Saturday, 20 December 2014

Replacement order in AX 2012 R3

Hello everyone, today we are going to see a replacement order in AX 2012. In this post, I will explain you the importance of creating a replacement order, need for creation of replacement order and its significance in business.

What is replacement order?
It is the process of replacing the items (which are rejected by customer) with the new items in order to fulfill customer's demand.

Reason for replacement
1. When an item doesn't meet the quality criteria set by the customer.
2. When an item gets damaged during transit.
3. When wrong item send to the customer.

Business scenario:
Assume that the customer placed the order for 10 quantities of item. Company sent those 10 quantities to the customer. These items when received at customer's place, sent to the quarantine warehouse for quality inspection. When quality inspection happened as per the quality criteria set by the customer, Quality control manager found some items defective. They informed this to their purchasing manager who then decided to return the items back to the company.

Based on the negotiation between the customer and the company, the company agreed to take the items back from the customer and decided to replace the items with the new items.

In this scenario, replacement order will get created from the return order in AX to facilitate the replacement of items to the customer.

Replacement order is usually created when an item is returned and inspected. However when an item must be replaced before it has been returned or when the original items will not be returned (as it is damage badly or the returned cost is more for the company), you can create an item replacement order immediately after you create a return order. 

There are two ways to create a replacement order:
A. Replacement order after the receipt of returned items.
B. Replacement order before the receipt of returned items.

Part A:
Here in this post, we will create a replacement order after the receipt of the returned items.

Steps to create a replacement order in AX 2012
1.Go to Sales and marketing > Common > Return orders > All return orders.

2.Select a existing return order. 

Note: The return order items inventory transactions should be in registered state in order to create a replacement order for the same.

3. During registration (through the return order form or by the arrival overview) of returned items, proper disposition action needs to get selected i.e. either Replace and credit or replace and scrap. Only by selecting these actions, we can create a replacement order through return order.

Note:Before posting the return order packing slip, we need to create a replacement order otherwise system throws the below error:

4. Once the items are registered in the system, go to return order line > Click on Return line > Click on Replacement item.

5. Select items and its specifications for replacement.
6. Select quantity for replacement in Sales quantity field per item.

7. Click on Apply to setup a replacement order through return order.
8. After this, click on packing slip to generate the packing slip for return order.

9. Click ok to post the packing slip for the returned order.
10.Once packing slip gets posted, system automatically creates a new sales order for sending the replacement items to the customer.
11.The sales order created will have the same items with same specifications as we have selected in replacement order setup.
12. Go to Sales and marketing > Common > Sales orders > All sales orders 

12.You can see the new sales order created for replacement.
13.After this,we can process this sales order as like normal sales order. (Post confirmation, Picking list, Packing slip and invoice)
14. This will deliver the replacement items to the customer and will have proper financial and inventory impact in the system.

Note:The return order for which we have posted the packing slip can be invoiced so that both the invoices (Replacement sales order invoice and returned order invoice) adjust the financial impact to give correct financial results against the customer.

In this way we can create a replacement order in AX 2012 R3. 

Please post if any questions or suggestions to be made on this topic.

See you all soon with the new topic.

Happy Daxing :-)

Abhijeet Hele |  Dynamics AX Enthusiast | My Profile 
The information provided on this site represents my own opinion/view and does not represent the opinion/view of my employer or Microsoft.


  1. Great post!

    I have followed your steps but cannot seem to get the "Replacement item" function to become available. The function is greyed out before and after I register the line.

    Any thoughts?



  2. Hi Corey,
    Thank you for appreciating my post.

    Here basically two things need to take care of:
    1) The disposition code which you are selecting is either "Replace and credit " or "replace and scrap".
    Check what disposition code you are selecting for registration.

    2) Secondly before posting the packing slip only the "replacement item" function is enabled (Return line --> Replacement item)

    Overall, after the registration with the disposition code (Either "Replace and credit" and "Replace and scrap"), you can select the replacement item (Return line --> Replacement item).

    Once we perform the necessary steps mentioned in the blog for replacement item, the next step is to post the pacing slip.

    Hope this explanation is useful for you.

    Thanks again.. Good day.

  3. on the Return Order Line View/RO header there is an option that says Apply Credit, Adcanced Exchanged and Advanced credit.. do you know functionality and how to use those?

  4. When an item gets damaged during transit can we use it in transfer order an how

    1. You can only use transfer order for transfer between the warehouses. If the item gets damaged during transit in the transfer order, then we can scrap those items. Once you scrap the item, inventory adjustment happened and scrap transaction gets created. This transaction subtracts the scrap quantity from receipt quantity.

  5. Good article...

  6. Hi Abhijeet,

    It's a very interesting functionality. Most useful post.

    However, how does a user know on which inventory dimensions (Location & Pallet ID specifically) the Item Arrival journal should be posted to ?

    In case there is a difference between what the users inserts while receiving the returned product (in the item arrival) and the inventory dimensions in the original sales order, the activation of the replacement order might not find available stock. This is because the original inventory dimensions are defaulted in the replacement order and you can't change them.

    Did you find a convenient way for users to overcome this ?



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  9. Hi Abhijeet,

    This article is very useful.But i have one doubt in this.if we want to replace the item with another can we ?.

    Thanks & Regards,
    Pavan G.