A little while ago, we covered the topic of stocktake and cycle counting in Business Central. Physical Inventory Orders allow for a different way to count stock. If you wish to divide up the number of counts you perform, you have the option to. With Physical Inventory Journals, you could print off separate sheets and filter by item or location to reach a similar end goal. Whereas here you can tie several recordings to a single Physical Inventory Order. Let’s take a look at how it works and the differences to using Physical Inventory Journals.

Populating the Physical Inventory Order record

The first step is to go to the Physical Inventory Order page and create a record. In the header, make sure to give a value for the ‘No.’, ‘Description’ and ‘Person Responsible’ fields. The Person Responsible field isn’t necessarily looking for the person doing the stock count, but the person in charge of organising it. As we’ll see later, there’s a separate field you can use to record which individual counts the stock.

Calculating the Physical Inventory Order lines

Once you have inputted values for those fields, click ‘Prepare’, ‘Calculate’ and ‘Calculate Lines’. This is where you can choose which items you want to count. You can make this as specific or broad as you like. In my example, I have filtered by Item Category Code, Location and Bin Code. This means I will only be shown lines for items I have assigned the ‘DINING’ Item Category Code to, in the ‘BM-WH’ Location, specifically the ‘STORAGE’ Bin.

These are the filters I applying to my Physical Inventory Order, separating out which items and quantities appear. — I’ve highlighted some of the key fields here.

The Calculate Qty. Expected field

The Calculate Qty. Expected field lets you decide whether or not you want to make it clear to people the quantity of an item you are expecting to find. The system determines this figure based on the current recorded quantity, subject to any filters you use. It may be that you don’t enable this field, so as to prevent users potentially finding the expected figure and then stopping. Ultimately, it’s a decision that can be taken on a case-by-case basis; it depends on how much you trust those involved to count properly!

Items Not on Inventory

By enabling this field, the system will accommodate bin content records too. This will happen if an Item has a Fixed Bin, where you are counting stock, and the quantity is zero. So essentially, the system will additionally populate Physical Inventory Order lines for items with an Qty. Exp. Item Tracking (Base) value of zero. As a reminder, a Fixed Bin Content record is created when an Item is in, or has been in a bin previously. If the Bin Content isn’t set to ‘Fixed’, the record is deleted when the quantity of that item in that bin is zero. We have a guide on Bin Contents, if you’d like to read up on the topic.

The Location I am using for my example is BM-WH, which has ‘Bin Mandatory’ enabled. We’ll cover what effect this will have on the process later. For now, be aware that having Bin Mandatory enabled is the lowest level of warehousing.

The 'Warehouse' tab on a Location Card allows you to specify what degree of warehouse functionality you want to enable. I am displaying this here to show that 'Bin Mandatory' is enabled, something which will affect how you set up your Item Tracking Code Cards.

Returning back to the Calculate Lines screen, when you are happy with your filters, click ‘ok’ and create the lines.

This message appears when you proceed to calculate the lines on a Physical Inventory Order.

The lines on your Physical Inventory Order record should update:

The updated lines on the Physical Inventory Order display items and quantities, subject to the Location and Bin filters I applied. It also displays information about item tracking. As you can see, three of the four items are using some form of item tracking and the quantity of tracked items for these matches the total number in expected inventory. The 'Table mats' item is the only item which isn't employing any form of tracking.

The ‘Qty. Exp. Item Tracking’ field specifies how many serially or lot tracked items you are expecting to find. This again, is based on the quantity currently in the system, subject to filters. In my case, all of the items are either lot or serially tracked, except for the ‘Table mats’. That explains why the Qty. Exp. Item Tracking (Base) value is zero here. Before we continue, we have a guide on item tracking which we recommend reading.

Physical Inventory Recordings

The next stage is to make a new recording. The idea of a recording is to split up the total number of items in the Physical Inventory Order. To do this, click the action ‘Make New Recording’ at the top of the page. For each recording you make, you can print out the documents to hand it out to the individuals responsible for counting the stock. All of the recordings together form the inventory order in total.

The Only Lines Not in Recordings field

When you click ‘Make New Recording’, a subpage will appear:

The Physical Inventory Recording screen shows which, more granular, filters I am applying to my Physical Inventory Order. This is to split up my results from the original order, typically to reduce the amount of counting each person has to do. This isn't always the case and it may just be a procedural stance to separate all items or bins into separate recordings.

At the top, in the Options tab, there are two fields, the first of which is Only Lines Not in Recordings. If enabled, this field prevents you from recording duplicates. For example, if I have a recording in which I display Quantity: 10 of Item: X in the Bin: STORAGE of Location: BM-WH, it will prevent subsequent recordings from displaying the same lines of data. This is more likely to be prevalent if you count by item, not by bin. Typically, we suggest enabling this field so the data in each recording is accurate.

Allow Recording Without Order

The other field in the Options tab is Allow Recording Without Order. Enabling this field allows you to accommodate finding items you didn’t expect to. So for example, say you filter by Location and Bin Code, you may find five different types of item. Well, by enabling this, you can manually create additional recording lines to accommodate for finding unexpected items. Let’s say you find two more, bringing up the total number of lines to seven. If you don’t enable this, the system will error if you try and create a manual line and ‘Finish’ the recording. To clarify, without enabling this field, you can only amend quantities found for expected items in that bin; you can’t add new items. This field grants users the ability to log unexpected items, increasing the accuracy of the recording.

My recording example

In my scenario, as the order is already filtered by Location and Bin Code, I’ll filter the recordings by specific item. As I’m filtering this way, I must make four separate recordings, one for each individual item.

The filter in the image a couple of paragraphs above is for the ‘Dining table’, a serially tracked item.

Inputting the data onto the recording

As you can see, I have a line for each serially tracked item. After the individual responsible for counting has tallied up the results, put these figures into the Quantity field on the Phys. Inventory Recording. The ‘Recorded’ field will become ticked after you input a quantity value. Note that I have one less line than in the Qty. Expected (Base) on the Physical Inventory Order. This means one serially tracked item has gone missing.

This Physical Inventory Recording shows that four serially tracked items, 1209, are in the 'STORAGE' bin in 'BM-WH' Location.

Notice I have put a value against the Person Recorded field, signifying Annette Hill performed the count. This level of detail may be valuable for reporting purposes.

Finishing the Phys. Inventory Order Recording

When you are happy with the recording, click ‘Finish’ in the header. The record will then become non-editable unless you click ‘Reopen’. To revisit any recordings, click ‘Order’ and ‘Recordings’. Against each recording you can input the date and time they took place. The ‘Person Recorded’ field is what controls who does the actual count.

The ability to reopen the record can be invaluable for recounts. Only when a recording is set to ‘finished’ will the Qty. Recorded (Base) on the Physical Inventory Order update. So if after setting a record to finished, you can simply reopen the record, create a new recording and recount the stock.

Finishing the Physical Inventory Order

When you’re happy with the recordings, navigate back to the Physical Inventory Order. I have repeated this process, making recordings for each specific item.

The list of Physical Inventory Recordings is accessed by clicking 'Order' and 'Recordings' against the Physical Inventory Order. You can also see the Person Recorded value against each recording from the list view.

On the Physical Inventory Order, click ‘Finish’. This will update the Qty. Recorded (Base) field and any positive or negative adjustments if the Qty. Expected (Base) value and the Qty. Recorded (Base) value don’t match.

In the screenshot below, the second line for ‘Dining room chairs’ has a higher value in the Qty. Recorded field than in the Qty. Expected (Base). This is a serially tracked item, showing there’s more than were recorded in the system prior. The fields on the right-hand side show the variances for this line and the one above.

This shows a 'Finished' Physical Inventory Order, which has quantity variances. These variances can be seen in the Pos. Qty (Base) and Neg. Qty. (Base) fields. The variances have come about from different levels of stock being counted to what the system had recorded in it beforehand.

Seeing the financial effects of the stock count

Prior to posting, you can click ‘Process’ and ‘Print’. The timing is key for this. If you do this before setting the record to ‘Finished’, you will only see the difference between the expected and the recorded quantity. However, if you click ‘Print’ after setting the order to ‘Finished’, you will not only see the quantity differences, but also the difference in value between what was expected and what was recorded. This is done on a line-by-line basis.

Posting the Physical Inventory Order

You can now post the Physical Inventory Order. This will make any quantity adjustments accordingly. Last but foremost, you can check the amendments using the Item Ledger Entries page. See below:

Posted Physical Inventory Order

Finally, after you have completed the stock count, you can go to the Posted Physical Inventory Orders page to view the posted record. Moreover, you can see the value of any stock adjustments made by clicking on ‘Statistics’ in the header:

Perhaps surprisingly, the Phys. Inventory Ledger Entry records are exclusive to Physical Inventory Orders and aren’t available for the Physical Inventory Journal, potentially another reason to use this feature.

That’s the end of the process. I am next going to redo this process, covering an issue which is easily preventable when using Physical Inventory Orders. It relates to tracked items on Physical Inventory Orders, namely in Locations with warehousing (even just Bin Mandatory) enabled. I encountered this issue when testing this functionality. Given how simple the solution is and how much grief it caused, I thought it was worth sharing!

The Qty. Exp. Item Tracking (Base) field isn’t accurate

Where Item Tracking Codes aren’t set up properly, it will affect the results in the Qty. Exp Item Tracking (Base) field. Notably, this is the case for Locations using warehousing.

Below is an Item Tracking Code Card. Notice that when ‘SN Specific Tracking’ is enabled, it doesn’t enable the SN Warehouse Tracking field. See below:

On an Item Tracking Code Card, if you turn on 'SN Specific Tracking', it will turn on all the fields in this image.

The effect of not having this field enabled is that when it comes to the Physical Inventory Order, after clicking Calculate Lines, the system sees that the items are tracked but doesn’t expect to find any.

In the example below, I am using the BM-WH Location, which has Bin Mandatory turned on. I am using a different combination of serial, lot and untracked items. However, the warehouse tracking fields are disabled for both the lot and serial tracking codes. This was rectified for my demonstration shown earlier.

Every ‘Painting’ is serially tracked and every ‘Paint Brush’ is lot tracked, in one of two lots. By way of alternative, the ‘Paint Supplies’ aren’t tracked. Below are my filters in the Calculate Lines action on the Physical Inventory Order:

The Calculate Lines field brings up a screen where you can filter by as many or few things as you like to narrow down your results. This includes: Location Code, Bin Code, Item No., Item Category Code.

As you can see below, despite having tracked items, they aren’t appearing in the Qty. Exp. Item Tracking (Base) field:

If I check my Warehouse Entries, the tracked stock still doesn’t show:

Using the Warehouse Entries, you can see that if you are using tracked items, they will not be shown unless you turn on the relevant tracking fields in the Item Tracking Code Card.

The solution

To manage this, enable Lot Warehouse Tracking or SN Warehouse Tracking. Obviously, only the one which applies to your items in the Location is relevant, unless you are tracking items in both ways. As I mentioned, I am using both. Ideally this is ‘on’ from the start, especially as Bin Mandatory is a field we strongly recommend using. See below:

The Item Tracking Code Card has a field 'SN Warehouse Tracking' which allows users to serially track items in Locations using warehousing.

Afterwards, when we revisit the Physical Inventory Order and click ‘Calculate Lines’, the Qty. Exp. Item Tracking (Base) field is populated appropriately.

Locations without warehousing

Below is an example of a Location which has no level of warehousing enabled:

This is an example of a Location Card without any warehousing enabled.

If there’s no warehousing enabled, you don’t need to worry about fields related to warehousing in the Item Tracking Codes. You will still need to enable SN Specific Tracking or Lot Specific Tracking if you are using tracked items. You can then proceed as I demonstrated earlier.

Closing remarks

To conclude, Physical Inventory Orders offer an alternative to counting stock which may be preferable to you. I’d argue this method is a better way to separate out specific counts for individuals than the Physical Inventory Journal. However, I’d also argue the Physical Inventory Journal is slightly simpler to use.

Hopefully, between this and Physical Inventory Journal, there’s a method of stocktaking that suits you! If you have any questions or queries, don’t hesitate to get in contact with us.

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