Month: July 2015

Part 1: Microsoft Dynamics NAV’s Reservations – should you use them or not?

No this is not about any reservations you may have about NAV as a product, I don’t understand those at all, it’s a great! This it about the reservation functionality inside NAV.

One of the most frequent discussions that comes up during Dynamics NAV implementations that involve inventory is ‘should you use reservations?’ Do they make the system more complex than it needs to be? Do we need them for every item and if not which items should we apply them to? Are they reliable because we had a nightmare with them in v4?

Like most questions that come up repeatedly there is not one right answer from my point of view. I’ll try to answer each question in turn and by the end of this series I hope you have a good idea of what you need to do.

What are Reservations? Well here in the UK at least they have historically been known as allocations. Basically it’s the pencilling in or tagging of certain stock/inventory or the potential supply of inventory to satisfy specific demands.

Do we need Reservations at all?

Most manufacturing and all distribution companies need reservations, as they are not in the fortunate position of always having enough inventory to satisfy every customer instantly. Note the word always, most companies aspire to have sufficient stock but at least occasionally, due to supplier or quality issues for instance, that won’t be the case. I would suggest it is better a system that copes with the more stressful situation from the outset because it likely you will not get a warning it’s going to occur.

Of course reservations are an extra complexity and keeping a system as simple as possible has benefits in that there is less to understand and go wrong. Making your software as lean as possible will always pay off.

What leaving reservations off will mean however is that your stock is always on a first come first served basis. The first person to get to that pick bin will grab the items regardless of the implications elsewhere.

For manufacturers that can mean that they are unable to complete a big production order because one, small, low value, part went out on a spares order just as they were about to pick it.

For distributors it can mean that orders where the customer has stipulated – ‘send when complete i.e. all together’ – either have to be picked to a holding bin or subsequently might have very long delay till all the items are available.

In both sets of circumstances the sales or customer services team are unable to make confident promises to the customer. They cannot know that the sales line they just put on will not get beaten by another that because of total fluke of timing. Obviously if you’re small enough to have just one picker or even two that talk to each other and work in strict number sequence order then you’re OK.

So if you see the issues behind the set of circumstances I’ve outlined, I think you’ve probably concluded that reservations are required in all but the smallest of inventory management situations. I’d be as bold as to say if you have more than four people moving stock and you’re not using reservations then either your customer service is not as good as it could be or you’re doing a lot off system administration.

So you need them; next we will look at how you need to reserve.

Note

This post is part of a 6-part series. A link to rest of the posts in this series are below (updated as published);