So first question really should be, in what circumstances should you reserve? Well Microsoft give you the option of always, optional or never against either the account or the item. None of these are the right answer for me. Which customer is so important that you want to reserve everything for (down to the smallest item that you always have millions of because they cost next to nothing), so the common scenario is that you leave the customers on their default of optional and set it on the item.
So which items? Well obviously ones which are either in constrained supply or/and high value. But what happens in those periods where you have plenty, are you complicating things for no reason?
I would advise that ideally you want to reserve based on time not just a straight yes or no. The system should be making the decision if you need to reserve for you not leaving it to the operator, as the optional setting suggests.
To explain let me use the most straightforward example of a sales order. If the date requested for that item is three months in the future and my lead time for purchasing or manufacturing the item is just two weeks then why do I want to reserve it? I can sell or use the inventory that I have for another customer and still replenish this requirement with plenty of time to spare.
If however the items need to be supplied in a just one week’s time then I need to reserve them when the sales order goes on in order to keep my commitment to the customer. Making sure that no other sales order with a requested date on just a couple of days ‘nicks’ the stock before it is picked ready for shipment.
This means that the inventory that you do have can be worked to satisfy as many customers as possible and maximises your ability to be on time in full shipments, while enabling you to keep your inventory levels as lean as you need them to be these days.
Does Dynamics NAV do reservations based on the items lead time window? No, not as standard but it’s not a huge customisation to make a sales line apply the timing criteria before it invokes the standard reservation routines. In addition you have to schedule a process, typically overnight, that looks at sales orders (or other demand) that have now come into the ‘lead time window’ for an item and reserves it.
This post is part of a 6-part series. A link to rest of the posts in this series are below (updated as published);
- Part 1: Do we need Reservations at all?
- Part 2: How do you need to reserve using Dynamics NAV reservations?
- Part 3: Only Reserve against Inventory in Dynamics NAV?
- Part 4: Reserve against all inventory in Dynamics NAV?
- Part 5: Only pick quantities that are reserved?
- Part 6: Do Reservations work properly these days?