What do you use the Physical Inventory Journal for?
The physical inventory journal is a journal for counting the warehouse on locations which is not directed put away, meaning not having a checkmark in the directed put away and pick.
This is what happens in the video
The physical inventory journal in Microsoft Dynamics 365 Business Central lets you count and adjust your warehouse stock on locations that are not set up for directed put-away and pick. You use it to compare what the system thinks you have against what you actually count on the shelves, and then post the difference as a positive or negative inventory adjustment.
You cannot use the physical inventory journal on a location that has the Directed Put-away and Pick checkmark set. If you try, Business Central gives you a validation error. The journal works on all other locations and all other combinations of warehouse checkmarks.
The workflow follows four steps: calculate the inventory, print the count list, enter the physical counted quantity, and post the journal. Business Central calculates the difference between the system quantity and your counted quantity automatically and decides whether each line is a positive or negative adjustment.
When to use the physical inventory journal
The physical inventory journal handles counting on locations that are not directed put-away. In practice that means the location does not have a checkmark in the Directed Put-away and Pick field.
If you enter a location that does have that checkmark, you get a validation error. The physical inventory journal simply does not work for those locations. For every other location, regardless of which other warehouse checkmarks are set, you can use the journal without a problem.
Calculating the inventory in the journal
The first step is to calculate the inventory so you can see what the actual inventory level is right now according to the system.
It is a good idea to add a posting date that matches when you expect to post the document. If you expect the counting process to take several days, set a posting date in the future so it lines up with the day you actually post.
When you calculate, you can choose to include items that are not in inventory, which gives you a full list of all items. Alternatively, you can limit the calculation to items that actually have movements.
You can filter the calculation. In a real situation you would normally calculate one location at a time, walk around and count that location, and then enter the result in the journal. Counting several locations at once is rarely practical.
The calculation fills in the location code, the bin code for locations where bins are mandatory, and the calculated quantity. It also gives you a separate quantity column that you can change after calculating.
Printing the count list for the warehouse
The next step is to print the report so the warehouse employee has a physical list to count against.
When you print, you can choose whether to display the calculated quantity on the report. This is a matter of strategy. Showing the calculated quantity makes counting faster, but some companies prefer to hide it so the count is not influenced by the system figure.
The printed report shows each line with the location code, the bin code, the calculated quantity if you set that checkmark, and a line where the employee writes down the counted quantity.
Entering the counted quantity and posting
After counting in the warehouse, you enter the actual physical counted quantity in the Quantity (Physical Inventory) column. For example, you might find that you only had 272 of one item but 6 of another.
When you enter a quantity in the physical inventory column, Business Central automatically fills the Quantity column, which is the value that actually gets posted. It works out whether the line is a positive or negative adjustment based on the difference between the calculated quantity and what you counted.
This lets you correct quantities across all the different locations and bins. If one bin shows 19 and another shows 17 against the expected figures, it might point to an item that was misplaced between bins.
When the counts are entered, you post the physical inventory journal. Business Central then performs all of the inventory changes and your stock matches what you physically counted.
Q&A
Can I use the physical inventory journal on a directed put-away and pick location?
No. If the location has the Directed Put-away and Pick checkmark set, Business Central gives you a validation error. The physical inventory journal only works on locations that are not directed put-away, regardless of which other warehouse checkmarks they have.
What posting date should I use in the physical inventory journal?
Use the date you expect to actually post the document. If the counting process runs over several days, set the posting date in the future so it matches the day you post the journal.
How does Business Central decide if a count is a positive or negative adjustment?
When you enter the physical counted quantity, Business Central compares it to the calculated quantity and automatically fills the Quantity column with the difference. It determines whether the adjustment is positive or negative based on that comparison.
Can I include items that are not in inventory when I calculate?
Yes. You can calculate items that are not in inventory to get a list of all items, or you can limit the calculation to items that actually have movements.
Should the printed count list show the calculated quantity?
That is up to your counting strategy. You can set a checkmark to display the calculated quantity on the report, or leave it off so the warehouse employee counts without seeing the system figure.