume that a company purchases four  items for the cost of $5 and three items for the cost of $6. So, the total items’ cost is 4*$5+3*$6=38$. The company sells two items. Now, there are 4+3–2=5 items in the company warehouse. And how much items’ cost remains?

Possible variants:

1. (4 – 2) * $5 + 3 * $6             = $28       (the company has sold two items that cost $5)
2. (4 – 1) * $5 + (3 – 1) * $6    = $27       (the company has sold one item that costs $5 and one item that costs $6)
3. 4 * $5          + (3 – 2) * 6$    = $26       (the company has sold two items that cost $6).

We can’t answer this question accurately because we only know that there are six items remaining in the warehouse and we don’t know which items are sold. The first and the main purpose of the Inventory model group is to set up the rules for calculating of item cost (of those items that are still in the warehouse and those that are sold).

We can set up the following rules for an inventory models to calculate item’s cost:

• FIFO – First in First out. Means that the first purchased item is first sold. In our example, we purchased four items for the cost of $5 first, so these items will be first sold. After the items are sold, the items’ cost in the warehouse will be (4 – 2) * $5 + 3 * $6 = $28.
• LIFO – Last in First out. Meaning that the first purchased item is last sold. In our example, we purchased three items for the cost of $6 last, so these items will be first sold. After the items are sold, the items’ cost in the warehouse will be 4 * $5 + (3 – 2) * 6$ = $26.
• Weighted avg. – in this case, the average cost is calculated and subtracted from the warehouse items’ cost when the item is sold. In our example, the average cost is (4 * $5 + 3 * $6) / 7 = $5.43. After the items are sold, the items’ cost in the warehouse will be (7 – 2) * $5.43 = $27.15.
• Standard cost – this inventory model uses a specific price as cost. The price can be entered manually or calculated automatically. This price is used as cost for purchase and selling. For example, we have a standard cost price of $5.5. So, we purchase all items for this price ($5.5). The total items’ cost before the selling is 4 * $5.5 + 3* $5.5 = $38.5. After two items are sold, the items’ cost in the warehouse will be (7-2) * $5.5 = $27.5.
• LIFO date – this model equals to LIFO with the only difference being that purchase and selling dates are taken into account. For example, a company purchases four items for the cost of $5 on October, 11, three items for the cost of $6 on October, 11 and two items for the cost of $7 on October, 13. The company sells two items on October 11, but the Sales manager was out of office and didn’t post the sales. The Sales manager came back to the office on October, 13 and posted the sales backdate to October, 11. The sales posting process will decrease the cost of items in the warehouse at 2 * $6 (item’s last cost as of October, 11). If the LIFO inventory model is used, the sales process will decrease the cost of items in the warehouse to 2*7$ (because 7$ is the last cost received into the warehouse).
• Weighted avg. date. – this model equals to the Weighted avg with the only difference being that the average amount is calculated for a separate day. For example, a company purchases four items for the cost of $5 on October, 11, three items for the cost of $6 on October, 13 and two items for the cost of $7 on October, 13. The company sells two items on October, 13. The average cost price will be (3 * $6 + 2 * $7) / (3 +2) = $6.4, note that four items at the price of $5 are not included in the average cost price calculation because they have been purchased on another day.

We will use the FIFO inventory model group for the Bottle and Can items. The inventory model group called FIFO is already created in our demo data used for training.

You can create your own inventory model group. Go to Inventory management > Setup > Inventory > Inventory model group and create a new record with the following setup:

Overview tab

Setup tab

Inventory model tab

As you can see from screen shots an Inventory model group has a few more parameters. You can also specify the following parameters:

• Whether physical and financial negative inventory is permitted
• Whether inventory transactions are to be posted to the General ledger
• The workflow used when you send or receive items
• The reservation rules, when you create sales order lines for items where some or all of the quantity of the item has the status Ordered

These parameters will be explained later in practice.

Now, we assign an inventory model group to the Bottle item (back to the Item > General tab).

Assign inventory model group with Bottle item

Training Lesson Summary

In the Inventory model group training lesson, we understand the purpose of an Inventory model group.

Our new item named Bottle has the Packaging item group with a specific general ledger account and the FIFO inventory model group. In the next training lesson, we will study an Inventory dimension group and finish the item setup.

Technorati Tags: Inventory dimension group, inventory model group

In this training lesson, we will finish the setup of the Bottle item. Today, we will study an Inventory dimension group, create, and activate Bottle dimensions.

Inventory dimension group

What else should we know about an item? That is the item and storage dimensions. Item dimensions characterize an item by size, color, and configuration. Storage dimensions characterize an item by location, warehouse, serial number, etc. Item and storage dimension are known as Inventory dimension. Inventory dimensions are used to define physical characteristics of inventory items. Dimensions control how items are stored and drawn from inventory and enable inventory to be managed on a more detailed level.

Microsoft Dynamics AX provides the following Item dimensions:

• Size
• Color
• Configuration

Storage dimensions are as follows:

• Site
• Warehouse
• Batch number
• Location
• Pallet ID
• Serial number

For the Bottle item, we will use the Size and Color item dimensions and the Site and Warehouse storage dimensions.

Find or create a new inventory dimension group. Go to Inventory management > Setup > Dimensions > Dimension groups. If you use our demo data, find the appropriate dimension group (i.e. with Size, Color, Site, and Warehouse dimensions active).

Or create yours:

1. Create a new record by pressing CTRL+N.
2. Fill in the dimension name; for example, CS-W.
3. Save the record by pressing CTRL+S.
4. Select the Active check box for the Size and Color item dimensions, and note that the Site and Warehouse storage dimensions have already selected by default.

Item and Storage dimensions areas

The Inventory dimension form also contains a lot of fields. The functions of these fields will be explained later.

Now, go to the Item form (Inventory management > Common Forms > Item details > General tab) and assign the inventory dimension group to the Bottle item.

Assign inventory dimension group with Bottle item

Now all item’s mandatory fields are filled in, we can save the record in the Item form. The Bottle item is now created.

Setup inventory dimensions

For the Bottle item, we select the CS-W dimension group with the Color and Size item dimensions active. Let’s create a value for these dimensions.

First, create a value for the Size dimension:

1. In the Item form, click Setup > Sizes. The Sizes form opens.
2. Create two records with size dimensions 0.33 and 0.5.

Bottle item’s size dimensions

Then create a value for the Color dimension:

1. In the Item form, click Setup > Colors. The Colors form opens.
2. Create records for the following three colors: Blue, Red, and Green.

Bottle item’s color dimensions

An item may be of different sizes and colors but a company may not purchase and/or sell item in every dimension combination. Available item dimension combinations must be created in the Combinations of item dimensions form. We will work with the Bottle items with the following dimension combinations:

• 0.33 Blue, Red, Green
• 0.5 Blue and Red (0.5 Green Bottle doesn’t exist)

To create these dimension combinations, do the following:

1. In the Item form, click Setup > Item dimension combination.
2. In the Combinations of item dimensions form, create a new record by pressing CTRL+N. Select 0.33 in the Size field and Blue in the Color field. Save the record by pressing CTRL+S).
3. Click the Create Combinations button. This button can help in creating the item dimension combinations for a new item. If we click this button, dimension combinations that do not exist are shown.
4. In the Combinations of item dimensions form, click the Select All button and then click OK. All possible dimension combinations are created. Note that the form has the same name as the initial form.
5. Since there is no Bottle item of the size 0.5 and of Green color, we delete this record from the initial form. (Select the record and press ALT+F9).

Item dimension combinations

Create dimension combinations automatically.

It is a very tedious process to activate a dimension combination when a new dimension value is created. If an item must have a dimension combination for all dimension values, we can set up Microsoft Dynamics AX to activate new dimension combinations automatically.

To achieve this, do the following:

1. In the Item form, click the General tab -> Item dimension – Setup field group
2. Select the Autocreate combination check box.

Now, create the Orange color dimension (click Setup > Colors). Make sure that the new dimension combinations 0.5 Orange and 0.33 Orange are created (click Setup > Item dimension combinations).

Item dimension combinations

Note that automatically created combinations have the Auto-generated check box selected.

Create the Can item

Now, we will create the Can item. It has similar parameters to those of the Bottle item. We will use the Bottle item template for this purpose.

To create the Bottle template, do the following:

1. In the Item form, right-click the Bottle record and select the Record info option from the menu. The Record information form appears.
2. Click the User template button. The Create template form opens. (This template will be available for the current User only. The template approach can be used for all forms in Microsoft Dynamics AX).
3. Enter the template name Bottle in the Create template form.
4. Click OK. And close the Record information form.

After a template is created, Microsoft Dynamics AX automatically shows the Select a template for Item form when we create a new item in the Item form.

Select a template for Items form

To create the Can item, do the following:

1. In the Item form, click CTRL+N.
2. Select the Bottle template from the Select a template for Items form and click OK.
3. Type 11 in the Item number field and Can in the Item name field.
4. Make sure that all mandatory fields are filled in. Save the record.

Note: Item dimensions are not transferred from the Bottle item. So, we need to create new Size and Color dimensions and activate them in the Dimension combination form.

Create the following Sizes and Color dimensions for the Can item and activate them:

• Standard Black
• Standard Blue
• Double Black
• Double Blue

Training Lesson Summary

In the Inventory dimension group training lesson, we understand the purpose of a Dimension group.

The Item setup training lesson is now over. Our Company has two items to work with: Bottle and Can. The items have the following setup:

• Packaging item group with specific general ledger accounts
• FIFO inventory model group
• CS-W dimension group with active Color, Size, Site, and Warehouse dimensions

The Bottle item is set up with the following dimension combinations:

• 0.33 Blue
• 0.33 Green
• 0.33 Red
• 0.33 Orange
• 0.5 Blue
• 0.5 Red
• 0.5 Orange

The Can item has following dimension combinations:

• Standard Black
• Standard Blue
• Double Black
• Double Blue.

We have finished setting up the company’s item list. Now, we will work with these items purchasing and selling it. In the next training, we will learn the process of purchasing an item.

Technorati Tags: inventory dimensions, record template

In this Microsoft Dynamics AX Training Lesson, we will understand the purchase business process.

In the previous training lessons, we have created two items – Bottle and Can which we will now use in our work.

Let’s assume that our company needs 5,000 Bottles Red 0.5 and 3,000 Cans Standard Black. The company’s Purchase Manager receives the information from one of the company managers to buy these items from the Big Bottle vendor.

The Purchase Manager creates a new purchase order with two lines, calls the vendor, and agrees order details – item quantity, delivery date, price, etc.

The Purchase Manager enters the agreed information into the purchase order. Then the Purchase Manager needs to confirm the order details and print the Confirmation document. This document is a guarantee that our company and the vendor have a preconcert. The Purchase Manager sends the Confirmation document to the supplier via a fax or an e-mail.

After that, the warehouse workers (on the Big Bottle company side) load a truck with necessary items. A truck driver starts out.

The Purchase Manager typically receives phone calls from the truck driver asking for a delivery. The Purchase Manager asks the driver for any purchase order numbers listed in his paperwork and finds the appropriate purchase order in the system.

The Purchase Manager uses the warehouse management system to determine a time slot, dock door, and duration for the delivery. The system evaluates all items on the purchase orders and determines what receiving door would result in the least travel time for the putaway.

The Purchase Manager accepts the desires dock door and date.

The Purchase Manager provides the truck driver with the dock door number, date and time of receipt.

When the truck arrives to the gate, a security guard logs that the truck is on site.

When the truck driver arrives to the warehouse office, the Purchase Manager physically collects the receiving paperwork from the truck driver. The Purchase Manager opens the purchase orders in the Warehouse Management System (WMS) and compares line item quantities in the truck driver’s paperwork with the quantities displayed in the WMS. Any differences are entered into the WMS.  (These totals should normally remain unchanged from the purchase order totals displayed, and will only vary when the supplier does not ship complete or, rarely, if there is a substitution.)

Once the expected quantities are entered, the WMS goes through putaway routines to determine where to store each inbound pallet. Locations are printed on pallet tags.

As soon as the Purchase Manager makes sure that the order information matches the truck driver’s paperwork, the following documents are printed and given to the Receiving Manager:

• Pallet Tags, (one for each pallet expected)
• Lumper’s TI-HI report. A Lumper is a non-employee hired by a truck driver to help unload a trailer. The TI-HI report refers to the number of boxes/cartons stored in one layer (or tier of a pallet -TI) and the number of layers stacked on a pallet (HI).
• Receiver. A document listing each pallet expected with item quantity.

The Receiving Manager physically examines the arriving goods, affixes pallet tags, and validates the quantities on the Receiver.

When finished, the Receiving Manager returns the Receiver and any leftover labels to the Purchase Manager.

The Purchase Manager stamps the truck driver’s paperwork and releases him.

The Purchase Manager then opens the Warehouse Management System again, opens the data entry function, and enters any quantity adjustments, code dates, etc. noted on the Receiver, and voids any leftover pallet tags.

In the warehouse, the forklift truck driver moves the pallets off the receiving dock and takes them to the location printed on a pallet tag. If for any reason he cannot put a product away, he takes the pallet to a special area sometimes called a twilight zone. Inventory management personnel will handle the problem from there.

The security gate logs trucks off the site.

When items are received, the Purchase Manager posts the Packing slip – this means that the items are already in the company warehouse (company’s property) and we can use these items.

In the last step, the Purchase Manager confirms that our company must pay to the Big Bottle company. For this purpose, the Invoice document exists. The Purchase Manager receives an invoice from the Big Bottle Sales Manager and posts one. This process creates a ledger transaction – an Inventory account is debited (increased), Accounts Payable account is credited (also increased). To understand a financial transaction I recommend you read this training.

There is still one more step exist is the payment process. But this process does not belong to the purchase business process. Even more, the payment is out of the Trade and Logistics scope. Payment will be studied in the Microsoft Dynamics AX (Axapta) Financial training.

Training Lesson Summary

In this training lesson, we have learnt the purchase business process. Let’s review the key personas in this process:

• Purchase manager
• Receiving manager
• Truck driver
• Forklift truck driver

The purchase order flow is as follows:

1. Create
2. Confirm
3. Arrive
4. Register (PutAway)
5. Packing slip (company property)
6. Invoice (must pay)

In the next training lessons, we will learn how the purchase process is implemented in Microsoft Dynamics AX. Also, we will understand that not all steps are implemented on an adequate level.

Technorati Tags: Purchase workflow

Hi Axapta People! Before we start the purchase business process, we must set up initial data in Axapta. In this training lesson, we will understand and set up the following:

• Vendor
• Warehouse structure
• Pallets and forklift

Let’s begin.

As you may remember the initial data from our previous trainings is the follows:

• Company purchases 5,000 items of Bottle Red 0,5 and 3,000 items of Cans Standard Black
• Company vendor is Big bottle company

We need more data for a full-fledged purchase process including the following (I suppose that you have already downloaded the demo data):

• Company warehouse structure
• Company pallet types
• Company forklift trucks
• Extend the Bottle and Can dimension to be able to track a pallet and location

Vendor

We may now create the Big Bottle vendor:

1. Go to Accounts payable > Common Forms > Vendor Details. The Vendors form opens.
2. Create a new record by pressing CTRL+N. Fill in the following fields:
   • Vendor account = 1000
   • Name = Big Bottle
   • Group = 50
3. Save the record. (If you encounter an error “Number sequence for the reference Address book ID in parameters in the Global address book module has not been set up”, do following.)

Now, we have set up the vendor. One field that we should discuss is the Group field. What is the Group field used for? In this training lesson, we have set up general ledger accounts for items. We have studied that a general ledger account contains information (in a money equivalent) about a concrete type of assets, liabilities, or shareholders’ equities. If a company needs to distinguish the item cost (asset) purchased from different groups of vendors, then a vendor group helps. This field relates to the Financial training scope. So I won’t explain it in details in this training. But, I will write short example that can help you understand what a vendor group is used for.

Company warehouse structure

A company’s warehouse physical structure contains the following entities:

1. Sites. A site is a geographical location. A site includes one or several warehouses.
2. Warehouses. A warehouse is a commercial building for storage of goods.
3. Aisles. An aisle is a space for walking with rows of seats on either side or with rows of seats on one side and a wall on the other. In warehouses, rather than seats they have a rack to either side.
4. Racks. A rack is a material handling storage aid system designed to store materials on pallets. One more rack example.
5. Shelves. The rack system composed of shelves.
6. Bins. A bin is a position on a shelf.

A company’s warehouse logical structure contains the following entities:

1. Locations. It is a physical place in a warehouse that must be used as one entity. A location can be an entire aisle or a rack, a shelf or a bin. If, for example, a warehouse has aisles and racks only (without shelves and bins), a location is an entire rack.
2. Store areas. Store areas group locations by dividing the warehouse into designated sections for inventory with similar characteristics. There are two types of store area, and every location is connected to one of the folowing areas: Input area and Picking area. An Input area is used in connection with a place where items are stored when they are received as inventory. A Picking area is used to determine picking routes.
3. Store zones. Store zones are used for prioritizing the store areas for arriving items. The store zones are thus made up of store areas. We will understand the meaning of this entity later in this training lesson.

To set up a company warehouse structure (physical and logical), go to Inventory management > Setup > Inventory breakdown.

Inventory breakdown folder

Under the Inventory breakdown folder, we can find the Sites, Warehouses, Inventory aisles, Store areas, Store zones and Locations forms. Note that a rack, a shelf, and a bin are not warehouse entities. We can’t create a rack, a shelf, or a bin and work with them (for example, associate to a location or inquire the on-hand for a shelf). In Microsoft Dynamics AX, Shelf, Rack, and Bin are properties of a Location. When a location is being created, the user chooses whether the location is rack, shelf, or bin. For example, in the following picture, a Location is a Bin that is situated in Bin 1, Shelf 2, Rack 1, Aisle 01 of Warehouse 22.

Location example

In our training, we will use warehouse 22. This warehouse contains seven aisles. Six aisles are used for storing goods and one aisle is used for receiving and issuing goods to and from warehouse. This one aisle is called Special. Each aisle (with the exception of Special) consists of 15 Racks with 3 Shelves each, each Shelf has one Bin. In this case, a Location is a Bin. A Location name consists of aisle, shelf, rack and bin IDs (names). The Special aisle doesn’t have any racks (or shelves and bins), this “aisle” contains five inbound and five outbound docks. An Inbound or an outbound dock is location. In this case, a Location is a part of an aisle. In our demo data, the location has the name (In_01 or Out_05). The EMPTY-P location is also a part of an aisle that will be used to store empty pallets.

Let’s find all these settings in Microsoft Dynamics AX. I have prepared several screen shots from our demo data.

To find this setting, take the following steps:

1. To open the Warehouses form, go to Inventory management > Setup > Inventory breakdown > Warehouses.
2. To view inventory aisles that belong to the current warehouse, click Inquiries > Inventory aisles in the Warehouses form.
3. Each aisle (except the Special) contains racks, shelves, and bins. A Location in this case is a Bin.
4. From the Inventory aisle form, click the Locations button.
5. The Locations form opens. This form shows locations that belong to the current aisle.

A Location can be of several types:

• Bulk location. Storage of received items. Identifies locations where items are stored until they are either moved to an outbound dock or used to fill a picking location.
• Picking location. Storage of items ready to picking (for sales process).
• Inbound dock. Location in the warehouse where items are received.
• Outbound dock. Location in the warehouse where shipments take place.
• Production input location. Location is used in the Production module.

The following picture helps understand what different location types are used for.

Location types

For example, in the Arrival journal (Inventory management > Journals > Item arrival > Item arrival), an item can arrive only to a location of the Inbound dock type.

A few words about a store zone and a store area. In Microsoft Dynamics AX, Warehouse Management store zones and areas are used for automatic placement of items into preferred locations. A store area groups locations. A store zone prioritizes store areas.

Let’s assume that the Bottle item arrives to the In_01 (inbound dock) location. Where must this item be stored? An item is associated with a store zone. This is done through the Warehouse item form.

Take the following steps to associate the Bottle item with a store zone:

1. Go to Inventory management > Common Forms > Item details. The Item form opens.
2. Find the Bottle item. Select the record and click Setup > Warehouse items. The Warehouse items form opens.
3. For all Bottle item’s dimensions, we will use the same setup. We assume that the Bottle item arrives in warehouse 22.
4. Create, a new record by pressing CTRL+N. Leave the item’s Dimension field empty and fill in the Warehouse field with the value 22.
5. To assign a store zone, click the Locations tab.
6. In the Store zone field, enter All-22.
7. Save the record by pressing CTRL+S.

Set up the Can item with the same value.

We have now set up the All-22 store zone for the Bottle item. Let’s find what store areas belong to this store zone and how store areas are prioritized.

1. Go to Inventory management > Setup > Inventory breakdown > Store zones. The Store zone form opens.
2. Find the All-22 store zone and click the Store areas tab. The following tab opens:
   

   Store zone, Store areas tab

The information on this tab tells us that first, Microsoft Dynamics AX will try to put the Bottle item into a location from store area A-22. If there are no available locations, the location will be found in store area B-22. If there are no locations here also, the location will be found in store area C-22. If no appropriate location is found, an error message is shown: “Cannot find location for item Bottle at warehouse 22″.

To find what locations belong to store area A-22, take the following steps:

1. Go to Inventory management > Setup > Inventory breakdown > Store areas. The Store area form opens.
2. Find and select the record for the A-22 store area. Click the Locations button
3. The Location form opens. This form tell us what locations are associated with the A-22 store area.
   

   Locations form

Extend item dimensions

The Bottle and Can items have the following storage dimensions: Site and Warehouse. Since we want to track pallets and locations, we need to change the dimension group. What does it mean “to track locations” (or pallets)? It means that all inventory transactions (except those of the status Ordered) must be recorded with a location ID (pallet ID). With the help of this ID, we can inquire about how many Bottles are stored at a certain location or how many Bottles there are on pallet 555, for example.

To change the item dimension, perform the following steps:

1. Go to Inventory management > Common Forms > Item details. The Item form opens.
2. Find and select the Bottle item. Click the General tab and change the Dimension group field value from CS-W to CS-WLP. The CS-WLP dimension group has active Color, Size, Warehouse, Location, and Pallet dimensions.

Note: If you have at least one transaction with this item, Microsoft Dynamics AX will not allow changing the dimension group. If you want to delete all transactions in the current company, refer here for information.

Set up the Can item with the same value.

Inventory equipment

Now, we will set up pallet types and forklift trucks available in our company. This can be done under the following path: Inventory management > Setup > Inventory equipment.

Since a pallet can have different height, width, and depth dimensions, we need to create different pallet types. I suppose that you use the demo data, so I only present a screen shot of the Pallet types form:

Pallet types form

Now, we need to create pallet groups. Each location has a pallet type group parameter specified under the following path: Inventory Management > Setup > Inventory breakdown > Locations form.

Pallet type group on the Locations form

The Pallet group shows what pallet type can be stored at this location.

In my demo data, I have the following pallet groups:

• Default pallet type group contains pallet types:
  • 40″x40″
  • 42″X42″
• Large pallets pallet type group contains pallet types:
  • 48″X40″
  • 48″X48″
• Picking cages pallet type group contains pallet type Picking cage

Let’s now set up a forklift truck. I assume that we will use only one forklift truck in our company warehouse. So, refer to the Forklift form’s screen shot for an example of forklift truck setup in Microsoft Dynamics AX:

Forklift form

OK, we have done a good work! We have set up all necessary data for the purchase business process (to be more specific, for its receiving part).

Training Lesson Summary

Today we have set up the initial data for the purchase business process, its receiving part.

Let’s review what we have done:

• Have created the Big Bottle vendor.
• Have understood and set up the company warehouse structure (warehouses, aisles, racks, shelves, bins, and locations).
• Have extended the Bottle and Can dimensions (have added Location and Pallet).
• Have understood and set up company warehouse equipment (pallet types, pallet groups, and forklift trucks).

In the next training, we will create a purchase order.

Technorati Tags: inventory breakdown, inventory equipment, vendor

In this Microsoft Dynamics AX training lesson, we will create a purchase order, discuss its main fields, and understand how the user can control the purchase order process in Microsoft Dynamics AX.

We will use the following information from the Set up initial data training lesson:

• Company purchases 5,000 Bottles Red 0.5 and 3,000 Cans Standard Black
• Company vendor is the Big bottle company

Before we start, I ask you to set up the following prices for Bottle and Can items:

• For the Bottle item, we will set up the purchase price to 5$, its cost price to 5$, and its sales price to 9$.
• For the Can item, we will set up the purchase price to 7$, the cost price to 7$, and the sales price to 12$.

Take the following steps to perform the price setup:

1. Go to Inventory management > Common Forms > Item details. Select the Bottle item and then click the Price/Discount tab.
2. Under the Base purchase price field group, type 5 in the Price field.
3. Under the Base cost price field group, type 5 in the Price field.
4. And under the Base sales price field group, type 9 in the Price field.

Repeat the procedure for the Can item.

Create purchase order

Go to Accounts payable > Common Forms > Purchase order details. The Purchase order form opens. The form provides two views Simple and Advanced. We will work in the Advanced form view. If you have the Simple form view, click the Advanced button.

Purchase order form

In the form header, create a new record by pressing CTRL+N. The Create purchase order form opens.

In this form, we need to select a vendor. In our case, we select the Big bottle vendor. All vendor information including vendor name, vendor contact person, delivery type (this field isn’t shown in this form) will be transferred to the purchase order.

Create purchase order form

Expand the Delivery address field group. This group contains the information about the company address. We can change this address if, for example, a receiving warehouse has a different address. Company information is set up under the following path: Basic > Setup > Company information.

I want to say a few words about the Orderer field located under the Administration field group. This field contains the information about an employee who creates this purchase order. Microsoft Dynamics AX automatically fills in this field. The relation between a company employee and the Microsoft Dynamics AX user is set up under the following path: Administration > Users > (the User form will be shown) > User relations button > (the User relations form will be shown) > General tab > Internal user field.

After clicking OK, the new purchase order will be created.

Purchase order header

The Purchase order form displays a new purchase order in the header. The order is of the status Open order. All fields in the purchase order header have been filled with the default values. The field that I need to mention is the Posting profile field. This field is located on the Setup tab, under the Posting field group. The Posting profile answers the questions what general ledger accounts will be used to reflect vendor transactions. When a company purchases items (i.e. during the last step – posting an Invoice), the following general ledger transaction is created:

Ledger transaction

What general ledger account will be used instead of Inventory? Item group answers this question (Inventory management > Setup > Item group).

What general ledger account will be used instead of Accounts payable? Vendor posting profile answers this question.

A Posting profile is filled in the purchase order from the Account payable parameters form. A posting profile is set up under the following path: Accounts payable > Setup > Parameters > Ledger and Sales tax tab > Posting profile field.

We will return to the posting profile later when the purchase order will be invoice updated. (This field is only used when a purchase order is invoice updated).

Create purchase order line

Let’s create a purchase order line:

1. In the line area, create new record by clicking CTRL+N).
2. In the Item field, select the Bottle item.
3. Select 0.5 in the Size field.
4. Select Red in the Color field.
5. Select 2 in the Site field.
6. Select 22 in the Warehouse field.
7. Fill in 5,000 in the Quantity field.
8. Save the record by pressing CTRL+S.

The purchase price is automatically set up. We have set up the purchase price of the Bottle item to 5$.

The purchase order line should have the following view:

Purchase line

I want to explain one field from the purchase order line. Click the Setup tab and find the Lot ID field. Lot ID is a unique identifier for items that belongs to the current line. With the help of lot ID, we can find out what happens with line items inside the company. This field is used to find inventory transactions for the line items.

Now, create a second purchase order line yourself.

I will just show you my screen shot.

Purchase order lines

Inventory transactions

How can we control what happens to items inside the company? For this purpose, inventory transactions exist. The main inventory transaction fields are item ID, item dimensions, quantity, and item status. Item status is divided to Receipt and Issue statuses. Receipt statuses are used when items are received into a warehouse. Issue statuses are used when items are issued from a warehouse. As we purchase items, we are more interested in the Receipt statuses.

Axapta has the following Receipt statuses:

• Quotation receipt – An item has this status when the Purchase Manager creates a Quotation. A Quotation is just a manager’s suggestion to buy any item from a vendor. When the Purchase Manager calls and agrees the details with the vendor, the purchase order is created.
• Ordered – An item has this status when a purchase order is created.
• Arrived – An item has this status when it arrives into a warehouse (to an inbound dock).
• Registered – An item has this status when it is put away in a warehouse (to a bulk or a picking location).
• Received – An item has this status when the Purchase Manager posts a packing slip (Packing slip document guarantees that a company has received items).
• Purchased – An item has this status when the Purchase Manager posts an invoice (Invoice document guarantees that a company must pay to a vendor).

In our case, we have created a purchase order. So, the item on purchase order lines must have inventory transactions of the Ordered status.

Inventory transactions can be viewed from the purchase order line area. Click Inventory > Transactions. The Transactions form opens.

Inventory Transactions button

How can we control the item quantity in a warehouse, i.e. the item on-hand? Item on-hand is the sum of all item transactions. To get the item on-hand, click Inventory > On-hand menu button. The On-hand form opens. Notice that the on-hand quantities are shown per item statuses.

The purchase line with the Bottle item has the following on-hand quantities:

On-hand form

Training lesson summary

In this training lesson, we have studied the following:

• How to create a purchase order
• The main purchase order fields – Delivery address, Orderer, Posting profile, Lot ID
• How to control item statuses inside a company

Now, we have a purchase order and can control item statuses, so the receiving process can be started and a result can be checked! Let’s begin…

Technorati Tags: inventory transaction, Lot ID, Receipt status, Vendor posting profile

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