12.3 Locations, Transfer Routes & Stockkeeping Units (SKUs)

12.3 Locations, Transfer Routes & Stockkeeping Units (SKUs)

Quick Summary: In Dynamics 365 Business Central, a Location (Table 14) represents a distinct physical or logical site where inventory is stored. Locations can range in warehouse complexity from simple direct order posting to advanced Directed Put-away and Pick. Goods moving between facilities are tracked using Transfer Orders routed through specialized In-Transit Locations via defined Transfer Routes. To handle regional differences in replenishment, costing, and lead times, organizations implement Stockkeeping Units (SKUs) (Table 5700), which localize item planning and replenishment rules by Location and Variant, overriding global Item Card settings.

---

Multi-Location Infrastructure & The Location Card

The Location Card (Alt+Q -> type Locations, Page 5703 / Table 14) defines facilities such as warehouses, retail stores, manufacturing plants, or third-party logistics (3PL) distribution centers.

UI Navigation Path:
Tell Me (Alt+Q) -> Locations -> Action Bar: New -> Location Card

The "Use As In-Transit" Location

A vital operational toggle on the General FastTab of the Location Card is Use As In-Transit:

• Purpose: Represents an intermediary virtual location used to maintain financial balance sheet custody of goods while they are physically in transit between two company facilities.
• Legal & Financial Ownership: Inventory residing in an in-transit location is fully capitalized on the general ledger balance sheet as corporate inventory, but it cannot be reserved, picked, or sold to customers.
• Strict Restrictions: In-Transit locations cannot utilize bins, cannot have warehouse handling flags enabled (such as Require Receive or Require Shipment), cannot be used as a standard line location on sales or purchase orders, and cannot store permanent static inventory.

---

Warehouse Complexity Tiers on the Location Card

Business Central allows organizations to scale warehouse operations across five progressive complexity levels by configuring checkboxes on the Warehouse FastTab of the Location Card:

Warehouse Complexity Spectrum:
[Level 1: Basic]      ──► Direct Sales/Purchase Document Posting (Zero warehouse docs)
[Level 2: Receipts]   ──► Require Receive / Require Shipment (Separate warehouse documents)
[Level 3: Put/Pick]   ──► Require Put-away / Require Pick (Inventory Put-aways / Picks)
[Level 4: Bins]       ──► Bin Mandatory (Tracks shelf/rack/bin coordinates)
[Level 5: Advanced]   ──► Directed Put-away and Pick (Zones, Bin Types, Bin Ranking, WMS)

Progressive Warehouse Handling Configurations

Bin Architecture & Bin Types

When Bin Mandatory is enabled, facilities are subdivided into bins representing physical storage slots:

• Bin Types: Categorize operational permissions (RECEIVE, SHIP, PUTAWAY, PICK, PUTPICK).
• Default Bins: Defined per item or location to automate document line suggestions.
• Dedicated Bins: Locked to specific items to prevent cross-contamination or mixed stock.

---

Transfer Routes & In-Transit Logistics Execution

Moving inventory between physical facilities requires a formal audit trail. Organizations configure the Transfer Routes matrix (Alt+Q -> type Transfer Routes, Page 5740 / Table 5742) to automate logistics parameters.

Transfer Order Logistics Flow:

[Origin: MAIN Warehouse]
       │
       ▼ (Action: Post Shipment)
[In-Transit Location: INTRANSIT] ──► Owned by company; Goods in transit on carrier truck
       │
       ▼ (Action: Post Receipt)
[Destination: STORE-1]

Transfer Route Components

For every unique combination of Transfer-from Code (Origin) and Transfer-to Code (Destination), consultants define:

1. In-Transit Code: Specifies the dedicated in-transit location (e.g., INTRANSIT).
2. Shipping Agent Code: Identifies the logistics carrier (e.g., FEDEX, UPS, DHL).
3. Shipping Agent Service: Specifies the transit speed (e.g., NEXTDAY, GROUND).
4. Shipping Time: A date formula (e.g., 1D, 2D, 1W) used by the system's lead-time calculation engine to predict expected receipt dates at the destination.

The Two-Step Transfer Order Process

When executing a Transfer Order (Alt+Q -> type Transfer Orders, Page 5740):

• Step 1: Post Shipment: Relieves stock from the origin location (e.g., MAIN) and increases inventory in the INTRANSIT location. The system creates negative Item Ledger Entries at MAIN and corresponding positive Item Ledger Entries at INTRANSIT.
• Step 2: Post Receipt: Relieves stock from the INTRANSIT location and increases inventory at the destination location (e.g., STORE-1). Inventory valuation remains unbroken throughout the lifecycle.

---

Stockkeeping Units (SKUs): Localizing Master Data & Supply Chain Rules

In a distributed enterprise, managing an item purely through global settings on the Item Card is inadequate. A product might be manufactured at a central plant, purchased from a local vendor at a regional hub, and replenished via transfer at retail branches. Stockkeeping Units (SKUs) (Alt+Q -> type Stockkeeping Units, Page 5701 / Table 5700) resolve this by establishing localized item definitions.

Item Card vs Stockkeeping Unit Architecture:

                    ┌────────────────────────────┐
                    │   ITEM CARD: CHAIR-100     │
                    │ Global Costing: FIFO       │
                    │ Global Replenish: Purchase │
                    └─────────────┬──────────────┘
                                  │
            Local Overrides per Location & Variant
                                  ▼
┌───────────────────────────┐ ┌───────────────────────────┐ ┌───────────────────────────┐
│     SKU: MAIN Location    │ │    SKU: WEST Location     │ │    SKU: STORE-1 Location  │
│ Replenish: Purchase       │ │ Replenish: Prod. Order    │ │ Replenish: Transfer       │
│ Vendor: VEND-100          │ │ Routing: ROUT-200         │ │ Transfer-from: MAIN       │
│ Reorder Policy: Maximum   │ │ Reorder Policy: Order     │ │ Reorder Policy: Fixed     │
└───────────────────────────┘ └───────────────────────────┘ └───────────────────────────┘

Automated Creation of SKUs

Rather than creating SKUs manually, consultants run the Create Stockkeeping Unit batch job (Alt+Q -> type Create Stockkeeping Unit, Report 5706):

• Create Per: Location, Variant, or Location & Variant.
• Item Filters: Selects specific product groups or active items.
• Automatically copies baseline parameters from the Item Card to the new SKU records.

Parameter Overrides at the SKU Level

[!IMPORTANT] Planning Precedence Rule: When calculating the Planning Worksheet or Requisition Worksheet, Business Central checks for the existence of an SKU record for the specific Item + Location + Variant. If an SKU exists, the planning engine exclusively honors the SKU parameters, completely ignoring the Item Card's replenishment and planning fields.

---

Step-by-Step UI Configuration Workflows

Workflow A: Setting Up a New Warehouse Location with Bins

1. Press Alt+Q, type Locations, and select New.
2. In the Code field, enter DIST-1; enter a descriptive Name and physical address.
3. On the Warehouse FastTab:
   • Set Require Receive to Yes.
   • Set Require Shipment to Yes.
   • Set Require Put-away to Yes.
   • Set Require Pick to Yes.
   • Set Bin Mandatory to Yes.
4. In the action bar, select Location -> Bins.
5. Create bin records (e.g., RECEIVE, SHIP, A-01-01, A-01-02) with assigned Bin Types.
6. Return to the Location Card and assign default bins under the Bin Setup FastTab.

Workflow B: Configuring a Transfer Route

1. Press Alt+Q, type Transfer Routes, and select the related link.
2. In the grid, locate the intersection of Transfer-from Code MAIN and Transfer-to Code STORE-1.
3. In the line details:
   • In In-Transit Code, select INTRANSIT.
   • In Shipping Agent Code, select FEDEX.
   • In Shipping Agent Service, select GROUND.
   • Enter 2D in Shipping Time.

Workflow C: Creating and Configuring a Branch SKU

1. Press Alt+Q, type Stockkeeping Units, and select New.
2. On the SKU Card, enter Item No. 1000 and Location Code STORE-1.
3. On the Replenishment FastTab:
   • Change Replenishment System from Purchase to Transfer.
   • In Transfer-from Code, enter MAIN.
4. On the Planning FastTab:
   • Set Reordering Policy to Fixed Reorder Qty.
   • Set Reorder Point to 10.
   • Set Reorder Quantity to 25.
   • Set Safety Stock Quantity to 5.

---

Common Implementation Pitfalls & Exam Traps

• Pitfall 1: Missing Transfer Route Definition. If a user attempts to release or post a Transfer Order between two locations where no Transfer Route has been configured, Business Central throws a validation error stating that an In-Transit location must be specified. Transfer routes must be established before executing transfers.
• Pitfall 2: Attempting to Enable Bins on an In-Transit Location. Enabling the Use As In-Transit toggle locks all warehouse tabs. Attempting to assign bin codes to an in-transit location is blocked by platform validation.
• Pitfall 3: Assuming Item Card Changes Update Existing SKUs. Modifying replenishment or planning parameters on the Item Card does not update pre-existing SKU records. Consultants must update the SKU cards directly or re-run the Create Stockkeeping Unit batch job with update options.
• Pitfall 4: Leaving Transfer-from Code Blank on Transfer SKUs. When an SKU has its Replenishment System set to Transfer, omitting the Transfer-from Code causes the Planning Worksheet to fail during calculation, as it cannot determine the supplying source location.