How to manage Inventory in Dynamics 365 Business Central
Advanced options streamline replenishment
Dynamics 365 Business Central offers powerful Inventory management when utilizing both Locations and Stockkeeping units.
Locations are defined in Business Central to identify multiple physical places where inventory is stored. When defining multiple Locations in Business Central, it is recommended that you set “Location Mandatory” on the Inventory Setup Page to <TRUE>. This will force the users to identify which Location an inventory transaction is being transacted within.
Locations are defined by creating Location Cards. The Location Card is also where you may define your warehouse processes’ level of complexity (e.g., if Zones, Bins, Picks or Putaways will be deployed). For the sake of this blog, keep in mind that Locations are a vital setup if you want to maintain, control and most importantly, plan on-hand inventory balances across one or more physical inventory locations. Below is an example of a Location Card.
Combining Locations with Business Central’s “Stockkeeping Units” functionality allows an organization to uniquely manage like item numbers across multiple physical inventory locations. Perhaps the best way to describe a “Stockkeeping Unit” is that it’s a secondary Item Card that is directly attached to a specific Location. The Stockkeeping Unit Card contains similar inventory planning and replenishment data elements that are also listed on the Item Card, but the data defined in a Stockkeeping Unit Card will take precedence over the data defined on the Item Card.
In the example below, the Stockkeeping Unit Card for item 206252 references Location = GSO – MAIN. As highlighted below, the item may have a unique primary vendor and unique planning parameters that are very specific to Location = GSO – MAIN.
This is a very powerful feature when planning inventory replenishments for the same item number but across multiple physical locations that are defined within one Company. For example, an item number may be purchased in one location but manufactured in a different location. Likewise, an item may have different planning parameters (e.g., safety stock quantities, minimum, maximum, or multiple replenishment quantities). Creating Stockkeeping Unit Cards that are directly aligned with a Location, along with the ability to generate the MPS / MRP planning process by a specific Location, is a powerful combination that allows companies to effectively manage their inventory replenishment processes by Location by Item.
For more information on best practices related to setting up Locations and Stockkeeping Units and planning inventory on-hand balances by Location, reach out to Boyer & Associates.