Mastering Inbound Warehouse Flows in Dynamics 365 Business Central

Inbound warehouse processes in Dynamics 365 Business Central: the systematic handling of goods arriving at warehouse locations from various source documents, including purchase orders, sales return orders, inbound transfer orders, and the output of production orders.

The system supports multiple configuration levels: from basic inventory handling to advanced warehouse management with directed put-away and pick, allowing organisations to scale their warehouse operations based on complexity and volume requirements.

The inbound flow begins when a source document is created and released, signalling to the warehouse that goods are expected to arrive. The source document, whether a purchase order, sales return order, inbound transfer order, or production order with output, contains the essential information about what items will be received, in what quantities, and at which location.

Once released, these source documents become available for warehouse processing through warehouse receipt documents.

The warehouse receipt acts as an intermediary document that warehouse personnel use to record the physical arrival and verification of goods before they are put away into storage bins. However, this document is only one of the two warehouse activities that allow warehouse teams to receive items in a warehouse. The other document is the Inventory Put-away, which, contrary to what the name suggests, acts as a receiving and put-away document.

Finally, the put-away document guides the movement of items from the receiving area to their designated storage locations within the warehouse.

The degree of automation and control in inbound processes depends on the warehouse configuration settings defined at the location level, which determine whether operations require warehouse receipts, put-aways, or can be processed through simple inventory transactions.

This architectural flexibility ensures that Business Central can accommodate diverse operational models from small distribution centres to complex multi-location warehousing operations with strict bin management and directed workflows.

Prerequisites and Setup for Inbound Flows

Before implementing inbound warehouse flows, administrators or functional consultants must configure location cards with appropriate warehouse management settings that align with operational requirements and complexity levels.

The Microsoft Learn documentation emphasises that proper setup of fields such as "Require Receive," "Require Put-away," and "Directed Put-away and Pick" on the Location Card directly determines which warehouse documents will be generated and what validation rules will apply during inbound processing.

To configure a location for inbound warehouse flows, navigate to the Locations page by searching for "Locations" in the search bar, then open the relevant Location Card. On the Warehouse FastTab, you will find the critical configuration fields that control inbound processing behaviour:

• Bin Mandatory: When enabled, all item transactions at this location must specify a bin code. This is required for any level of warehouse management beyond basic inventory.

• Require Receive: When enabled, inbound source documents must be processed through warehouse receipt documents rather than being posted directly. This creates a formal receiving step where quantities can be verified before affecting inventory.

• Require Put-away: When enabled, a put-away document is generated after receipt posting (or after direct posting if Require Receive is not enabled). This separates the receiving activity from the storage activity.

• Directed Put-away and Pick: This advanced setting enables the whole warehouse management system with zone and bin ranking logic. When enabled, the system automatically calculates optimal storage locations based on configured bin policies, capacities, and rankings. This option automatically enables both Require Receive and Require Put-away.

  
  

When selecting the appropriate configuration level, consider the following decision criteria:

• For simple operations with low volume and minimal control requirements, basic inventory posting without warehouse documents may suffice (no warehouse fields enabled).

• For operations requiring receiving verification but with fixed storage, enable Require Put-away only.

• For operations requiring receiving verification but flexible storage, enable Require Receive only.

• For operations requiring both receiving verification and tracked storage movements, enable both Require Receive and Require Put-away.

• For complex operations requiring system-directed storage optimisation, enable Directed Put-away and Pick.

Additional prerequisites include bin structure configuration for locations using directed put-away and pick, setting up warehouse employees with appropriate location assignments on the Warehouse Employees page, and definition of warehouse tracking on the Item Tracking Codes page if serial or lot number management is required for inbound items.

These foundational elements must be properly configured before source documents can generate warehouse-specific documents and workflows.

Creating Inbound Sources (Purchase Orders, Returns, Production)

Inbound warehouse flows originate from various source documents within Business Central, each representing different business scenarios that result in inventory increases at warehouse locations.

Purchase orders represent the most common inbound source, while sales return orders handle customer returns, inbound transfer orders manage inter-location movements, and production orders with output generate finished goods receipts into the warehouse.

To create a Purchase Order for warehouse receiving, navigate to Purchasing > Purchase Orders and select New. On the purchase order lines, specify the item, quantity, and critically, the Location Code field.

The location code must reference a location configured for the level of warehouse management you require.

If the location has "Require Receive" enabled, posting directly will be blocked, and you must process the receipt through a warehouse receipt document. Complete the purchase order with vendor information, expected receipt date, and other required fields, then use the Release action from the Actions menu to make the document available for warehouse receipt creation.

When creating source documents for warehouse-enabled locations, users must ensure that location codes reference locations configured for the appropriate level of warehouse management, as this determines whether the system will generate warehouse receipts and put-aways or process transactions directly through inventory posting.

The Release action on source documents plays a critical role in making documents available for warehouse put-away creation.

The Whse. Receipt Process

The warehouse receipt process serves as the formal acknowledgement and registration of goods arriving at the warehouse, creating a controlled checkpoint between external source documents and internal warehouse operations. According to Business Central documentation, warehouse receipts consolidate multiple source document lines into organised receiving worksheets that warehouse personnel use to physically verify and register incoming items before they enter inventory.

The Warehouse Receipt document consists of a header containing general receiving information and lines detailing the specific items to be received. The header includes fields such as No. (the warehouse receipt number), Location Code (the receiving location), Bin Code (the default receiving bin if applicable), Posting Date (when the receipt will be recorded), and Vendor Shipment No. (for cross-referencing vendor documentation).

Each receipt line corresponds to a source document line and includes fields for Item No., Description, Quantity (from the source document), Qty. to Receive (the amount to be recorded on this receipt), and Qty. Outstanding (remaining quantity not yet received).

Using warehouse receipts provides several operational benefits over direct posting:

• Separation of duties between purchasing/planning staff and warehouse receiving personnel

• Ability to receive partial quantities while keeping source documents open for remaining quantities

• Consolidation of multiple source documents onto a single receiving document for efficient processing

• Quality control checkpoint before inventory is officially updated

• Clear audit trail of receiving activities, separate from purchasing activities

Warehouse receipts support scenarios where physical receiving operations need to be separated from source document posting, enabling warehouse staff to focus on receiving activities while purchasing or production teams maintain ownership of their respective source documents. This separation of duties improves accuracy and accountability in inbound operations.

Step 1: Generating Warehouse Receipt from Source Documents

The generation of warehouse receipts from source documents can be accomplished through multiple methods, including the "Create Whse. Receipt" action on individual source documents, batch processing through the "Get Source Documents" function on the Warehouse Receipt page.

When using batch processing, Source documents must be released before they become available for receipt creation, ensuring that only approved documents enter the warehouse workflow.

To create a warehouse receipt from an individual source document, such as a purchase order, open the released purchase order and navigate to Actions > Warehouse > Create Whse. Receipt. The system will create a new warehouse receipt document containing lines for all items on the purchase order that are designated for the warehouse-enabled location.

For batch processing multiple source documents, navigate to Warehouse Receipts and create a new warehouse receipt by selecting New. Set the Location Code on the header to specify which location you are receiving at. Then use the Actions > Functions > Use Filters to Get Src. Docs. action to open the Filters to Get Source Docs. page.

This page provides extensive filtering options:

• Source Document: Filter by document type (Purchase Order, Sales Return Order, Inbound Transfer, etc.)

• Source No.: Filter by specific document numbers

• Shipping Agent Code: Filter by carrier information

• Expected Receipt Date: Filter by date range to retrieve only documents expected within a specific period

After setting your filters, run the function to retrieve matching source document lines onto your warehouse receipt. You can also use the Get Source Documents action without filters to see all available source documents for selection.

The Posting Date field on the warehouse receipt header determines when the inventory transaction will be recorded in the ledgers, while the Expected Receipt Date on lines helps with receiving planning and scheduling.

Setting appropriate dates ensures accurate inventory valuation and reporting alignment.

Once created, warehouse receipt lines can be modified to reflect actual receiving quantities if they differ from source document quantities. However, this capability depends on the source document type and organisational policies regarding over-receipt or under-receipt situations.

The warehouse receipt serves as the working document for receiving personnel during physical receipt operations.

Step 2: Registering Receipt and Posting to Inventory

The registration and posting of warehouse receipts represents the critical step where physical receipt activities are formally recorded in the system, transitioning goods from "expected" status to "received" inventory.

The Post Receipt action on the Warehouse Receipt page triggers both the creation of posted warehouse receipt documents for audit purposes and the generation of put-away documents for locations requiring directed put-away.

To post a warehouse receipt, first verify and enter the quantities being received in the Qty. to Receive field on each line. This field defaults to the full amount expected, but can be adjusted to reflect partial receipts when the actual delivery contains fewer items than expected.

The system validates that the quantity to receive does not exceed the quantity on the source document unless over-receipt is configured for the vendor or item.

Set the Posting Date on the warehouse receipt header to the date when the receipt should be recorded. This date affects inventory valuation calculations and determines in which period the inventory increase appears on financial reports.

Navigate to Home > Post Receipt to execute the posting. The system performs several validation checks before completing the posting:

• Verification that all required fields are populated

• Confirmation that quantities are within acceptable ranges, such as over-receipts

• Validation of item tracking information, if necessary, by item tracking codes

• Bin capacity checks for locations with directed put-away enabled

Upon successful posting, the system creates a Posted Warehouse Receipt document that serves as a permanent record for audit purposes. To view posted receipts, navigate to Posted Whse. Receipts. The posted receipt displays the original receipt information along with the posting date and any modifications made during posting.

For locations without put-away requirements, receipt posting directly updates inventory and creates item ledger entries, completing the inbound process in a single step. However, for locations with directed put-away enabled or with both receipts and put-away enabled, receipt posting generates put-away documents that must be registered separately before inventory is fully available, maintaining strict control over bin-level inventory movements.

The Put-away Process

The put-away process governs the physical movement of received goods from receiving areas to their designated storage locations within the warehouse, ensuring items are systematically organised according to warehouse layout and storage strategies.

Business Central's put-away functionality varies significantly based on warehouse configuration, with basic inventory locations allowing immediate put-away to designated bins, while advanced warehouse locations with directed put-away utilise sophisticated bin ranking and capacity algorithms to optimise storage locations.

Put-away documents are structured with a header and lines that guide warehouse personnel through the storage process. The header contains fields, including No. (the put-away document number), Location Code, Assigned User ID (the warehouse employee responsible), and Source Document (reference to the originating warehouse receipt or source document). The Assignment Date and Assignment Time fields record when the put-away was assigned to a worker.

Put-away lines contain the detailed movement instructions. Each line includes:

• Action Type: Either "Take" (pick up from source location) or "Place" (put into destination location). Lines typically appear in pairs—one Take line and one Place line—representing the complete movement from origin to destination.

• Zone Code: The warehouse zone where the action occurs (applicable for directed put-away locations)

• Bin Code: The specific bin for the take or place action

• Item No. and Description: The item being moved

• Quantity: The total quantity to be put away

• Qty. to Handle: The quantity being processed in this put-away action, enabling partial put-aways when warehouse workers cannot complete the full quantity in one operation

The relationship between put-away documents and their source documents is maintained through reference fields, allowing users to trace put-away activities back to the originating warehouse receipt and ultimately to the source document, such as a purchase order.

Put-away documents guide warehouse personnel through structured movement activities, specifying both the source location (typically a receiving bin or staging area such as a work centre output bin) and the destination storage bin where items should be placed.

The registration of put-aways creates warehouse entries that track bin-level inventory movements and ultimately update available inventory quantities in designated storage locations.

Directed vs. Non-Directed Put-away Scenarios

Locations configured with directed put-away and pick functionality leverage Business Central's warehouse management system engine to automatically calculate optimal storage locations based on bin rankings, bin capacity constraints, item attributes, and warehouse configuration rules defined in the system.

Directed put-away considers factors such as bin types and related allowed movements, fixed bin assignments, minimum and maximum quantity thresholds, and bin ranking sequences to determine where items should be stored.

In directed put-away scenarios, when a warehouse receipt is posted, the system automatically generates put-away lines with suggested bins populated based on the following calculation logic:

• Fixed Bin: The system first checks if the item has a fixed bin assignment (configured on the Bin Content page with the Fixed field enabled). Items with fixed bins are directed to those locations first.

• Bin Ranking: If no fixed bin applies or the fixed bin is full, the system evaluates available bins by their ranking number. Higher-ranked bins are selected preferentially.

• Zone Restrictions: The system respects zone configurations, only suggesting bins in zones appropriate for the item type (for example, refrigerated zones for temperature-sensitive items).

• Bin Type: Bin types (defined on the Bin Types page) control whether bins can receive put-aways. Only bin types marked as "Put-away" bins are considered.

• Bin Capacity: The system checks available capacity based on the Maximum Cubage and Maximum Weight fields on the bin, along with current bin content.

The automatic creation of Warehouse Put-Aways can be disabled by setting up Use Put-away Worksheet on the location card. This option allows warehouse personnel to create warehouse putaways using a dedicated worksheet for better control.

In non-directed put-away scenarios (locations with RequirePut-awayy enabled but without DirectedPut-awayy and Pick), warehouse personnel have the flexibility to manually select destination bins on Inventory Put-Aways.

The system generates put-away documents with pre-populated bin suggestions either using the Last-used or a Default Bin.

This approach offers faster setup and greater flexibility but sacrifices the optimisation capabilities of directed put-away.

To override system-suggested bins, warehouse personnel can modify the Bin Code field on the Place line before registering the put-away.

Keep in mind that frequent overrides may indicate a need to review bin ranking or capacity configurations. Organisations must evaluate their operational complexity, inventory volume, and control requirements when determining the appropriate put-away methodology for each location.

Handling Cross-Dock and Special Cases

Cross-docking functionality in Business Central enables the direct transfer of received goods from inbound to outbound flows without intermediate storage, optimising warehouse efficiency for items with immediate demand from sales orders or transfer orders.

To enable cross-docking, configure the Use Cross-Docking field on the Location Card (found on the Warehouse FastTab). Additionally, set the Cross-Dock Due Date Calc. field to define the time window for matching inbound receipts with outbound demand.

For example, a value of "7D" means the system will consider outbound shipments due within 7 days when calculating cross-dock opportunities.

When processing a warehouse receipt at a cross-dock enabled location, use the Actions > Functions > Calculate Cross-Dock action.

This function analyses:

• Current warehouse shipment lines are awaiting inventory

• Quantities on the warehouse receipt lines

• Due dates of pending shipments versus the cross-dock owing date calculation

The system populates the Qty. to Cross-Dock field on warehouse receipt lines, indicating how much of each received item can bypass storage and move directly to outbound staging.

To view detailed cross-dock information, access the Cross-Dock Opportunities page from the warehouse receipt line, which displays the specific shipment demands that will receive the cross-docked quantities.

After posting a receipt with cross-dock quantities, the resulting put-away document contains lines directing items either to storage bins (regular put-away) or to cross-dock bins (for items allocated to pending shipments). Cross-dock bins are typically configured in a zone designated for cross-dock activities, positioned near shipping areas for efficient outbound processing.

The distinction between a Cross-Dock Opportunity and a confirmed cross-dock assignment is essential: an opportunity represents a potential match between supply and demand that could be cross-docked, while the confirmed assignment occurs after the warehouse receipt is posted.

Quantities are formally allocated to specific shipment lines.

Business scenarios where cross-docking delivers substantial benefits include:

• Retail distribution centres receiving shipments from suppliers with immediate demand at stores

• Made-to-order environments where finished goods from production are immediately needed for customer shipments

• Seasonal or promotional items where warehouse space is limited, and turnover is rapid

Special handling scenarios, such as items requiring quality inspection, items with specific storage requirements based on item attributes, or items subject to regulatory compliance requirements, may require customised put-away workflows that deviate from standard processes. Business Central supports these scenarios through features such as blocked inventory status, item tracking requirements, and custom bin selection logic.

Integrating with Inventory Posting and Reconciliation

The completion of inbound warehouse flows triggers comprehensive inventory posting routines that create item ledger entries, value entries, and warehouse entries to maintain accurate inventory balances and cost tracking across the system.

The integration between warehouse management and inventory ledgers ensures that physical warehouse movements are correctly reflected in financial inventory valuation and availability calculations used by planning and reservation systems.

When inbound warehouse documents are posted and registered, the system creates several types of ledger entries:

• Item Ledger Entries: Record the increase in inventory quantity. Navigate to Items, select an item, and choose History > Entries > Item Ledger Entries to view entries. Each entry shows the Entry Type (Purchase, Positive Adjmt., Output, Transfer, depending on the source document), Document No. (linking to the posted source document), Quantity, Location Code, and Posting Date.

• Value Entries: Record the inventory valuation associated with the item ledger entry. From the item ledger entry, use Value Entries to see cost amounts, cost per unit, and the inventory valuation impact.

• Warehouse Entries: For warehouse-managed locations, these entries track bin-level movements. Navigate to History > Warehouse Entries to view entries showing Zone Code, Bin Code, Quantity, and the associated Source Document and Whse. Document No.

To trace from a posted warehouse receipt to the resulting ledger entries, open the Posted Whse. Receipt, then navigate to individual lines and use the document number references to locate corresponding item ledger entries.

Similarly, from a Registered Whse.Put-away, you can trace to warehouse entries that record the bin movements.

For locations with directed put-away and pick, an important timing consideration exists: the warehouse receipt posting creates the item ledger entries and increases inventory at the location level, but the inventory is not available to pick until the put-away is registered.

This means that while inventory appears available at the location, pick operations requiring specific bin quantities may not be able to access items until put-away completion. The Available Qty. to Take field in bin content reflects this distinction.

Reconciliation procedures verify that warehouse records match inventory ledger entries, ensuring data integrity across the integrated warehouse and inventory systems.

Regular reconciliation activities include comparing bin content totals to item ledger entry quantities, verifying that posted warehouse documents have corresponding item entries, and investigating any discrepancies that may arise from posting errors or incomplete transaction sequences.

Summary

Mastering inbound warehouse flows in Dynamics 365 Business Central requires understanding the architectural flexibility of the warehouse management system, from basic inventory handling to advanced directed put-away scenarios with cross-docking capabilities.

Proper configuration of location settings, disciplined use of warehouse receipt and put-away documents, and integration with inventory posting processes create a controlled, auditable framework for receiving operations that supports both operational efficiency and inventory accuracy.

Organisations implementing inbound warehouse processes should carefully evaluate their operational complexity requirements, configure location settings appropriately, train warehouse personnel on document workflows specific to their configuration level, and establish regular reconciliation procedures to maintain data integrity between warehouse and inventory systems.

The scalability of Business Central's inbound warehouse functionality enables organisations to start with simpler configurations and progressively adopt more sophisticated warehouse management capabilities as operational needs evolve.

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