What's New for Manufacturers and Distributors in Business Central Version 28

Business Central 2026 release wave 1 (version 28) became generally available on April 1, 2026. Microsoft has followed it with monthly updates — from 28.1 in May through 28.5 on September 2, 2026. Together they bring two new capabilities manufacturers have asked about for years: built-in quality management and subcontracting. There is also a long list of smaller fixes to planning, costing, and warehousing.

We went through the release plan and the update notes on Microsoft Learn so you do not have to. Here is what matters for manufacturing and distribution, and what we recommend before you turn anything on.

Manufacturing Changes

Subcontracting Is Now Part of Standard Business Central

This is the biggest change for manufacturers in version 28. Subcontracting capabilities became generally available on July 8, 2026, with update 28.3. If you send out plating, heat treating, machining, or assembly to a vendor, Business Central can now manage the full flow:

• Transfer raw materials and components to the subcontractor, with warehouse handling and item tracking
• Price subcontracted work by work center, item, date, and quantity
• Receive finished goods back on a purchase order, with item tracking and warehouse handling
• See where your material is at every step

An admin has to turn it on. Companies using the older Italian subcontracting functionality will be moved to the new worldwide version.

Tip: If you track subcontracted work today with a spreadsheet or an outside app, map that process before you switch. Note which steps need a transfer order and which need a purchase receipt.

Built-In Quality Management

The new Quality Management extension became generally available on April 1, 2026. It lets you run quality checks on:

• Purchase receipts, with or without warehouse handling
• Production output and assembly output, manually or automatically
• A schedule, at regular intervals

You can define tests by item, item group, lot, serial, or package number, set sampling rules, and quarantine items until they pass. It includes a Certificate of Analysis, a Non-Conformance report, and quality status overviews. Update 28.2 added Word layouts for these reports and a setup checklist for quality managers.

The extension installs automatically on new environments. Existing customers who upgraded can install it from AppSource.

Everyday Manufacturing Usability

Microsoft also cleaned up several long-standing pain points:

• Serial-tracked output. The Explode Routing action now creates one line per serial number, ready for entry, instead of one line for the full quantity.
• Location on capacity and overhead postings. Capacity and overhead now post with the production order's location, so costs land in the right WIP account and are easier to reconcile.
• Fewer pop-ups. Each user can turn off the warning that appears when closing a production BOM or routing that is not certified.

Approvals for Journals and Planning Worksheets

You can now require approval before posting item, physical inventory, output, and consumption journals — or before carrying out requisition and planning worksheets. Lines are locked while approval is pending. This is useful for companies that need tighter control over inventory adjustments and purchasing.

Inventory, Planning, and Distribution Changes

Planning for Locations Without SKUs

Distributors that use multiple locations but do not set up stockkeeping units (SKUs) have run into a frustrating planning problem. When no SKU existed, the planning engine ignored the order modifiers on the item card — such as minimum order quantity and order multiple.

Version 28 adds a Missing SKU Planning Policy on each location card:

• Minimal: Keeps today's behavior. This is the default.
• Item Card: Plans using the item card settings.
• Don't Plan: Leaves the location out of planning.

A new SKU Creation Policy can also block SKUs from being created at a location where you do not want them.

Tip: Review your locations before your next planning run. If your planners have been fixing suggested quantities by hand, the Item Card policy may save them that work.

Drop Shipments

Drop shipments get several improvements that distributors will notice right away:

• Create purchase orders directly from drop shipments
• Post purchase invoices without waiting for the related sales invoice
• Reverse a drop shipment when neither side has been invoiced yet

Purchasing, Shipping, and Items

• Match one purchase invoice to multiple orders and receipt lines — useful when a vendor bills several deliveries on one invoice
• Filter receipt and shipment lines to find the ones you want to invoice faster
• Email posted sales shipments and return receipts directly to customers
• Create purchase quotes for contacts before a vendor is set up
• Item variants can now have their own pictures and their own attributes, which helps companies that sell the same product in several sizes or colors
• Description 2 now appears on more pages

Fixes in the 28.x Updates Worth Knowing About

Each monthly update ships a list of fixes published in the Microsoft Support notes. Most are small, but several fix problems manufacturers and distributors have reported. Here are the ones we would point out to our clients.

Update	Area	What was fixed
28.5	Planning	Low-level codes now calculate correctly for multi-level bills of material
28.5	Planning	The Order Planning worksheet no longer suggests supply for items already received
28.5	Scheduling	Work center and machine center pages now show the calendar horizon, to prevent scheduling errors
28.5	Reservations	Automatic reservation now triggers for items set to Reserve = Always
28.5	Warehouse	Bin replenishment with FEFO picking now creates the correct movements
28.5	Subcontracting	Receipts against subcontracting orders now post, and posted receipts can be undone
28.5	Drop shipments	Undoing drop shipment receipts for service and non-inventory items now works
28.3	Production	Quantity Per on production order components no longer rounds incorrectly after upgrading from version 27
28.3	Production	Production BOM and routing status errors now include a link to the record to fix
28.3	Costing	Adjust Cost no longer fails with a decimal "outside of the permitted range" error
28.3	Assembly	Assembly order posting now validates item tracking correctly across multiple component lines
28.3	Item tracking	Serial numbers with special characters, such as parentheses, can now be scanned
28.3	Warehouse	Registering picks for production is faster
28.3	Drop shipments	The ship-to address now carries from the sales order into order planning

Updates 28.1, 28.2, and 28.4 did not list new manufacturing or distribution features beyond the quality management improvements in 28.2 described above. Microsoft applies these updates automatically to online environments, so most of these fixes are likely already in your system.

What to Do Before You Turn These On

Some of these changes are on automatically. Others — like subcontracting, quality management, and approvals — need setup. Either way, a little preparation goes a long way.

• Test in a sandbox first. Copy production to a sandbox and run a few real orders through the new features before you change anything in your live company.
• Check your inventory posting setup. Capacity and overhead now post with the production order's location. Make sure every location you produce in has the right WIP accounts in Inventory Posting Setup.
• Review your add-ons. If you use an add-on for subcontracting or quality today, talk to the vendor before switching. You may not need both.
• Decide who approves what. Before turning on journal or worksheet approvals, agree on who approves and how quickly. Otherwise, approvals become a new bottleneck.
• Train the people affected. A short session for planners, buyers, and warehouse leads on what changed will save a lot of questions later.

Pick the one or two changes that solve a problem you have today and plan those first. You do not need to adopt everything at once.

Start Where You Are

Version 28 gives manufacturers and distributors a lot more out of the box. Subcontracting and quality management alone can replace spreadsheets and add-ons for many shops.

If you would like help deciding which of these changes fit your business, schedule a discovery call and one of our Business Central consultants can review your setup and build a plan to adopt them at a pace that works for your team.

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Sources: Plan and prepare for Business Central 2026 release wave 1, What's new in update 28.0, Update 28.3, Update 28.5