12.3 Tracking Control Center, Goods in Transit Orders, and Over/Under Tolerances

12.3 Tracking Control Center, Goods in Transit Orders, and Over/Under Tolerances

Quick Answer: The Goods in Transit (GIT) architecture in Dynamics 365 Supply Chain Management (D365 SCM) enables companies to assume legal ownership of purchased goods at the overseas shipping point (such as under Incoterms FOB Shipping Point or EXW). By posting the vendor invoice directly from the voyage prior to physical arrival, D365 SCM records accounts payable liability and places items into a virtual Goods in Transit warehouse. The Tracking Control Center acts as the automation engine, dynamically cascading milestone dates across journey legs and updating supply delivery dates. When cargo arrives, Goods in transit receiving moves items into physical inventory, while Over/under delivery tolerances control the resolution of shipping discrepancies.

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1. Goods in Transit (GIT) Orders and Ownership Transfer

In standard domestic procurement, legal title and inventory ownership transfer when the goods are delivered and physically receipted at the warehouse dock. However, global international trade operates under strict Incoterms (International Commercial Terms):

• FOB Origin / Shipping Point (Free On Board) or EXW (Ex Works): Legal ownership, title, and transit risk transfer to the buying enterprise the moment goods are loaded onto the vessel or transport carrier at the overseas port of departure.
• Balance Sheet Requirement: GAAP and IFRS auditing standards require the purchasing enterprise to recognize both the asset (inventory) and the corresponding commercial liability (accounts payable) upon title transfer, even if the vessel will be crossing oceans for 30 to 60 days.

Why Standard PO Receiving Fails for Inbound Imports

Under standard D365 SCM Purchase Order processing, an invoice cannot be posted until a product receipt is generated, or posting an invoice immediately triggers physical inventory receipt at the destination warehouse. If used for ocean imports, this practice incorrectly inflates on-hand warehouse availability, leading warehouse staff to attempt picking and shipping inventory that is physically in the middle of the Pacific Ocean.

Landed Cost resolves this dilemma through Goods in Transit (GIT) Orders:

1. The vendor submits the commercial invoice upon vessel departure.
2. The accounts payable clerk posts the invoice directly from the voyage.
3. The system records the vendor liability in Accounts Payable.
4. The system automatically creates a Goods in Transit Order, transferring the inventory into a dedicated, virtual Goods in Transit Warehouse.

+-------------------------------------------------------------------------+
|                    PURCHASE ORDER LINE: 1,000 UNITS                     |
+------------------------------------+------------------------------------+
                                     │
                                     ▼ [Post Invoice from Voyage]
+------------------------------------+------------------------------------+
|              PURCHASE ORDER LINE STATUS = INVOICED                      |
|  - Financial Liability Posted to Accounts Payable                       |
|  - Physical Purchase Order Line Closes                                  |
+------------------------------------+------------------------------------+
                                     │ (Generates)
                                     ▼
+------------------------------------+------------------------------------+
|                  GOODS IN TRANSIT (GIT) ORDER                           |
|  - Virtual Warehouse: WH-GIT-24 (Transit Asset Account)                 |
|  - Quantity: 1,000 Units (In Transit Balance Sheet Asset)               |
|  - Destination: WH-24 Dallas Distribution Center                        |
+------------------------------------+------------------------------------+
                                     │
                                     ▼ [Physical Arrival & Receiving]
+------------------------------------+------------------------------------+
|          DESTINATION WAREHOUSE: WH-24 (PHYSICAL ON-HAND)                |
|  - Issues from WH-GIT-24 (Clears Transit Asset)                         |
|  - Receipts into WH-24 Location/License Plate (Available On-Hand)       |
+-------------------------------------------------------------------------+

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2. Configuring the Goods in Transit Infrastructure

To operationalize Goods in Transit orders, specific warehouse and parameter prerequisites must be established in D365 SCM.

1. The Virtual Goods in Transit Warehouse

Every physical destination warehouse that receives international shipments requires a paired virtual Goods in Transit warehouse.

• Navigation: Inventory management > Setup > Inventory breakdown > Warehouses
• Create a new warehouse record (e.g., WH-GIT-24).
• In the General FastTab, set the Type field to Goods in transit.

2. Linking GIT Warehouse to Destination Warehouse

• Open the master record for the physical destination warehouse (e.g., WH-24 Dallas Distribution Center).
• Expand the Warehouse management or General FastTab.
• In the Goods in transit warehouse field, select the virtual transit warehouse (WH-GIT-24).

[!IMPORTANT] If the destination warehouse does not have a linked Goods in Transit warehouse, D365 SCM will block invoice posting on the voyage and generate a validation error stating that no transit warehouse is defined for the delivery location.

3. Posting the Vendor Invoice on a Voyage

• Navigate to Landed cost > Voyages > All voyages.
• In the Action Pane, open the Invoicing tab and click Post invoice.
• The system validates that the voyage lines are associated with valid folios and containers.
• The posting executes two simultaneous financial actions:
  • Merchandise Vendor Invoice: Debits Goods in Transit Inventory Asset; credits Vendor Accounts Payable.
  • Landed Cost Accruals: Debits Goods in Transit Inventory Asset; credits Landed Cost Accrual / Clearing accounts for all estimated auto-costs.

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3. The Tracking Control Center: Dynamic Schedule Automation

The Tracking Control Center is the central rules engine in Landed Cost that monitors logistics milestones and automates operational updates across the system.

• Navigation: Landed cost > Setup > Tracking control center

Tracking Rules and Trigger Mechanics

A tracking rule consists of a Source table / trigger, a Condition, and an Action:

• Trigger Events: Entering or modifying dates on journey legs (e.g., Actual departure date, Actual arrival date, Estimated departure date).
• Target Entities: Voyage headers, Shipping containers, Folios, Purchase order lines, or Transfer order lines.

Primary Tracking Control Actions

1. Lead Time and Milestone Cascading:
   • When an ocean carrier reports a delay and the user updates the Actual departure date on Leg 2 (Ocean transit), the Tracking Control Center automatically evaluates downstream legs.
   • It adds configured lead times to calculate revised Estimated arrival dates for Leg 3 (Port customs) and Leg 4 (Inland rail).
2. Synchronizing Supply Delivery Dates:
   • Changes to the final leg's arrival date automatically update the Confirmed delivery date on the underlying purchase order lines.
   • Master Planning (Planning Optimization) immediately recognizes the updated delivery date, recalculating safety stock time fences and pegged sales order promising dates.
3. Automated Status Progression:
   • Populating the Actual departure date on Leg 1 automatically changes the Voyage Status from Created to In transit.
   • Populating the Actual arrival date at the destination port transitions container statuses from At sea to At port.

Tracking Control Center Configuration Matrix

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4. Receiving Goods in Transit at the Destination Warehouse

When shipping containers physically arrive at the destination warehouse facility, the inventory must be transferred out of the virtual Goods in Transit warehouse and into available on-hand stock.

Receiving Workflows in D365 SCM

Warehouse operations can execute Goods in Transit receiving through two distinct mechanisms:

Method A: Desktop Client Receiving

• Navigate to Landed cost > Inquiries > Goods in transit orders.
• Locate the active Goods in Transit order matching the container or voyage.
• In the Action Pane, click Receive goods in transit.
• Enter the quantity received, destination location, and inventory batch/serial numbers.
• Click OK to post the receipt journal.

Method B: Warehouse Management Mobile App (WMA)

For advanced warehouse management (WMS) facilities utilizing mobile barcode scanners:

• Configure a Mobile Device Menu Item under Warehouse management > Setup > Mobile device > Mobile device menu items.
• Set Mode to Work.
• Set Work creation process to Goods in transit receiving (or Goods in transit item receiving).
• The mobile worker scans the Voyage ID, Container ID, or License Plate.
• The worker confirms received quantities and scans items directly into receiving staging locations. Directed putaway work is generated to move items to final bulk or pick locations.

Financial Impact of Receiving Goods in Transit

• Debit: Destination Warehouse Inventory Asset (increases physical on-hand valuation).
• Credit: Goods in Transit Inventory Asset (clears the temporary in-transit balance sheet asset).
• No accounts payable or landed cost accrual entries are posted during this step, as those liabilities were recognized during invoice posting at the shipping point.

Handling Damaged or Lost In-Transit Stock

If physical counts reveal missing or destroyed items upon opening the container seal:

• Partial Receiving: The worker receipts only the undamaged, verified quantity into available stock.
• In-Transit Write-Off: The remaining damaged/missing quantity remains in the Goods in Transit order. Under Goods in transit orders > Write-off, the inventory controller executes a write-off journal, posting the lost stock directly to an in-transit loss or insurance claims P&L account.

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5. Over/Under Delivery Tolerances in Landed Cost

Discrepancies frequently occur between purchase order quantities and physical container shipments due to vendor packaging variations, bulk liquid evaporation, or container volume constraints.

• Navigation: Landed cost > Setup > Over/under tolerance setup

Tolerance Configuration Matrix

Tolerances can be defined across five structural hierarchy levels:

• Item: Specific released product.
• Item group: Item landed cost group.
• Vendor: Specific vendor account.
• Vendor group: Vendor procurement group.
• All: Enterprise-wide global default.

Over-Delivery vs. Under-Delivery Mechanics

[!NOTE] Automatic under-delivery closure is vital for master planning hygiene. Without under-delivery tolerances, small unreceived residual balances (e.g., 2 missing units out of 5,000) remain open indefinitely in virtual transit warehouses, causing Planning Optimization to anticipate phantom inbound supply and fail to trigger necessary replenishment.

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6. Implementation Scenarios and Common Exam Traps

[!TIP] Exam Tip — Vendor Invoicing Sequence: In standard D365 procurement questions, the correct sequence is always Purchase Order -> Product Receipt -> Vendor Invoice. In Landed Cost international import questions, the sequence is inverted: Purchase Order -> Voyage Creation -> Vendor Invoice (Generating Goods in Transit) -> Physical Goods in Transit Receipt. Memorize this reversal for MB-330.

[!WARNING] Exam Trap — Master Planning Visibility of GIT: Goods in transit orders are treated as confirmed inbound supply by Planning Optimization. If a voyage is delayed at sea and the Tracking Control Center updates the arrival date, running Master Planning will automatically reschedule dependent production orders and customer sales order promises without requiring manual order maintenance.

[!IMPORTANT] Exam Tip — Warehouse Mobile App Setup: To receive Goods in Transit stock using handheld RF scanners, do not use standard Purchase order item receiving. You must configure dedicated mobile menu items using Goods in transit receiving or Goods in transit item receiving.