A pallet reaches your customer damaged because it was badly stacked. A delivery of kitchen units is turned away because the colour doesn't match the specification. An auditor asks what happened to a batch that failed inspection, and the record isn't there.
None of these is a software failure. Each one comes down to a decision about what is checked, where it is checked, and what happens when something fails.
Business Central now offers quality management for warehouse and inventory processes. Microsoft has provided the tools: inspection templates, rules that create inspections automatically, and links back to the transactions they relate to.
What the software can't decide is how your business should use them. Which goods need checking, and which can flow straight through? Where in the warehouse should a check happen? What happens to stock that fails, and who is allowed to release it? Answering those questions means balancing compliance with warehouse throughput.
Drawing on Advantage’s direct warehousing experience, here are the four decisions that matter, with insight from Alfredo Iorio, Head of Advanced Projects at Advantage.
The Capability, in Brief
Quality Management arrived with Business Central 2026 release wave 1 as a Microsoft-published extension. It installs automatically on new environments; on existing environments it can be installed from the Extension Management page or Microsoft Marketplace (Microsoft Learn overview).
In outline, it works through three elements:
- Inspection templates define what to test, the acceptable values and the conditions for a pass or fail.
- Generation rules link a template to an operation, such as a purchase receipt, an inbound transfer or a warehouse movement, and can be filtered by location, item category or attribute.
- Quality inspections are the records created when a rule fires, linked to the transaction that triggered them.
Advantage can help you with the set-up, and below we run through some of the considerations to make the best use of Quality Management in Business Central.
1. Decide Which Operations to Control
It's possible to create an inspection on every purchase line, but this may be more than you need, unless you really do need to check everything that comes into your warehouse.
Inbound transfers are a good example. You might want to check parts arriving from your own factory, but not stock coming in from your other warehouses. Generation rules can be filtered by the location goods come from and by item category, so checks happen only where you want them.
Item attributes can sharpen this further. If some goods arrive with certification and some don’t, a rule can skip the check for certified goods and inspect the rest.
Rules can also be driven by process rather than by item. Picture a warehouse with three loading bays: general goods, temperature-controlled and flammable goods. Attach a rule to the flammable goods bay, and anything received into it, lithium batteries for example, triggers an inspection regardless of the item.
That can suit a business that regularly adds items to its range and doesn't want to create a new rule every time. It does rely on the process being followed. The bay triggers the inspection, but it doesn't establish what the goods are, so receiving goods into the right bay is a control in its own right.
Get this wrong in either direction and you pay for it. Inspect too much and goods sit at goods-in waiting to be checked, slowing everything behind them. Inspect too little and problems slip through to storage, dispatch or your customer. Item-driven rules need maintaining as your range grows; process-driven rules rely on your team receiving goods into the right place. Knowing which risk your operation can live with is the real decision.
“It's either item driven or process driven. You decide.”
2. Decide Where in the Flow to Check
Inspections can be set up at three points: when goods arrive, while they sit in storage, and before they leave.
On receipt
This covers purchase receipts, but also inbound transfers from your own sites. When a transaction meets a rule's conditions, the inspection is created and linked to it, with the template's tests ready to complete.
In storage
“One check on receipt is not enough,” says Alfredo of some goods. He recalls a client that stored electrical equipment containing batteries and wanted to check it every month, so any issues were found before goods were shipped.
Scheduled inspections cover this. A dangerous goods template might sample a percentage of stock on hand for every item in a Dangerous Goods category, with a schedule creating those inspections every Friday at 5pm, before the warehouse closes for the weekend.
A battery fire at midnight on a Friday, in an empty warehouse, costs far more than the time it takes to run a check before you lock up.
The schedule creates the inspections; people still have to carry them out.
Before goods leave
“If I have a wobbly pallet, it gives me damage in transit, and then I get the blame.”
For businesses using Business Central's full warehouse management, a rule can create an inspection when goods are placed in a shipment bin, checking the packaging and stacking of a delicate item, for example. It can be configured so that a failed check stops the shipment being posted until a reinspection passes.
Whether a failed inspection blocks a transaction depends on how quality management is set up, the inspection result and the relevant tracking and transaction controls (Microsoft Learn: lot blocking and unblocking).
A badly stacked pallet caught in the shipment bay costs a few minutes to restack. The same pallet caught at your customer’s door can mean a rejected delivery, a return trip, a redelivery and a credit note, and a customer who remembers it.
Not every order needs that check, though. Deciding which items and customers justify a pre-dispatch inspection, and whether a fail should stop the shipment or just flag it for a supervisor, is where the balance between protecting deliveries and keeping orders moving is struck.
3. Decide What Happens When Something Fails
Business Central can record a fail. What happens next is up to you, and each option has different commercial and compliance consequences:
- Block the stock so nobody uses it by mistake while an inspection is in progress or after a fail.
- Move it to quarantine.
- Return it to the supplier, with a non-conformance report attached.
- Escalate for sign-off, for example to a line manager or supervisor.
- Reinspect, where the first check may have been incomplete or the issue has been put right.
Workflows can automate the response. A simple one-line workflow might create a purchase return order, with a reason code, for the failed quantity whenever a dangerous goods inspection fails. Other responses can be added, such as moving stock to quarantine or alerting a manager. Which to use, in what order and for which goods, is where the thinking is needed.
Failing part of a batch
Sometimes only part of a delivery fails. Say 20 bags of roasted coffee beans arrive under one lot number, and five are damaged. The split can be recorded against the lot.
But if good and failed bags share the same item and lot number, how do you tell them apart later? An automation can be configured to reclassify the failed bags under a new lot number, such as the original lot number plus the inspection number. Item tracing then shows the full chain, from purchase order to receipt, inspection and reclassified lot.
That reclassification is configured, not something every failed inspection does by default. The value is in the design: separating failed quantities from good stock without losing traceability, with naming and handling rules that fit your own process.
Without that split, the safe option may be to hold back the whole lot. With it, the 15 good bags stay available to sell, and when a customer or auditor asks what happened to that delivery, the answer is a trace report, not a manual search through stock and paperwork.
“For a quality or compliance manager, this is gold.”
4. Decide Who Can Do What, and How Results Are Recorded
Separation of duties
Quality inspections are separate records from the purchase documents they relate to. The person responsible for quality may not have permission to edit a purchase document: procurement works on purchases, and quality works on inspections.
That makes the separation possible. Deciding who can carry out inspections, who can approve exceptions and who can release blocked stock is an operational control design decision.
Reinspection rather than deletion
Alfredo remembers one client conversation well. The client wanted quality inspections, but asked whether they could delete one and recreate it.
“Why do you want to delete it?” he asked.
“Because sometimes I need to reinspect.”
“So, reinspect it.”
At a construction products wholesaler, inspectors had signed off kitchen cupboards that looked fine, but nobody had checked the colour against the sample. “It might look nice visually, the product might look okay, but if it's out of spec, they cannot fit it.”
Business Central does allow users with Quality Admin & Supervisor permissions to delete finished inspections (Microsoft Learn: set up quality management).
We recommend reinspecting instead, and limiting who can delete.
Delete an inspection and you delete the evidence. In the cupboard example, the record would no longer show that the first check missed the colour, or that a second check caught it. A reinspection keeps the same quality document number with its own reinspection number, so the original result, the correction and who made each one all stay visible. When an auditor or customer asks what happened, that history is your answer.
The system allows deletion, so this is a governance decision rather than a technical one. Deciding who holds that permission, and when if ever it should be used, is part of designing your controls.
Structured results
Free text invites different versions of the same answer. Set a test up with a fixed list of options, such as undamaged or heavy damage, and nothing else is accepted, not even “Undamaged.” with a full stop. Defined options keep entries consistent, as part of internal compliance.
Where Advantage Comes In
Business Central provides the capability. Making it work in a busy warehouse takes people who understand warehouse operations. Advantage's team has direct warehousing experience, so we understand the operational implications of each control, not just how to configure the software:
- which inbound, storage and outbound operations to control, and which to leave alone
- where to enforce a check, and whether a fail should block, quarantine, return or escalate
- how to segregate failed quantities without losing traceability
- who inspects, who approves exceptions and who releases stock
- how to balance those controls against warehouse throughput
That combination of distribution process knowledge and Business Central configuration is what turns the capability into controls that reduce the risk of non-compliance.
See It in Action
If you'd like to talk through what all of this means for your own warehouse, then book a free, no-obligation, audit of your Warehouse Operations with our specialist team.
Related Resources
- On-Demand Webinar: Business Central Quality Control, from Goods In to Shipping
- Warehouse Quality & Compliance - Free Downloadable Self-Assessment
- AI and Technology Solutions for Logistics and Distribution
- Dynamics 365 Business Central
- Supply Chain, Stock and Procurement Control
Frequently Asked Questions
Is quality management part of Business Central?
It is available as a Microsoft-published extension, introduced in 2026 release wave 1. It installs automatically on new environments, and on existing environments it can be installed from the Extension Management page or Microsoft Marketplace.
Can inspections be created automatically?
Yes. Generation rules can create inspections for operations such as purchase receipts, inbound transfers and warehouse movements, and scheduled inspections can be set up for stock on hand. Inspections can also be created manually.
Will a failed inspection stop stock being used or shipped?
It can, depending on how quality management is configured, the inspection result and the relevant tracking and transaction controls. It is not automatic in every case.
Can I delete an inspection?
Users with the Quality Admin & Supervisor permissions can delete finished inspections. We recommend reinspection where you need to keep a record of what was checked and what changed.
Can part of a lot be failed?
Yes, a partial pass and fail can be recorded against a lot. Separating the failed quantity under its own lot number can be set up with a configured automation.
