Managing Ocean Freight with Transfer Orders in Business Central

Companies who use Business Central manufacturing often need to have product purchased offshore delivered to their facility by ocean freight.  I would guess (from personal experience) that about 33% of my customers do this.  A common problem I see is that the product on the ocean is not visible to the planning department.

We even find customers who have Business Central and are still tracking this inventory on spreadsheets.

Why Companies Don't Use Transfer Orders

Transfer Orders are a standard feature of Business Central, but I find they are often overlooked.  I think this is because many consultants think they are specifically part of the Distribution Requirements Planning features of BC/NAV rather than looking at them for Ocean Freight.

What I see quite often is that the customer has communicated to their trainer/consultants that they buy product from a supplier in (example) China.  They are correctly shown how to place the purchase order.  What then happens most often is the purchase is received at the time it ships.  Since Ocean freight probably takes about 5 or 6 weeks to reach the warehouse in North America, the customer starts a spreadsheet to track material.  The product is put into a virtual "Transit" location/warehouse and the spreadsheet keeps track of when it'll arrive.

Handling Product from Overseas

There is a way better way to do this.

The use of Transfer Orders in Business Central lets you track that Ocean freight and show it in all your inventory availability and MRP views.

Transfer orders allow a business to "Ship" a product to itself.  It takes care of a bunch of problems caused by trying to use a spreadsheet.

• The Planning Worksheet will calculate the Transfer Order as a source of supply when calculating purchase requirements, so it won't tell you to order materials you already expect.
• The Item Availability views (there are several) will include the Transfer Order so you can see when that product is expected
• The Available to Promise and Capable to Promise screens in Sales Orders will use Transfer Orders in their calculations
• You can add costs like freight, brokerage and customs to your transfer order shipments, allowing you to correctly calculate a landed cost for your product

Overall the use of Transfer Orders make life a lot easier for a purchasing or planning department trying to figure out where freight is, when it will arrive and what the product costs once it hits your facility.

Customizations to Transfer Orders

There are a couple of small customizations we see done to Transfer Orders sometimes (and that we've done ourselves).

Transfer from Purchase Order: It tends to be that a purchase order from an overseas supplier goes right into a container and right onto a ship. The Location/Warehouse at the site of shipment is just a virtual one.  You receive your purchase order into the location in (example) China, but it doesn't actually go into a real warehouse.  The location is just there because you own the inventory.  Moving the purchase order into the location with a receipt, and then taking that receipt and just adding it to a transfer order with the click of a button saves a lot of time.

NOTE: You can also copy and paste rows to and from excel in some cases, which can also save some time.

Add Container No., Shipment Tracking etc. to the Transfer Order: These are usually user defined fields.  We think adding a URL enabled field (with the ... icon so you can launch right into a web browser) is a good idea.  It's very simple to do, and saves a lot of time when you want to check on the expected delivery date of your transfer.

Conclusion

I recently wrote an article on production manufacturing features of Business Central used by make-to-stock and make-to order companies, and realized that there wasn't much on managing ocean freight for those companies.  I felt that I needed to document this approach to tracking inventory in a ship or train when the purchase order is received well before the product actually hits your door.  If you have any comments or thoughts on this, I'd love your input.