Transfer Orders

A transfer order supports the coordination and execution of supply chain activities for material flows between two locations. It communicates requirements for moving material from one location (the transfer-from location) to replenish inventory at another location (the transfer-to location) within the same company. It also provides the means to track movement of in-transit inventory.

Alternatively, an inventory movement transaction (termed an item reclassification journal ) can be used to report movement, especially when minimal transportation lead-time eliminates the need for tracking in-transit inventory.

The structure and life cycle of a transfer order serve as a starting point for further explanation about transfer order considerations and how to report shipments and receipts.

Structure and Life Cycle of a Transfer Order

The basic structure of a transfer order consists of header and line item information. The transfer order header identifies the two sites involved (the transfer-from and transfer-to locations), and then provides a two-part header approach (one for each location) for defining additional header information. One part defines additional transfer-from information such as the shipment date and outbound handling time; the second part defines additional transfer-to information such as the receipt date and inbound handling time. This header information provides default values for line items and a mass update approach. For example, changing the receipt date in the header mass updates the receipt and shipment dates for all line items. The header also defines the in-transit location and the associated shipping agent, service, and transportation lead-time that apply to the entire transfer order.

As a reflection of this basic structure and the two-part header, the transfer order number and line number uniquely identify a scheduled shipment (at the transfer-from location) and a scheduled receipt (at the transfer-to location). The life cycle of a transfer order consists of several steps, with two steps represented by an order status as explained below.

• Open . An open status indicates the transfer order is being created. The order header has been created, and one or more line items can be defined. Information can be changed on an open transfer order, but items cannot be shipped until the status is changed to released.

• Released. A released status indicates the transfer order information has been completely entered and authorizes shipment for all line items. Information cannot be changed on a released transfer order, but it can be manually reopened to allow changes. A released order allows generation of documents (such as the pick and receipt documents) for warehouse management purposes.

Shipping activities at the transfer-from site are performed before receiving activities at the transfer-to site. That is, the transfer order lines are posted as shipped and subsequently posted as received. A line item is automatically flagged as completely shipped when the shipped quantity equals the order quantity; it is flagged as completely received when the received quantity equals the order quantity. The shipment cannot exceed the order quantity, and receipts cannot exceed the shipped quantity. The order is automatically deleted when order quantities for all line items have been posted as completely shipped and received. Historical information about a transfer order can be viewed on the windows for posted transfer shipments and posted transfer receipts.

Transfer Order Considerations

The basic transfer order information defines the item(s) to be transferred and the relevant locations. Many situations require additional considerations, such as order- related text and reserved material, as described below.

Manually Created vs. System-Suggested Transfer Orders

A transfer order can be created manually or in response to a suggested action message for a new transfer. Planning calculations suggest a new transfer based on SKU planning data about the preferred transfer-from location. Planning calculations reflect the normal transfer route between the two locations (which determines transportation lead-time) and the warehouse handling time at each location. Information about the transfer route ”the shipping agent, service, and shipping time ”can only be overridden after creating the transfer order.

The system creates a transfer order for each item and combination of locations, which means that the line items reflect only one item. Line items can also be manually added.

A manually created transfer order typically reflects an unplanned or emergency requirement to replenish inventory. The transfer order line items may be created for different items. In addition, the line items can be automatically created for all items within a bin at the transfer-from location (using the get bin contents function). This feature proves useful when moving many items from one location to another, especially when the items have been placed in a unique bin representing material to be shipped to a specific location.

Order-Related Text Comments can be defined for a transfer order. Text can also be entered as a line item using the item description field and a null item number.

Shipment and Receipt Dates The difference between a transfer order shipment and receipt date reflects the shipping time plus the warehouse handling time at each location. Changing the shipment date on a transfer order line item automatically updates the receipt date and vice versa. Changing the shipment or receipt date in the transfer order header automatically aligns all line items to the same dates.

Transfer Lead-Time and Capable-to-Promise Logic

Capable-to-promise (CTP) logic provides one approach to making sales order delivery promises for an out-of-stock item. CTP logic calculates a transfer item s ealiest ship date based on the preferred transfer-from site and the related transportation lead-time and warehouse handling time.

 

Reserving Material for a Transfer Order An SKU s inventory can be reserved for shipment on a transfer order line item. With a manual approach to reservations , the user can prompt a review of existing inventory and manually select inventory to be reserved.

Reporting a Transfer Order Shipment and Receipt

Shipping and receiving activities represent the completion of a transfer order, and different approaches can be taken to report these activities. The basic approach focuses on reporting shipping (and then receiving) activity against line items on an individual transfer order. In many cases, a printed version of the transfer order serves as a pick list and identifies the items bin locations. It also serves as a turnaround document for recording actual quantities shipped, along with the actual bin locations and applicable lot or serial numbers . Actual shipment can then be entered on the Transfer Order window; the same window can be used to report receipts.

Other approaches can be used to report transfers that support requirements for coordinating warehouse management activities. These approaches use a separate pick document and/or shipment document to coordinate shipping activities at the transfer-from location, plus receipt and put-away documents at the transfer-to location. These documents were described in Chapter 7.