Warehouse management only mode with external shared warehouses

This article explains how to use Warehouse management only mode to support external shared warehouse processing. This approach allows warehouse management (WMS) functionality to be consolidated into a separate legal entity that handles requests from multiple sales subsidiaries (legal entities) in Microsoft Dynamics 365 Supply Chain Management.

You can use Warehouse management only mode to handle logistics operations in a legal entity solely dedicated to warehousing operations. You can then connect warehouses between that legal entity and other legal entities that do all the order and financial processing. In addition, warehouse management processes can use an owner inventory dimension to track which legal entity owns the inventory for items that are shared across legal entities.

This feature works without modifications in a single-instance deployment model. If you want to link between multiple instances, one of which handles logistics and warehouse processes, you must set up an integration process like the one described in Warehouse management only mode with external ERP system.

To use Warehouse management only mode in a multi-instance deployment, you must use the standard integration process.

The following articles provide detailed information about how Warehouse management only mode works:

• Warehouse management only mode with external ERP system
• Exchange data between systems
• Monitor and control message processor messages

High-level implementation example

The following illustration shows an example system where Warehouse management only mode is active with an external shared warehouse in the WOM legal entity. The WOM legal entity handles logistics warehouse operations for two sales subsidiaries that manage order and financial processing in the LE1 and LE2 legal entities.

Inbound process example (shared warehouse)

The following illustration highlights the elements of the inbound process when you use a shared warehouse.

Here's a high-level description of the inbound process. Steps that start with LE1 are done by a sales subsidiary. Steps that start with WOM are done by the warehousing entity.

1. LE1: Purchase orders are created and released to the warehouse. The system then creates external warehouse inbound shipment order requests. As a result, inbound shipment order messages are delivered to the WOM legal entity. Purchase orders that are released to the externally managed warehouse can be processed via a periodic background process. (This background process is set up at Warehouse management > Periodic tasks > Create external warehouse inbound shipment order requests.) Alternatively, they can be manually processed by using the Release to warehouse option on the purchase orders page.
2. WOM: The warehousing entity processes the inbound shipment order messages. As a result of this processing, inbound shipment orders are created.
3. WOM: Inbound loads are created manually, automatically, or through import (depending on your configuration).
4. WOM: Warehouse workers use the Warehouse Management mobile app to register the inbound shipment order transactions.
5. WOM: The warehousing entity processes receiving completed operations for the related loads. These operations update the load status to Received and generate external warehouse inbound shipment order updates for LE1. You can turn on automatic message processing for the External warehouse shipment order updates message queue.
6. LE1: During the processing of the external warehouse inbound shipment order updates, inbound loads and shipments are created, and the related purchase order line transactions are updated to Registered. This status update allows further processing of product receipts and invoices.
7. WOM: The warehousing entity finalizes the inbound shipment order line transactions by running the Post shipment receipts batch job.

For a more detailed description of this process and the related processes, go to Work with warehouse management only mode in Supply Chain Management.

Outbound example process (shared warehouse)

The following illustration highlights the elements of the outbound process when you use a shared warehouse.

Here's a high-level description of the outbound process. Steps that start with LE1 are done by a sales subsidiary. Steps that start with WOM are done by the warehousing entity.

1. LE1: Sales orders are created and released to the warehouse. The system then creates external warehouse outbound shipment order requests. As a result, outbound shipment order messages are delivered to the WOM legal entity.
2. WOM: The Outbound shipment order messages are processed. As a result of this processing, outbound shipment orders are created.
3. WOM: Inventory reservations are created either manually or automatically (depending on your configuration).
4. WOM: The orders are released for further warehouse processing, either manually or automatically. If you use outbound load planning processes, you can create loads by using the Outbound load planning workbench before you release the orders.
5. WOM: Depending on the setup of your wave template definitions, warehouse work might be created and released immediately.
6. WOM: Outbound warehouse work is processed, and the status of the related outbound shipment order line transactions is updated to Picked.
7. WOM: The loads are outbound ship confirmed. As a result, external warehouse outbound shipment order updates are generated for LE1.
8. LE1: During the processing of the external warehouse outbound shipment order updates, outbound shipment data and the related sales order line transactions are updated. The transactions become Picked. This update allows further processing of the packing slip and invoice. You can turn on automatic message processing for the External warehouse shipment order updates message queue.
9. WOM: The warehousing entity finalizes the outbound shipment order line transactions by running the Post shipment packing slips batch job.

For a more detailed description of this process and the related processes, go to Work with warehouse management only mode in Supply Chain Management.

Transfer orders (shared warehouse)

Transfer orders with external shared warehousing mean that either the source, destination, or both warehouses in a transfer order are external. Most aspects of the transfer order processing work in the same way, regardless of whether you use external shared warehouses.

Prerequisites

Before you can use this feature, your system must meet the following requirements:

• You must be running Supply Chain Management version 10.0.44 or later.
• In the warehouse configuration of the externally managed warehouse, you must set both a default location and a default license plate location. This location is used as a temporary location when processing a transfer order. When shipping from an external warehouse, the system sends an update to communicate what was shipped and what license plate was used. Inventory is then moved from a default location to a default license plate location and the transfer order is processed against that location.

Transfer order shipped from an external warehouse

The following illustration highlights the elements of the transfer order process when shipping from an external warehouse.

Here's a high-level description of the process. Steps that start with LE1 are done by a sales subsidiary. Steps that start with WOM are done by the warehousing entity.

1. LE1: The transfer order is created and released to the warehouse. The system then creates external warehouse outbound shipment order requests. As a result, outbound shipment order messages are delivered to the WOM legal entity.
2. WOM: The Outbound shipment order messages are processed. As a result of this processing, outbound shipment orders are created.
3. WOM: The orders are released for further warehouse processing, either manually or automatically. The rest of the process proceeds as described in Outbound example process (shared warehouse).
4. WOM: The loads are outbound ship confirmed. As a result, external warehouse outbound shipment order updates are generated for LE1.
5. LE1: As the external warehouse outbound shipment order updates are processed, the system updates outbound shipment data and the related transfer order transactions. The transfer order becomes Shipped if everything from the order is shipped. This update allows further processing of the transfer order when received at the destination warehouse.

Transfer order received at an external warehouse

The following illustration highlights the elements of the transfer order process when receiving at an external warehouse.

Here's a high-level description of the process. Steps that start with LE1 are done by a sales subsidiary. Steps that start with WOM are done by the warehousing entity.

1. LE1: The transfer order is created and released to the warehouse. The transfer order is shipped and the system creates a transfer order shipping journal. The system then creates external warehouse inbound shipment order requests from the shipping journal. As a result, inbound shipment order messages are delivered to the WOM legal entity.
2. WOM: The warehousing entity processes the inbound shipment order messages. As a result of this processing, inbound shipment orders are created.
3. WOM: Inbound loads are created manually, automatically, or through import (depending on your configuration). The rest of the processing in the WOM proceeds as described in Inbound example process (shared warehouse).
4. WOM: The warehousing entity processes receiving completed operations for the related loads. These operations update the load status to Received and generate external warehouse inbound shipment order updates for LE1.
5. LE1: As the external warehouse inbound shipment order updates are processed, the system creates inbound loads and shipments, and updates the related transfer order line transactions. If everything from the transfer order is received, the transfer order moves to the Received status.

Transfer order with shipping from and receiving to an external warehouse

It's possible to have both source and destination warehouses set as external. This scenario works the same as the previous two scenarios combined.

On-hand adjustments

The following illustration shows how on-hand inventory adjustments are handled when Warehouse management only mode is run.

Changes in on-hand inventory that are the result of inbound and outbound shipment orders are handled when Receive external warehouse inbound shipment order update and Receive external warehouse outbound shipment order update operations are processed through the message processor in the LE1 legal entity. However, other warehouse movements, such as warehouse counting operations, must also ensure that on-hand inventory is the same between the WOM legal entity and any related order processing legal entities, such as LE1. Therefore, Warehouse management only mode can record the changes in warehouse inventory in the warehouse inventory update log (Warehouse management > Inquiries and reports > Physical inventory reconciliation > Warehouse inventory update log). This data is used to automatically create external inventory adjustments for the relevant legal entities via the Publish warehouse inventory update log updates process automation background process. (By default, this background process runs every 10 minutes.)

You can use the Create external inventory adjustment journals process (Warehouse management > Periodic tasks > Create external inventory adjustment journals) to generate the inventory adjustment journals that are used to update the on-hand inventory. In this way, you can keep inventory information synced between the two legal entities.

To automatically post the inventory adjustment journals, go to Warehouse management > Periodic tasks > Post external inventory adjustment journals. This process posts the journals that the Create external inventory adjustment journals process creates.

Warehouse inventory update logs

The Warehouse inventory update log (Warehouse management > Inquiries and reports > Physical inventory reconciliation > Warehouse inventory update log) collects all the inventory transaction updates that lead to on-hand updates that are of interest for the related legal entities. For example, you might want to handle information about inventory status changes.

Example setup that uses external shared warehouse processing in Supply Chain Management

This section provides an example that shows how to set up and use Warehouse management only mode with external shared warehouse processing in Supply Chain Management.

Legal entities and source systems

To use Warehouse management only mode as described in this article, you must have at least two legal entities. For this example, the two legal entities are named as LE1 and WOM.

In the WOM legal entity, you must create a source system to handle shipment orders and the inventory on-hand update processes. For this example, this source system is named SS-LE1.

In the LE1 legal entity, you must set up an external warehouse management system of the Legal entity type and link it to the SS-LE1 source system in the WOM legal entity. You can complete this setup by going to Warehouse management > Setup > Warehouse management integration > External warehouse management systems.

In the LE1 legal entity, you can now go to Warehouse management > Setup > Warehouse > Warehouses and select the warehouses that you want to handle externally. Specify the external warehouse management system and the external warehouse name from the WOM legal entity. You should select a default location that doesn't use license plates. This location is used for all inventory changes from the external warehouses in the LE1 legal entity.

Product master and reference data

Warehouse management must be fully set up in all legal entities that run warehouse management processes (such as WOM). This setup includes product master data. The same products and product variants can be used for the released products in all legal entities. In this case, you must use a separate source system as the source for managing product master data. If you share products among multiple sales subsidiaries or legal entities, you must create the necessary source system item data. For example, you might create a source system named PIM-D365 and assign it as the product master source system for the SS-LE1 source system.

You must also ensure that the products have a tracking dimension group where the Owner dimension is enabled. In this way, the ownership of the inventory can be tracked for each of the related legal entities. For this example setup, you don't have to enable the Owner tracking dimension for the released product in the LE1 legal entity. However, if you enable it, the legal entity owner dimension value is automatically assigned to the purchase and sales order lines, and you can't change it.

You can find more details about the product master data in Master and reference data. However, be sure to use the Non-valuated inventory model for the products in the WOM legal entity. In addition, be sure to enable the Owner inventory tracking dimension.

To use the Owner dimension, you must create a record on the Warehouse inventory owner page (Warehouse management > Setup > Warehouse management integration > Warehouse inventory owner). Learn more in Warehouse inventory owner.

If you use this example setup in an environment where you already have some released products, ensure that you create the data for the released products and variants on the Source system items page.