Supply chain | Supply Chain Management, Commerce

Disposition action set up

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Posted on by PT-01100339-0

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I'm working on Sales return order.

There is an option choosing disposition code for a return order. There are 7 different disposition codes (with 6 pre-defined action). Each action stands for different handling processes of a return order. I am trying to explore deeper into how the system treats each type of action differently in terms of physical items and financial posting activities. I don't find any settings/configurations available for viewing the set up of these actions. I know that they have pre-configured the posting profiles (including account, ledger account,...) of each action but I don't know where to see the differences? Or there might be other ways to adjust the posting (the system will use the posting set up of inventory/cost management, or it relies on the setup of item group)?

I also went through many posts about handling sales return order (see Disposition code for sales order in Microsoft Dynamics 365 finance and operations: Part-1 - Power Community). The "Disposition code" option is available for choosing different codes. However, in my environment, there is only one code "Credit only" available for chosen. Is there a place to configurate this section.

(My env)

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Dynamics 365 Supply Chain Management

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AR-01121610-0 4,967 Moderator on at

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Hy,

I think the more options will be available as soon as you have posted return item product receipt, or at least, registered the returned goods.

Hope this helps.

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PT-01100339-0 364 on at

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Thats right. It's only appeared when I register the item.

In addition, I do test a lot of cases of returning item. However, I'm very confused about the system's behaviour.

For example, for the DC of "Replace and Scrap" or "Scrap", the system reduce the revenue and credit customer. I expect the items will be put back into inventory and then system make some adjustment behind/automatically, for example Inventory profit/loss. However, they were not (of course because they are scrap), but just credit the amount and have no item in charge.

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Fasih 416 on at

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Disposition Codes control how sales returns are handled both physically and financially. Each code, like "Credit," "Scrap," or "Return to Inventory," defines specific actions that affect processing and financial postings. You can configure these codes under Inventory Management > Setup > Returns > Disposition Codes, while their financial impact depends on setups in Inventory Posting and Cost Management Posting, which map transactions to ledger accounts based on the Item Model Group, Item Group, or inventory movement type. If only "Credit Only" is available, more codes may need to be added in the same menu, and it should be checked.

For codes like "Scrap," items are not returned to inventory since they are non-recoverable. The system credits the customer, reverses revenue, and posts costs to an expense or write-off account. To review or modify this behavior, check Inventory Posting Setup under Inventory Management > Setup > Posting > Posting. Testing different codes and using tools like Performance Analyzer can help clarify how transactions impact accounts.

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CU11101029-0 4 on at

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Thank you Fasih!

I've tested all of the DCs. What you said is correct, but there is a thing "For codes like "Scrap," items are not returned to inventory since they are non-recoverable. The system credits the customer, reverses revenue, and posts costs to an expense or write-off account."

This is the voucher of my Returned SO with DC = scrap. As what I've checked, the physical quantity is not change, which means there is no item returning back to warehouse (I agree with this point). And the Finished Goods Inventory account increases. It's the problem.

At the beginning, I assumed that the scrap items will be recorded in an expense account. However, the system behaved that it decreased the inventory quantity while inventory value is not changed, which make the unit cost of each item increase (in case we use item model group of MA). I think this approach is quite close to what behinds the system posting.

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adijafr 8 on at

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When using the 'Scrap' disposition code, items are not returned to the warehouse because they are considered non-recoverable. This should decrease your inventory value. If your Finished Goods Inventory account increases instead, check the settings under Inventory Management > Setup > Posting > Posting in Microsoft Dynamics 365 to ensure correct financial handling of scrapped items and these scrapping tools can show errors in the disposition code. You can watch their tutorials online from streaming platforms like Freecine app which you can download online.

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Guy Terry 28,924 Moderator on at

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The answer to your question 'Why do I only see the Credit only disposition code':

Credit only means the customer can have a credit, and they do not need to return the item (e.g. the item is lost, something that can't be shipped, or something that you don't want back , like broken glass, or out of date cabbages).

If you want to use Credit only, you set it on the Return order line.

For any other disposition code, we are expecting to receive the items back. Therefore, it is set when Registration is performed, because Registration happens when the items are received in the Warehouse. We could not set Credit only during Registration, because Credit only items will never be received in the Warehouse.

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