Shortage Management
Definition
We understand by shortage the negative difference between the quantity delivered and the quantity ordered. The break may be on two levels:
- Partial outage: one or more lines of the order cannot be (or be partially) delivered.
- Complete outage: none of the products in the order can be delivered.
Shortages concern both the sales process and the purchasing process.
General
A shortage occurs when the ordered quantity of a product cannot be delivered. This is generally linked to poor anticipation of supply needs. This results in potential customer dissatisfaction and in certain cases may be subject to compensation. It is therefore important for a supplier or customer to be able to monitor their shortages as best as possible (“Shortage rate” performance indicator).
The goal of the shortage management functionality is to allow complete recording of the quantities originally ordered. In standard Dynamics 365 Business Central , an order can only be closed if the ordered quantity is completely delivered. In the event that a shortage occurs (the ordered quantity cannot be honored) if the user wishes to close his order then he must adjust the quantity ordered with the quantity actually delivered, thus losing all traceability of the ordered history.
In order to preserve these quantities originally ordered, we have added fields for storing the quantities initially ordered on purchase/sales orders, on purchase/sales invoices, as well as on receipt/shipment documents and all associated archived documents (orders archived, invoices recorded).
Setup
The setup of shortage management can be done at three levels.
- At the sales module level (Sales and Receivable page for sales module, Purchase and Payables page for the purchasing module).
- At the customer level (for purchases at the supplier level).
- At the ship-to address level (no equivalent on the purchasing part). When two settings are contradictory, it is the most “fine” level which wins (so Recipient Address>Customer>Sales & Receivables settings).
There are two ways of managing shortages,
- Standard mode: This is the standard management mode of Business Central, without automated management of shortages. The user will have to manually modify update the quantity if they wish (the quantity initially ordered is not kept in the specific field.)
- Change order quantity mode: In this mode the quantity ordered is automatically adjusted when a shortage is identified (when we validate a shipment or receipt with a shortage.) The quantity initially ordered is also kept in a specific field. This allows you to quickly close the order as the shortage is identified.
Note that when you configure the outage management mode you will also find a third possible option. This option called Default is to be used only on the customer/vendor or ship-to address level. If you wish to define a general setting and only manage exceptions. It is possible to define a management mode Standard or Change order quantity in the configuration of the sales or purchases module. Newly created customers/vendors/ship-to addresses systematically inherit the Default mode referring to the “higher” setting. This allows you to adjust only the cases of customers/ship-to addresses that need to operate in the other mode.
The choice of management mode is made in the Shortage management method field.
This field is available on the following pages,
| Page | Available values | Priority |
|---|---|---|
| Sales & Receivables Setup | Standard, Change order quantity | |
| Customer Card | Default, Standard, Change order quantity | If Default is selected then the setting defined in Sales & Receivables Setup will be used |
| Ship-To Address Card | Default, Standard, Change order quantity | If Default is selected then the setting defined in Customer Card will be used, if this one is also setup with Default then the setting defined in Sales & Receivables Setup will be used |
| Purchase & Payables Setup | Standard, Change order quantity | |
| Vendor Card | Default, Standard, Change order quantity | If Default is selected then the setting defined in Purchase & Payables Setup will be used |
Shortage Management
Change Order Quantity
- Customer Card
Enable Shortage management method field with Change order quantity on customer Card.
- Create order and post shipment
We can then create a sales order with a quantity of 10 of which 5 are shipped.
- Adjusting order quantity
As we have chosen the Change order quantity management mode, the ordered quantity is automatically adjusted upon validation of the shipment
- Conservation of the initial quantity in the sales line
If we go to the Sales Lines page, we see that the Initial order quantity value is kept and the Ordered quantity is adjusted.
- Conservation in sales order archives.
When archiving the order, the Initial order quantity and Quantity values are also saved.
- Conservation in posted sales invoices.
When the sales invoice is posted, the Initial order quantity and Quantity values are also saved.
Complete Shortages
A complete shortage occurs when it is not possible to honor delivery of all of the products ordered.
-
On the customer card we enable management with the Change order quantity mode.
-
We create an order for this customer
- When we identify the complete shortage, we delete the order which cannot be honored. When it is deleted, a message asks us if the shortage should be recorded.
- If we answer yes, then the order will be archived with the original quantity ordered saved.
