Warehousing Levels in Business Central (a Deep Dive into the Various Location Tiers)

In Microsoft Dynamics 365 Business Central, there are various tiers to the Warehouse or Distribution management. This blog post can be used to get a general understanding of the different tiers as Microsoft defines them. Something to keep in mind: “locations” in Business Central (synonymous with “warehouse” in the common vernacular) can be set up with their own tier. This means that within a single company, for example, there can be Tier 1 location(s) and Tier 4 location(s).

I just mentioned a few of the tiers, so allow me to explain exactly what that means. There are six Warehouse Complexity Levels (which I will refer to as “tiers”) in Business Central. Tier 1 is the “easiest” to manage and Tier 6 is the “most complex.” I use quotes to express that the ease of use, or lack thereof, is relative to the business.

Tier 1 – “Four Wall Inventory”

In the lowest complexity tier, inventory is managed by the source documents that generate movement (Purchase Orders, Sales Orders, Transfers, etc.). This means that the salespeople or purchasers will both create the sale or the purchase and post the inventory directly to a location. The system will track the inventory on hand by location, but does not know where in that location the inventory is stored.

Warehouse Managment SystemTier 2 – “Four Wall Inventory with Warehouse Staff”

Moving up to Tier 2, there is now a separation of tasks between the office staff (salespeople/purchasers) and the warehousing team (receivers/shippers). For a Tier 2 location, the “Require Shipment” and “Require Receipt” booleans must be checked. This will mandate that a warehouse shipment is created and completed before the sales order can be invoiced. For the Purchasing side, a warehouse receipt must be created and completed before a purchase order can be invoiced.

Tier 3 – “Picks and Puts”

For a Tier 3 location, the “Bin Mandatory,” “Require Put-Away,” and “Require Picks” booleans must be checked. Tier 3 locations are the first level with bins, which allow a more detailed location layout. At these locations, a purchase order (all inbound transactions) that mandates a put-away is created and completed before invoicing. With the put-away, a bin must be selected by the warehouse staff, which will become the default put-away bin for that item. Furthermore, a sales order (all outbound transactions) that mandates a pick is created and completed before invoicing. With the pick, a bin must be selected by the warehouse staff, which will become the default pick location for that item. If inventory movements within the warehouse are needed, journals can be used, or an internal movement will need to be created and completed.

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Tier 4 – “Loading Docks with Picks and Puts”

For a Tier 4 location, almost all of the warehouse controls will be turned on: “Require Receipt,” “Require Put-Away,” “Require Pick,” “Require Shipment,” and “Bin Mandatory.” In this configuration, default bins will be used to enable a multi-step process for Tier 4 warehouses, from first inbound to final outbound. In setting up automatic steps for inventory movements, the system will automatically insert the receipt bin on a warehouse receipt and generate a put-away document for the warehouse staff. Now the inventory can be received to the unloading floor, and the instructions for that inventory to be put away in the storage bins is automatically created. The same process flow works for shipments and, importantly, pick/puts for production.


Tier 5 – Directed Puts and Picks

This takes the concepts of Tier 4, and puts it in overdrive. Here the entire warehouse is controlled by zones and by templates. The bins in the warehouse are created within zones; for example, there would be a receiving zone, with as many bins as necessary. The put-aways generated would take into account the put-away template assigned to that item, and then direct which bin in which zone the inventory should be stored. This is great if your warehouse has many storage areas with different functions (e.g. cold, long-term storage, large item storage, etc.). If there is no need to handle the puts and picks on a per-item or item category level, Tier 5 is usually more than is needed for most companies.

Tier 6 – “All of the Above and Scanners”

Once we arrive at Tier 6, we are really talking about the introduction of scanners into the warehouse. Here the volume of movements is such that manual entry would be prohibitively expensive. Thus, recording internal movements, receipts, shipments, picks, put-aways, physical inventory and production consumption can all be done by scanner. A company that is interested in scanners should keep in mind the possibility that scanners can be used online and offline. This is extremely useful for sites that are quite remote.

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