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Maintain inventory levels overview

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Applies to: Dynamics 365 Supply Chain Management, Dynamics 365 Business Central

This article describes the business process area of maintaining inventory levels, which is part of the inventory to deliver end-to-end business process. It's important to organizations to manage inventory levels to meet customer demand while minimizing stockouts and overstocks. Maintain inventory levels includes monitoring stock levels, executing inventory movements, adjustments for gains and losses of inventory, and cycle counting processes.

Dynamics 365 Supply Chain Management and Dynamics 365 Business Central both support organizations in the crucial task of maintaining optimal inventory levels. Effective inventory management ensures that companies can meet customer demand without overstocking or understocking, which directly impacts profitability and customer satisfaction. Dynamics 365 solutions provide real-time visibility into inventory levels, automate replenishment processes, and offer advanced analytics to forecast demand accurately. These capabilities help businesses reduce carrying costs, minimize stockouts, and improve overall operational efficiency.

Considering inventory management processes in a technology implementation should occur during the initial planning and requirements gathering phases. It's essential to understand the specific needs and pain points of the business, and the unique characteristics of its supply chain. You can adjust many of the settings to control the behavior of the warehouse throughout the implementation or even after the initial go live. However, one critical decision is the overall approach for inventory management. The tasks include evaluating current inventory practices, identifying inefficiencies, and determining how technology can address these issues. Additionally, aligning inventory management goals with broader business objectives ensures that the chosen solution supports long-term strategic plans.

Key decisions to consider when implementing an inventory management solution include selecting the right system that integrates seamlessly with existing processes and other technology platforms. Businesses must decide on the level of automation required, the complexity of inventory tracking needed (such as batch tracking, serial number tracking), and the degree of real-time data access desired. Other critical considerations involve the scalability of the solution to accommodate future growth, user training requirements, and ongoing support and maintenance needs. When businesses carefully evaluate these factors, they can ensure a successful implementation that enhances their inventory management capabilities and overall operational performance.

Stakeholders

Many people across the organization should contribute to the decision-making process and design of the maintain inventory levels area. The following list provides examples of such stakeholders:

  • Operations stakeholders such as the Operations Manager, Supply Chain Manager, and Inventory Control Manager. Operations stakeholders are responsible for overseeing the entire inventory management process. They ensure that inventory levels are maintained to meet customer demand while minimizing stockouts and overstocks. They also play a key role in setting inventory policies and procedures, and in making strategic decisions about inventory management.

  • Warehouse management stakeholders such as the Warehouse Manager, Warehouse Supervisor, and Logistics Manager. Warehouse management stakeholders are responsible for the day-to-day operations of the warehouse. They ensure that inventory is accurately tracked and managed, and that warehouse processes are efficient and effective. They also oversee the implementation of technology solutions in the warehouse, such as inventory management systems and automation tools.

  • Warehouse workers such as the Warehouse Worker, Inventory Clerk, or Material Handlers. Warehouse workers are responsible for executing inventory movements, adjustments for gains and losses of inventory, and cycle counting processes. They play a crucial role in maintaining accurate inventory records and ensuring that inventory levels are properly managed.

Purchasing Managers such as the Purchasing Manager, Procurement Manager, or Buyers. Purchasing managers are responsible for sourcing and purchasing inventory. They work closely with suppliers to ensure that inventory is available when needed and at the right cost. They also play a key role in negotiating contracts and managing supplier relationships.

Finance Managers such as the Finance Manager, Cost Accountant, or Financial Analyst. Finance managers are responsible for managing the financial aspects of inventory management. They ensure that inventory costs are accurately recorded and reported, and that inventory levels are optimized to minimize carrying costs. They also play a key role in budgeting and forecasting for inventory.

Maintain inventory levels process flow

The following diagram illustrates the maintain inventory levels business process area. Each solid gray rectangle on the diagram represents an end-to-end business process. The solid blue rectangle represents the business process area. The diagram shows the subprocesses for the business process area. The arrows on the diagram show the flow of the business process in an organization. If a subprocess can lead to more than one other subprocess, the parallel subprocesses are shown as branches.

Diagram that shows business process relationships with upstream and downstream processes that are explained in the next paragraphs.

All activities in this process flow are mutually exclusive, and you can run them in no particular order. To effectively track inventory levels, the following business processes are highly recommended. (Links are added, when the articles are ready.)

  1. Track supplier-managed inventory and consigned inventory
  2. Process inventory movements
  3. Track customer-managed inventory and consigned inventory
  4. Count inventory
  5. Adjust inventory levels
  6. Transfer inventory between sites
  7. Analyze inventory levels

Benefits

There are many key benefits that can be used to monitor and measure the success of implementing technology to support maintaining inventory levels. The following sections outline the key benefits that an organization might monitor and measure for maintain inventory levels.

Reduced inventory stockout

Maintaining inventory accuracy ensures you have the right products available at the right time to fulfill customer orders. It can lead to improved customer satisfaction and long-term customer relationships.

Efficient inventory management

Having too much of the wrong product takes up valuable warehouse space and leads to product discounting and inventory write-offs. It also ties up company capital that could be generating money elsewhere. Maintaining accurate inventory levels is key to ensuring businesses run optimally on Dynamics 365.

Standardized warehouse processes and procedures

Having repeatable business processes, with the ability for supervisor oversight, ensures warehouse efficiency and lowers overhead costs. Dynamics 365 Supply Chain Management provides a framework for standard operating procedures and mobile device support to streamline the various inventory maintenance operations within a warehouse.

Next steps

If you want to implement Dynamics 365 solutions to assist with your maintain inventory levels business processes, you can use the following resources and steps to learn more. (Links are added, when the articles are ready.)

  1. Manage warehouse operations
  2. Maintain inventory levels (the article that you're currently reading.)
  3. Manage inventory quality
  4. Manage freight and transportation
  5. Record and manage inventory cost
  6. Analyze warehouse operations

You can use the following resources to learn more about the maintain inventory levels process in Dynamics 365.

Contributors

This article is maintained by Microsoft. It was originally written by the following contributors.

Principal author:

  • Aaron Murch | Director, Cloud Solution Architecture @ Microsoft

Other contributors: