ax2009_enus_tl1_06

Chapter 06: Quarantine Management

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CHAPTER 6: QUARANTINE MANAGEMENT Objectives

The objectives are:

• Set up a warehouse for quarantine management • Set up an item to be automatically quarantined by setting up the

required parameters • Create and process a manual quarantine order. • Set up automatic quarantine management. • Split, return and scrap part of the order in the quarantine order

process. • Identify the inventory transactions associated with the statuses of a

quarantine order.

Introduction Quarantine Management, which is part of the Inventory management module, introduces how Microsoft Dynamics® AX 2009 uses Quarantine orders to control the item location of incoming items for quality control.

Items can be set aside in a quarantine warehouse to await either manual or automatic approval, depending on setup. Manual quarantining can be used, for example, when an item must be set aside for quality reasons. Automatic quarantining can be used for perishable items where, for example, the expiration dates must always be checked before the items enter the standard warehouse.

NOTE: When the items are in quarantine they are not available in inventory and cannot be picked from inventory for a delivery.

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Trade and Logistics I in Microsoft Dynamics® AX 2009

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Quarantine Warehouse Setup Parameters To enable the manual or automatic quarantine of an item, you must create a warehouse to hold the quarantined item. In Microsoft Dynamics AX 2009, there are three types of warehouses, which are described in the following table.

Warehouse Type Description Default Where items are typically received into and issued from

Transit Used for transfer orders between warehouses

Quarantine Where items are kept to be quality controlled, until they are released for use

Procedure - Set Up a Quarantine Warehouse

To use quarantine orders, you must create a quarantine warehouse and attach it to the default warehouse.

NOTE: The quarantine warehouse must be associated with the same site as the current warehouse.

To create a quarantine warehouse, follow these steps:

1. Open Inventory management > Setup > Inventory breakdown > Warehouses.

2. Create a new warehouse by pressing CTRL+N. 3. Specify the name. 4. In the Type field, select Quarantine. 5. Select a site. 6. Press CTRL+S to save.

Procedure - Attach a Quarantine Warehouse to a Default Warehouse

Attach the quarantine warehouse to a default warehouse (or warehouses). Microsoft Dynamics AX 2009 will then send quarantine items bound for this default warehouse, to the specified quarantine warehouse.

To attach the new quarantine warehouse to the default warehouse, follow these steps:

1. Select the default warehouse on the Overview tab. 2. Click the General tab. 3. Select the quarantine warehouse in the Quarantine Warehouse

field. 4. Press CTRL+S or close the form to save.



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NOTE: If an item to be quarantined is stored in a warehouse that has no quarantine warehouse linked to it, Microsoft Dynamics AX 2009 stops updating and notifies you with an error message that there is no quarantine warehouse specified.

Quarantine Parameters

There are two groups attached to an item that affect how the item can use quarantine management:

• Inventory model group • Dimension group

Inventory Model Group

Inventory model groups contain settings that determine how items are controlled and handled on item receipts and issues. The Inventory model group can be accessed from Inventory management > Setup > Inventory > Inventory model groups.

FIGURE 6.1 INVENTORY MODEL GROUP FORM - SETUP TAB

Within the inventory model group, there is a Quarantine management field on the Setup tab that must be selected to have quarantine orders automatically generated for the items of this group. You must clear this field to manually generate quarantine orders.



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NOTE: If an item to be quarantined is subject to registration requirements (if this box is also selected in the Inventory model group), you must register it in the standard inventory before it can be put in the quarantine inventory. This is because the automatically generated Quarantine order removes the item from the standard inventory to put it in the quarantine inventory.

Dimension Group

Inventory dimensions control how items are stored and withdrawn from inventory. The Dimension groups form can be accessed from Inventory management > Setup > Dimensions > Dimensions groups.

When Inventory dimensions are set up, the storage dimension Site and Warehouse must be selected for the item's dimension group. It is also required that this is a primary stocking, meaning that you must enter the dimensions before any physical update. To do this, select the Primary stocking check box for Warehouse and Site on the Overview tab in the Dimension group form.

NOTE: The Site dimension is mandatory and will automatically be assigned primary stocking.

FIGURE 6.2 DIMENSION GROUP FORM



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In summary, for an item to use quarantine management, the attached inventory model group must be set up to use Quarantine management and the item's inventory dimension group must have the storage dimension Warehouse and Site selected.



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Lab 6.1 - Create Quarantine Inventory Contoso Entertainment Systems - Company CEU

Scenario

You are the purchasing agent for the Contoso Entertainment Systems. You must buy a new item number 800120, Q.AG.test, for Site 2, Warehouse 21. However, it is very important to control quality of each item received for a certain time.

You must create the new item and attach it to a new Inventory model group, QGRP, that you must create and set up for quarantine managed items.

• Create a purchase order for ten items of Q.AG.test for vendor 4301, Site 2, and warehouse 21.

The item to create has the following specifications:

Field Value Inventory Model Group QGRP

(Inventory Model Group) Name Quarantine Inventory Group

Item number 800120

Item name Q.AG.test

Item group RM

Dimension group N-N

Challenge Yourself!

1. Create and set up a new Inventory model group for quarantine managed items.

2. Create the new item. 3. Attach the new Inventory model group to this item. 4. Create a purchase order for ten pieces of item number 800120 for

vendor 4301, and post the packing slip. 5. Verify that the items are stored in a quarantine warehouse.

Need a Little Help?

1. Create a new Inventory model group. These are created in Inventory management > Setup > Inventory > Inventory model group.

2. Select the Quarantine management check box in the Inventory model group.

3. Create a new item and attach the new inventory model group. Do this from Inventory management > Item details. When you create the new item, use the new Inventory model group.



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4. When you create a purchase order for ten pieces of item items of 800120, select site 2, and warehouse 21 which is a warehouse that has a Quarantine warehouse attached to it.

5. To verify that the items are stored in the quarantine warehouse, click Inventory > Transactions on the purchase order line and then click the Inventory button and select On hand or Transactions for dimensions.

Step by Step

Create an inventory model group:

1. Click Inventory management > Setup > Inventory > Inventory model group.

2. Press CTRL+N to create a new Inventory model group. 3. In the Inventory model group field, type QGRP. 4. In the Name field, type Quarantine Inventory Group. 5. Click the Setup tab and select the Quarantine management check

box. 6. Accept all other default values and close the form.

Create a new item and attach the new inventory model group:

1. Click Inventory management > Item details. 2. Press CTRL+N to create a new item. 3. In the Item number field, type “800120”. 4. In the Item name field, type “Q.AG.test”. 5. TAB to the Item group field, click the arrow, and select RM. 6. Click the General tab, click the Inventory model group field, click

the arrow, and select QGRP. 7. In the Dimension group field, click the arrow, and select NN. 8. Close the form.

Create a purchase order to verify the settings:

1. Open Accounts payable > Purchase Order Details. 2. Press CTRL+N to create a new Purchase order. 3. Click Vendor account 4301. 4. Click Yes to transfer vendor information. 5. Click OK. 6. Click the Item number arrow and select item number 800120. 7. In the Site field, select “2”, and in the Warehouse field select “21” 8. In the Quantity field, type “10”. 9. Click Posting > Packing slip. 10. Select All in the Quantity field.



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11. Specify the packing slip number and then click OK. 12. Open Inventory management > Periodic > Quality

management > Quarantine orders. 13. Verify that the quarantine order for ten items of 800120 is started in

the Quarantine orders form.



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Quarantine Item Management To manage items to be quarantined, Microsoft Dynamics AX 2009 follows a three step procedure by using the Quarantine order form. Transactions are created for the item based on the Quarantine order.

The three step procedure is as follows:

1. An item is received through registration or packing slip updated into standard inventory.

2. A Quarantine order is created, either manually or automatically, moving the item to the quarantine warehouse and making the item unavailable from the standard inventory.

3. The Quarantine order is processed in the Quarantine orders form, and then reported as finished and ended. This transfers the item back to the standard inventory.

Manual Quarantine Orders

Most companies differentiate purchased items into high value and low value items. High value items are usually set for automatic quarantine and low value for manual quarantine.

When you create a manual quarantine order it corresponds, in principle, to a transfer journal, although there must be at least one quarantine warehouse created for quarantining to be performed. Notice that for manual quarantine management, the item does not have to be set up for quarantine management in the Inventory model group.

Procedure - Create and Process a Manual Quarantine Order

To create and process a manual quarantine order, follow these steps:

1. Open Inventory management > Periodic > Quality management > Quarantine orders.

2. Create a new quarantine order. 3. Specify the item number, the warehouse and site where the item is

stored, the quarantine warehouse and the number of items to be quarantined.

4. Save the order by pressing CTRL+S. 5. When the order is created, it must be processed by clicking the

relevant buttons on the Quarantine orders form. This moves the order through the following four statuses. o Created o Started



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o Reported as finished o Ended

6. The item now has four transactions posted. To see these transactions

open the Transactions form by clicking Inventory > Transactions from the Quarantine order form.

Manual Quarantine Orders - Status Overview

The following table contains descriptions of the statuses that a quarantine order is processed through after it is created.

Status Description Created This is the status of the order when it is created

manually and the item is not yet put in the quarantine warehouse. When an order has the status of Created, you can register the quarantine items with, for example, serial or batch numbers to be able to trace the items when they leave the quarantine warehouse. The items can also be picked and/or reserved from the standard warehouses, if you must control which exact items go into quarantine.

Started On this status a transfer transaction is created and the item is now moved from the default warehouse to the quarantine warehouse. This is created for the manually created order when you click Start. For the automatically created Quarantine orders, this is the status that is given when you create it.

Reported as finished If you report a Quarantine order as finished, the item is released from quarantine; however, it is located in the quarantine warehouse. If you use Warehouse management, you can specify an item arrival journal that is initialized at the time that the order's items are quarantined. Click the Report as finished button to report the quarantine order as finished.

Ended The item is now transferred from the Quarantine warehouse and back to the standard (or default) warehouse. At this point, the item is available in standard inventory and the quarantine management process is completed. This occurs when you click the Ended button.



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Manual Quarantine Orders - Release

If you do not use the Warehouse management module, you do not have to change the status to Report as finished (just Ended) for Microsoft Dynamics AX 2009 to handle quarantine management. However, notice that the item must also be physically transferred whenever a Quarantine order is Ended, as ending the Quarantine order releases the item.

NOTE: Only Quarantine orders with a status of Created or Ended can be deleted manually.

Scenario - Automatic Quarantine Management

An item can be set up so that all receipts are automatically quarantined. At Contoso Entertainment Systems, all items received from the five vendors who have had the greatest number of product recalls, are automatically quarantined. During this quarantine, the items are randomly tested for defects or other problems. Depending on the number of passed or failed tests, Contoso Entertainment Systems will accept the shipment into inventory or return it to the vendor for replacement.

Set Up Automatic Quarantine Management

When you set up automatic quarantine, the following conditions are prerequisites:

• The item's inventory model group and dimension group must be set up with the correct parameters previously discussed.

• The warehouse where the item is being purchased must have a quarantine warehouse attached to it.

If these settings are enabled, all receipts of the item automatically create a Quarantine order that is located in Inventory management > Periodic > Quality management > Quarantine orders.

The automatically generated Quarantine order puts the item in the quarantine inventory and is processed through the order statuses in the same manner as a manual quarantine order. Therefore, the order must have the status Reported as finished or Ended before the item is physically available in the standard inventory. Notice that, unlike the manual quarantine order, the automatic quarantine order has the status of Started when it is created.



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Automatic Quarantine Orders

If an item is set up for automatic quarantine the quarantine order can be created at the following points in time.

Creation Description On packing slip update The item is put in a quarantine warehouse when

the purchase packing slip is updated. For this option, there is no registration requirement.

On registration The item is put in a quarantine warehouse when registered in purchasing. For this option, the Registration requirement check box must be selected in the Inventory model group.

Location journal The item is registered at a standard (or default) warehouse with the help of a Location journal. When the journal is posted, a pallet transport is generated to move the item from the regular warehouse to the quarantine warehouse. When the pallet transport is Complete, a Quarantine order is generated. The pallet is moved to a quarantine warehouse.

Quarantine Order Processing Options

During the quarantine order, the processing of quarantine items can be split, returned, or scrapped depending on the result of the quality control. These options are available when a quarantine order, or part of an order, is not ready to be put into the standard warehouse or is up to the required standard.

Scenario: Split Quarantined Items

Contoso Entertainment Systems receives 30 projector lamps and because there have been several defects on these items earlier, the order processor decides that the lamps must be quarantine managed. In the quarantine warehouse, it is determined that 20 items are satisfactory and ten of the items have minor defects and cannot enter the standard warehouse. To end only the part of the order that has passed the quarantine and possibly scrap or perform additional tests on the ten items, the order processor can split the order.

Procedure: Split a Quarantine Order

To split a Quarantine order, follow these steps:

1. Open Inventory management > Periodic > Quarantine management > Quarantine orders.

2. Select a quarantine order. 3. Click Functions > Split.



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4. Specify the quantity to split. 5. Click OK.

When you click OK, a new quarantine order is created in the Quarantine orders form that has the split quantity and the quantity on the original quarantine order is updated. It is now possible to end the part of the order that passed the quarantine by selecting that quarantine order and clicking Report as Finished and End.

NOTE: Quarantine orders must be in a Created or Started status to split quantities on the order.

Scenario: Split and Return Part of a Quarantine Order

Contoso Entertainment Systems receives ten subwoofers from Litware Electronics. The items must be quarantine managed and a quarantine order is created and started. The goods are checked at the quarantine warehouse and it turns out that four of the ten items are defective and Contoso Entertainment Systems wants to return the defective items to the vendor at the vendor's expense.

Procedure: Return the Defective Items

To return the four items in Scenario: Split and Return Part of a Quarantine Order, follow these steps:

1. Click Accounts payable > Purchase Order Details. 2. Create a new purchase order and select Returned order in the

Purchase type field in the Create purchase order form. 3. Specify the RMA number, and click OK to create the purchase order

header. 4. Create a purchase line for four items. 5. On the purchase order line, specify the warehouse, to which the

returned items were sent from the quarantine warehouse, and type “-4” in the Quantity field. The quantity must be negative.

6. Specify a return action on the Setup tab in the Returned item field group.

7. Invoice the purchase order for the returned items.

NOTE: The return actions are set up for purchase orders in Accounts payable > Setup > Purchase order >Return action.



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Scenario: Scrap Quarantined Items

Contoso Entertainment Systems receives 20 items that must be quality checked before they go into the main warehouse. Five of the items prove to be defective, and instead of returning them to the vendor, Contoso Entertainment Systems decides to scrap them because the value is not significant enough to create a vendor return order.

Procedure: Scrap a Quarantine Order

To scrap a quarantine order, or part of it, follow these steps:


2. Select a quarantine order with the status of Started. 3. Click Functions > Scrap. 4. Specify the quantity of items that must be scrapped and the date

when to scrap them. 5. Click OK.

NOTE: Quarantine orders must be in a Started status to scrap quantities on the order.

When an item is scrapped, it does not affect the quantity on the Quarantine order line. When you click the Report as finished and/or End button, notice that the scrapped quantity has been deducted from the quantity. Therefore, only the part of the order that passed quarantine is reported as finished and ended.

To see the transactions generated when scrapping an item, click Inventory > Transactions.

View Ended Quarantine Orders

In the Quarantine orders form, you can select the View ended field. This helps if you only want to see finished orders, that is, those with a status of Ended.

Items in Quarantine Report

You can view items that are in quarantine by using a standard report in Microsoft Dynamics AX 2009. If the quality controller creates the Items in Quarantine report every morning, he or she can assess the volume of the work for the department.



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The Items in Quarantine report is located in Inventory management > Reports > Status > Items in quarantine. The standard defaults are to show items with a Status of Started and Reported as finished. You can modify these choices by clicking the Select button.

NOTE: To modify the statuses click the Select button and type or select the statuses in the Criteria field. Ensure that you separate the statuses with a comma before clicking OK.



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Lab 6.2 - Purchase to Quarantine Inventory Contoso Entertainment Systems - Company CEU

Scenario

As the quality controller at Contoso Entertainment Systems, you have a purchase order for ten items of Q.AG.test, item number 800120, that has been received automatically into quarantine.

When the quality assurance tests are completed, you verify that eight of the ten items can be accepted into inventory, and the remaining two items must be scrapped.

Challenge Yourself!

Your task is to register these inventory movements, for the quarantine order that you created in Lab - Create Quarantine Inventory.

Need a Little Help?

1. Locate the quarantine order through Inventory management > Periodic > Quality management > Quarantine orders.

2. First split the order into two orders; one order with eight as the quantity and one order with the quantity of two.

3. Scrap the order with the quantity of two and end the order with the quantity of eight.

Step by Step


2. Highlight the order for ten items of Q.AG.test, item number 800120 . 3. Click Functions > Split. 4. Type ‘8’ in the Split quantity field. 5. Click OK. 6. Select the order with the quantity of two. 7. Click Functions > Scrap. 8. Type ‘2’ in the Quantity field. 9. Click OK. 10. Highlight the order with eight items of Q.AG.test, item number

800120 11. Click Report as finished. 12. Click OK.



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13. Click End. 14. Click OK.



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Inventory Transactions on Quarantined Items Inventory transactions are created in Microsoft Dynamics AX 2009 for all statuses of quarantined items except Reported as finished.

To view the inventory transactions, open the Items form, select the item and then click the Transactions button. These transactions are for the item number and not a specific sales or purchase order. To view quarantine transactions on a sales or purchase order, open either of these forms and select the order for which you want to see the transactions. Click the Inventory button and select Transactions.

Scenario - Demonstration of Transactions

The new auditor at the Contoso Entertainment Systems has expressed concern about inventory control in the warehouse and quarantine warehouse. Therefore, the auditor has asked the Inventory manager to show him or her how to always identify, where all items are within the warehouses.

The Inventory manager explains that because Contoso Entertainment Systems uses an Enterprise Resource Planning (ERP) system, all data is linked, and within that ERP system, all inventory transactions can always be viewed. The inventory manager shows the use of the transactions in Microsoft Dynamics AX 2009, and can reassure the auditors that it is always clear where all inventory is when it is in the warehouses.

Created Transactions

When a quarantine transaction has the status Created, two inventory transactions are created: On order and Ordered.

Transaction Type Description On order An issue transaction is created in the regular (default)

warehouse with a status of On Order.

Ordered A receipt transaction is created in the quarantine warehouse with a status of Ordered.

Started Transactions

When the order status on quarantine transaction is changed to Started, two of the existing inventory transactions’ statuses are changed and two undated inventory transactions are created, for a total of four inventory transactions.

The transactions, Ordered and Reserved physical, are created to handle the return transfer of the items as soon as the quarantine order status is Ended.



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These transactions are described in the following table:

Transaction Type Description Deducted The On order status, in the regular warehouse, is

changed to Deducted (Issue transaction) and you also receive a financial date for this transaction.

Ordered A receipt transaction is created in the regular (default) warehouse with a status of Ordered.

Received The receipt transaction with the status Ordered is changed to status Received and you also receive a financial date for this transaction.

Reserved physical An issue transaction is created in the quarantine warehouse with a status of reserved physical.

Reported as Finished Transactions

When the order status is changed to Reported as finished, no transactions are created. The item is now released from quarantine but has not yet been transferred back to the regular (default) warehouse.

Ended Transactions

When an item reaches the final status, Ended, the two undated transactions that were created when the order status was changed to Started, are changed as described in the following table.

Transaction Type Description Purchased The receipt transaction of the status Ordered, created

in the standard warehouse, is changed to status Purchased and you receive a financial date for this transaction.

Sold The issue transaction of the status Reserved physical, created in the quarantine warehouse, is changed to status Sold and you receive a financial date for this transaction.

Summary Quarantine Management discussed the setup of Microsoft Dynamics AX 2009 for both automatic and manual quality control.

It also explained the various statuses that a quality order is taken through and how the transactions are related to each status.

Quarantine management helps a company control the item location of incoming items and prevents items from entering a production environment or being sold when they are waiting for quality control or are being controlled.



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Test Your Knowledge Test your knowledge with the following questions.

1. Task: Outline the basic steps that you would take to accept 80 percent of a quarantined purchase order for receipt, and scrap the remaining 20 percent.

2. Number the steps to form the correct flow of tasks.

Step _____ : Click Functions > Split

Step _____ : Select the line to scrap

Step _____ : Type the quantity to be scrapped

Step _____ : Type the Split quantity

Step _____ : Click Functions > Scrap

Step _____ : Open the Quarantine orders form

Step _____ : End the line for items to be posted into inventory

3. Task: Outline the basic steps in setting up a quarantine warehouse.


Step _____ : Select the main warehouse and attach the new quarantine warehouse to it

Step _____ : Select Quarantine as the type

Step _____ : Create a new warehouse

Step _____ : Click Inventory Management > Setup > Inventory Breakdown > Warehouses

5. Describe how an item is automatically moved into a quarantine warehouse.



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Quick Interaction: Lessons Learned Take a moment and write down three key points you have learned from this chapter:

1.

2.

3.



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Solutions Test Your Knowledge

1. Task: Outline the basic steps that you would take to accept 80 percent of a quarantined purchase order for receipt, and scrap the remaining 20 percent.


Step 2 : Click Functions > Split

Step 5 : Select the line to scrap

Step 7 : Type the quantity to be scrapped

Step 3 : Type the Split quantity

Step 6 : Click Functions > Scrap

Step 1 : Open the Quarantine orders form

Step 4 : End the line for items to be posted into inventory

3. Task: Outline the basic steps in setting up a quarantine warehouse.


Step 4 : Select the main warehouse and attach the new quarantine warehouse to it

Step 3 : Select Quarantine as the type

Step 2 : Create a new warehouse

Step 1 : Click Inventory Management > Setup > Inventory Breakdown > Warehouses

5. Describe how an item is automatically moved into a quarantine warehouse.

MODEL ANSWER - Items are automatically moved into quarantine based

on their Inventory model group, assuming the warehouse and site that the

items are being purchased into has a quarantine warehouse attached to it.


ax2009_enus_tl1_06

Documents

quarantine inventory

quarantine items

quarantine warehouse

new quarantine warehouse

specified quarantine

quarantine managementnote

quarantine parametersthere

quarantine management