Mystery of inventory reservations in Dynamics 365 Finance and Operations

Image result for Warehouse inventory

Reservation of inventory items is a very strong feature in Dynamics 365 Finance and Operations. Besides saving a lot of manual activity, it takes care of inventory transactions in various possible scenarios. Though, it is a very strong feature and hence it needs to be used carefully and cautiously as it can gets tricky sometimes.

What do you do if you have limited physical available quantity and you have reserved against a customer of class b and then customer of class A places the sales order which needs to be fulfilled or urgent basis? Would you un-reserve the quantities from first order and reserve against second? In this post, I will describe multiple scenarios of using reservations (multiple or automatic).

Scenario 1: Setting up manual or automatic reservation as a global setting

You can setup manual and automatic reservation by navigating to the following path

Accounts receivable > Setup > Accounts receivable parameters. Navigate to General, and then click the Sales FastTab. Select the desired value in the Reservation field.

  • Manual – Users can reserve orders manually from order lines by clicking Inventory > Reservation > Type in quantities to reserve or click Reserve a lot
  • Automatic – Inventory quantity defined on order is reserved when order lines are created, and in the order in which the order lines are created.

Please note that the change will only be effective for future orders and not for the existing orders.

Question

  1. What do I do if I have limited physical available quantity and automatic reservation has reserved quantities against Order 1 of a customer of class b as Order 1 was created earlier then Order 2 of customer of class A which needs to be fulfilled or urgent basis?
    • Do I manually un-reserve Order 1 of customer of class b? A lot of manual activity and not the best practice… as it would pose a lot of risks.

Let’s look at the answer in Scenario 2 below

Scenario 2: Setting up Automatic reservation as per item model groups

There are scenarios where you want only certain set of items to be reserved and not all other items. You can always define item model groups and associate different items in the defined model groups. Let’s see how to set this up

Accounts receivable > Setup > Accounts receivable parameters. Navigate to General, and then click the Sales FastTab. Select Manual in the Reservation field. This is important as it is the global setting and will be copied to order headers.

Now navigate to Inventory management > Setup > Inventory > Item model groups and select the value as shown in the screenshot below

Now when you create the orders with the items having item model group with Automatic reservation turned on, system will reserve the inventory automatically.

Orders having multiple order lines with different items (with different item model group), in that case, order lines having items associated with item model group with automatic reservation turned on will be reserved automatically. For example,

Question

  1. Though Scenario# 2 has helped in reserving items by putting them under different item model groups but what if I want to cater to urgent orders of items of same item model group. For example, I want to reserve inventory as per the order below

Let’s look at the answer in scenario 3 below

Scenario 3: Automatic reservation of inventory nearing to the order ship date

There are scenarios where you want to reserve the inventory quantities based on order ship date. In this case we will see how to reserve inventory items when sales orders are about to be shipped. We will cover following scenario

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Date control and backward ship date inventory reservation

Let’s see if date control reservation can help us achieving desired objective. Navigate to Accounts receivable > Setup > Accounts receivable parameters. Navigate to General, and then click the Sales FastTab. Select Manual in the Reservation field. This is important as it is the global setting and will be copied to order headers.

Now navigate to Inventory management > Setup > Inventory > Item model groups and select the value as shown in the screenshot below

FIFO date controlled – Selecting this check box will reserve the inventory by a sorting date according to the FIFO principle. Batches are reserved based on the earliest date of receipt of items, according to the principle of first in, first out (FIFO).

Backward from ship date – Selecting this option will reserve expected receipts, such as open purchase order lines, that have a date of receipt that is nearest to the delivery date of the sales order. If this option is cleared, incoming inventory transactions that have the earliest date of receipt are reserved. Items that are available in inventory are not controlled by the Backward from ship date parameter. To control the available inventory that is reserved, you can use dimensions, such as corresponding batch numbers. Alternatively, you can mark orders.

Hence the above scenario is not helpful as this will not let us reserve inventory quantities based on sales order ship dates.

We will not discuss about Same batch reservation and Marking. You can visit the site by clicking hyperlink.

Automatic reservation when using basic warehouse management system

You can reserve quantities defined on sales orders in inventory automatically when the sales orders are ready to be shipped. Use the following setup to achieve this.

Navigate to Accounts receivable > Setup > Accounts receivable parameters. Navigate to General, and then click the Sales FastTab. Select Manual in the Reservation field. This is important as it is the global setting and will be copied to order headers.

Create sales order, define ship date, define the sales order lines and confirm the sales order. Generate picking list post sales order confirmation. Select the flag Reservation during picking list posting as per below.

If in case sales orders are shipped daily and picking lists are generated daily; You can opt for defining a batch job at a frequency of every 24 hours which will let you reserve inventory quantities during picking list posting. In this case, don’t forget to select Late selection check box which is used for batch jobs and run the query little late. Below is the screenshot for reference.

Automatic reservation when using advanced warehouse management

You can reserve quantities defined on sales orders in inventory automatically when the sales orders are ready to be shipped and released to warehouse. Use the following setup to achieve this.

Navigate to Accounts receivable > Setup > Accounts receivable parameters. Navigate to General, and then click the Sales FastTab. Select Manual in the Reservation field. This is important as it is the global setting and will be copied to order headers.

Now navigate to Product information management > Setup > Dimension and variant groups > Storage dimension groups. Select the warehouse and enable Use warehouse management process

Further navigate to Warehouse management > Setup > Warehouse > Warehouses. Select the warehouse and enable Use warehouse management process under Warehouse fast tab.

Please note that once enabled it can only be turned off if there are no inventory transactions. So be cautious of this parameter.

Also enable Reserve inventory at load posting if you are using Transportation Management System

Alternatively, enable Reserve when orders are released by batch job. For this you must write batch job.

Now when you create sales order, define ship date, define the sales order lines and confirm the sales order. Further, if you are using Transportation Management System, create load using load planning workbench and then release load lines to Release to Warehouse, system will reserve the inventory quantities for load lines. If you are not using Transport Management System, click Release to Warehouse from sales/transfer order to release sales/transfer order lines, system will reserve inventory quantities.

Please note that we have not covered the setups for Transport Management System and Advanced Warehouse Management System.

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