Retailers today try to optimize their supply chain process to maximize profitability. A key component to optimization is ensuring that the right product is in the right location, at the right time, and at the right price. Supply chain is the lifeline of any retail organization.
The supply chain process that manages and controls inventory can be seen from an elevated level in Fig 1 below.
Dynamics 365 for Retail can meet the demands to automate the process to get goods from source to shelf. Keeping inventory optimized to meet customer demand and pinpointing the timing of when to get that product to location are just a few of the processes that these tools can achieve.
Let’s start with a high-level view of what inventory is and the types of inventory quantity. Dynamics 365 enables different inventory units of measure to support the way product is ordered through how product is sold. The main units of measure are purchase, inventory, and sell units. For example, we may purchase in cases and sell in each. The system has the capability to translate this based on the case pack content and unit of measure conversion. An example of this would be purchase unit of measure C12 (indicating case pack of 12 units), and once in the store location, this would automatically convert to each. Using the above units of measure, here is an example:
Ordered 12 cases of product x and received them into location y = 144 units on hand in location y
Inventory by unit of measure is important when we are going to perform cycle counts of on-hand inventory. The person performing these duties has to know if they are going to count inventory by cases or perhaps by individual units. All inventory in a warehouse may be counted by cases, but product in the store would count individual product. In the example below in Fig 2, you will see the Basic Inner Tube item has units of measure of EA (Each) for purchase, sell, and inventory.
Another important aspect of inventory is the state of the inventory within the supply chain process. As you can see in Fig 3, an item can have numerous indicatives for quantity that include current, on hand, reserved, on order, and available.
- On Hand/Physical Inventory – This is the total units that are physically accounted for in location.
- Reserved – This is the quantity of inventory that is taken up by either transfer orders or customer fulfillment orders. Physical quantity is in location but cannot be used for other purposes.
- On Order – This is the product that is on purchase orders and scheduled to be received into location. Product is not physically in location.
- Available – This is the on-hand quantity less any reserved that is available for sale or movement.
Once products are created in Dynamics 365, replenishment is the process that is used to ensure product is not out of stock, overstock, or not selling. There are several methods of replenishment to support this.
- Purchase Orders – Used to order product from an outside vendor or supplier to receive into our retail entities that could be a warehouse, cross docked, or direct to store location. Below in Fig 4 is a purchase order that is created with items – the next step would be to set up cross docking. Cross docking will allow the product to be brought in centrally to a warehouse and then immediately packaged and shipped via transfers to retail locations.
Selecting Cross docking from the purchase order screen will present the screen shown below in Fig 5. This screen provides the ability to determine your method of cross docking using replenishment rules, location weight, or fixed quantity. There is only one distribution rule you can use per purchase order.
- Buyer’s Push – This is a method buyers use to move existing products into location from existing warehouses or distribution centers via transfers. The example below in Fig 6 depicts inventory from an Atlanta warehouse using fixed quantities for all. There are 24 units on hand for each of those items and that will be used to transfer to buyer’s selected location(s).
Once the desired quantity to push is reached, orders can be generated by selecting Create order from the action bar as shown in Fig 7.
In Fig 8, the new transfer orders are created and will be ready for warehouse to pick and ship to stores.
In summary, the inventory is the blood running through the veins of the retailer and without it, there would be no customers. With too little or too much inventory, concerns would mount over lost sales or gross margin erosion due to markdowns. There is a fine balance of having the right amount of inventory at the right time and in the right location. Leveraging the tools within Dynamics 365 for Retail can help to keep you in balance.
Learn more about how PowerObjects can assist you with implementing a Dynamics 365 for Retail solution here.
Happy Dynamics 365’ing!