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.


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

Author: James Crowter

I’m passionate about how businesses can improve their efficiency by getting process optimal more of the time. For the last twenty five years I’ve worked to help organisations of all sizes and types implement the ERP & CRM software that typically they decide they need when things are going wrong. I’ve seen that work unbelievably well and enabled those organisations to rapidly grow but I’ve also had some hard projects over that time where it’s felt more like warfare at times. Since 1996 (and version 1.01) I’ve been working with a small Danish product called Navision that’s now become Microsoft’s Dynamics NAV and I’ve also been using and consulting around Microsoft CRM since 2005. As managing Director of one of the longest established first Navision and now Microsoft Dynamics partners I’ve been involved in the complete history including numerous product councils and system design reviews. It’s my privilege to know many of the key Microsoft executives and product designers and have insight into both where the products are now and their future direction. So colleagues & clients have asked me to start this blog to share some of the insight that both this knowledge (obviously where not restricted by NDA’s or client confidentiality) and experience can help. Specifically I want to concentrate not on the specifics of how (there are some great blogs already for that) but why. If any user helps their business make better decisions or consultant can give better advice then that will be objective achieved. I founded Technology Management in 1992 and have led from the front ever since. Helping clients use technology to grow their business is my passion through explaining technology in terms that everyone can understand. My interest in computing began at the age of eight, long before my school had the equipment to cope. Throughout school and university I developed software commercially. I hold many IT certifications, such as Microsoft Dynamics NAV (for over 17 years), Microsoft Dynamics CRM (for over 10 years), as well as Microsoft Windows Server, Exchange and SQL. In October 2015, I was awarded the title of Most Valuable Professional (MVP), a title given to a select few individuals (31 currently) across the world specifically for Dynamics NAV. After years of working with a range of distribution and manufacturing software for hundreds of organisations, I focus on understanding the business requirements of an organisation, what it will take to deliver the systems required to maximise their potential. Follow me online via my other social channels: - Twitter: @jamescrowter - LinkedIn: Or email me directly at james[.]crowter[@]

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