Inventory management overview
Inventory management in Dynamics 365 Supply Chain Management involves a series of interconnected processes that help you efficiently handle the flow of goods in your organization.
Inventory planning and forecasting - The process begins with inventory planning and forecasting, where your organization analyzes historical data, market trends, and demand forecasts to anticipate inventory requirements. This stage involves setting inventory targets, determining reorder points, and establishing safety stock levels to ensure optimal inventory levels.
Procurement - After your organization determines inventory requirements, the procurement process begins. This process involves creating purchase orders to procure raw materials, components, or finished goods from suppliers. The system generates purchase orders based on inventory replenishment parameters, such as reorder points, lead times, and supplier agreements.
Receiving and inspection - On receipt of goods from suppliers, workers in the organization inspect the inventory for quality, accuracy, and compliance with purchase orders. They record the goods in the inventory management system, and then the system updates inventory levels accordingly. The workers would address discrepancies or issues through the quality control process.
Storage and warehousing - Your company stores inventory items in designated warehouses or storage locations based on factors such as storage capacity, accessibility, and product characteristics. The system manages inventory locations to ensure efficient storage, retrieval, and movement of goods.
Inventory control - The company implements inventory control measures to maintain accurate inventory records and to prevent stockouts or overstock situations. This process includes implementing inventory tracking mechanisms, such as lot tracking, serial number tracking, and expiration date tracking. You must perform inventory adjustments and cycle counts regularly to reconcile physical inventory with system records.
Order fulfillment - As the company receives customer orders, the inventory management system generates picking lists or transfer orders to fulfill the orders. Workers pick goods from the warehouse shelves, pack them, and prepare them for shipment. Then, the system updates inventory levels in real time to reflect the outgoing goods.
Shipping and delivery - After workers pack and prepare orders for shipment, the system generates shipping documents, such as packing slips or shipping labels. Then, the company ships the orders to customers or transfers them to other locations according to the order instructions. Workers update shipment status and tracking information in the system for visibility and tracking purposes.
Inventory analysis and reporting - Throughout the inventory management process, your organization can use reporting and analytics tools to monitor key performance indicators (KPIs), track inventory metrics, and identify areas for improvement. This process includes analyzing inventory turnover, stock levels, order accuracy, and inventory costs to optimize inventory management processes and drive better business outcomes.