Sumit Potbhare: Tracking of Inventory and Implications | Standard Retail Inbound Needs | Approach to D365 for Commerce with Adv WH Mgmt
Hi Guys, Hope you have read my previous post where we talked about how Retailers get their product and what document comes along. In this blog, we will talk about what happens to merchandise after it is received in a Retail Warehouse. Retail businesses can have very specific expectations about how inventory will be tracked and appear in their financial statements after it’s brought into the warehouse. This has some significant implications on how D365 F&O Warehouse Management or any warehouse management system will need to be set up.
What Inventory Records do Retailers Need?
Many of the older retailers have kept the inventory associated with online sales independent of the inventory for brick and mortar sales. So the situation you see here on the left-hand side is common among some of the older brick and mortar retailers that got into online a little later. They have two distinct inventory pools, whereas some of the newer, multi-channel retailers that got started and then maybe added stores later on still look at their inventory as one big pool of inventory that can be used for either side of the business.
The Retailers that still view their inventory as being distinct, either online or stores take this further and start writing POs in this way, one PO for blue shirts for the online business and a separate PO for blue shirts for the brick and mortar business. Such business poses a slight problem for D365 F&O Warehouse Management, which is built around the idea that a warehouse only receives product for one financial entity or company. So if you look at this drawing, which reflects the financial ways these companies are structured, that have some kind of holding company at the top of the overall retail business, and then they will have separate companies for the online and a separate company for the retail stores, and each of those have their own inventory pools.
And what this means in the D365 F&O world is that you’re going to need to create virtual warehouses for each of these different business units. They may operate in the same physical warehouse, but they’ll have to be distinct virtual warehouses that are set up in D365 F&O separately. So you’ll have Warehouse 01 for the online business and Warehouse 02 for the brick and mortar business in that same physical warehouse.
Implication of Inventory Pools on the Layout
Now let us discuss how Inventory Pools would actually get implemented in terms of locations and business rules and so forth in D365 F&O Warehouse Management. This multi-pool inventory concept that the older, more mature retailers are fond of has implications on how you’re going to set up D365 F&O Warehouse Management in terms of the locations and zones inside the physical warehouse.
As you know we have to set up two virtual warehouses, but you have to be careful that the locations don’t overlap in certain parts of the warehouse, because Warehouse 01 won’t know what’s in Warehouse 02. To understand this better, let us zoom into the layout. If you only have one company that a Retail Warehouse is servicing, then you can just have one giant piece picking area. However, if you’re going to support this multi-pool inventory concept where online inventory is separate from retail inventory, this means you’re going to have separate pick faces for the same blue shirt. One pick face will have to be set up for the online and one will have to be set up for the brick and mortar stores.
And so you’ll have to literally divide the storage locations so that you’ll have distinct locations where you pick orders for online and distinct sets of locations where you pick the orders for the stores. In D365 F&O, you have to take this concept even further. You have to go back into the reserve storage area and carve it up as well. You’ll have to have certain aisles of the case storage area that are dedicated only to online and certain aisles or locations in the pallet storage area that are dedicated to online or the stores.
And then you have to think about some of the inbound locations. It won’t really matter if we have certain locations only set up in Warehouse 01 and only certain locations in Warehouse 02 in the prep area or the dock. Because it’s unlikely that they’ll use them at the same time. And the same thing certainly goes for the outbound packing area. You don’t have to worry about setting up different pack stations for a particular business. But it’s really in the piece picking area and the Bulk area that you’re going to need to carve up the locations in such a manner that certain physical locations will be associated with the online warehouse and certain locations will be associated with the brick and mortar warehouse.
I hope this blog helped you to understand the Retail Inbound Needs and you get the understanding on how the Retail Inventory are tracked and the implications from different Inventory pools that different Retailer maintains so you can talk about during any D365 for Commerce implementation utilizing Advance Warehouse management.
In our next blog, we are going to start digging in to the process requirements associated with the inbound side of a Retail Warehouse and we will take you through the process inside of a real working Retail Warehouse.
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