Tag Archives: Inventory

Properly Setup Bin Code for Warehouse Management in Dynamics NAV

Overview
One of the most often asked about features when dealing with inventory is the ability to keep track of inventory by bins in the warehouse. While The Warehouse Management System will benefit the accuracy of the items that are stored in the bins, careful consideration must be made during setup so when you go live, less additional work is needed for the system to work for you.

On a macro level, before you eve consider implementing a warheouse management system, your warehouse itself MUST BE ORGANIZED! What I always tell customers is that the purpose of a computer systems is to help you do something faster. This means that if you’re warehouse is a mess, implementing a warehouse system will make it more messy, faster. However, if you’re warehouse operation is efficient and optimized, then implementing a warehouse system will help you become more efficient and optimized, faster.

The Bin Codes
While there are many considerations for setting up warehouse management in NAV, this article will focus on one of the most overlooked areas.

The Bin Codes.

The Path of the Picker
There are many differnet theories about how to create the most efficient picking path. But generally, you want the path of the picking so the following occurs:

1. When picking for an order, they would not have to come back to the same bin in the same level
2. When picking, they should pick from the eye level (or the level where they don’t need special equipment). This is typically the first level.

Keeping it simple and not concerning with spliting into Zones, wave picking, and whatnot, the pattern the warehouse picker should walk is the following:

Warehouse path for picker

Warehouse path for picker

Only when the above is exhausted, do we use special equipment and pick from the higher levels. The general rules are the same, you want to use the run time for the special equipment should be as minimal as possible.

The Sort Order of the Pick Bins
In order to get the path described above, we have to first understand how Dynamics NAV priortizes what bin is selected when a pick is generated. Consider the following bins numbers for your warehouse:

Typical Bin Code for Warehouses

Typical Bin Code for Warehouses

The first 2 characters is Section, then Isle, then Level

When the pick from NAV is generated, it will suggest the pick in the following order (assuming no bin ranking is used).

NAV Suggested Pick Order

NAV Suggested Pick Order

As you can see, it will create the pick on a decending order.

Why Suggest the Bins in Decending Order?
The answer lies in the help for the Bin Ranking field found in the Help or on MSDN:

The program will suggest a pick from the bin with the highest numerical ranking. Items in the highest-ranking bins (bins with the highest number in the field) will thus be picked first

Makes sense.

Why Not Use the Bin Ranking?
We could. But tread carefully! Bin Ranking provides a lot of flexibility on how the bins are ordered during the directed pick/put-away. Not paying special attention to how to rank the bins will give you more pain and suffering.

Assuming you rank all of the 1st level bins the highest, and level 4 the lowest. The resulting pick order NAV would generate for its pick is the following:

Warehouse4

This means that NAV will ask the warehouse picker to pick from the section that’s furthest away from the warehouse (assuming that’s section C). Very good for letting your warehouse picker get excercise, not really good for pick efficiency.

Two Ways You Can Go About This

Property Setup the Bin Ranking
If you want to utilize the Bin Ranking, then you will need to sort it based on how you want the warehouse user to logically pick/put-away. In the example above, the bin ranking would be set as the following:

Proper Bin Ranking Setup for a Warehouse

Proper Bin Ranking Setup for a Warehouse

You will need to carefully configure how to assign the bin ranking. In addition, if there are any changes to your bins (add/remove), you will need to break out the spreadsheet and reassign all bin rankings again.

Modify the Default Bin to sort in Acending Order instead of Decending Order
Doing so will allow Dynamics NAV to “sort” to pick from A section to D section. However, it will also ask the picker to pick from multiple levels first instead of the 1st level.

You will need to reconfigure how your bin codes are setup. Instead of Section – Row – Level, you will need to reconfigure your layout as Level – Section – Row:

Warehouse6

This will ensure that all of the 1st levels are picked first. Then it will then pick the 2nd level, then the 3rd, etc. This option may not be feasible if you’ve already spent the time and effort on labeling all of your bins. This option may also not be feasible if you want them to pick from the same column once they got the forklift truck. However, this option will require the least amount of maintenance.

Conclusion
Having implemented both methods for clients with warheouse management requirements for Dynamics NAV, both methods have their pros and cons. And they both work for the respective companies.

Bin Ranking will work wonders if you take the time to set it up right, but maintenance is a hassel. Reconfiguring the bins is simple, but you have to becareful about how NAV sorts the bins.

Again, both methods work. It really depends on how you implement this.

Entering Beginning Inventory Balance

When moving from a legacy system into Dynamics NAV (Navision), one of the areas you want to try and avoid is messing with the inventory G/L accounts. Most systems are usually pretty good with open A/R and A/P accounts, they can be transferred using the “posting back to the same account” technique that most implementers do. The beginning A/R and A/P G/L accounts would be based on your entry on the General Journal. This is assuming that the A/R and A/P aging reports matches the G/L.

Inventory valuation is one of the areas where we find the most discripencies based on what is entered on the Item JournalĀ  from the physical count and the inventory valuation report from the legacy system. Depending on your requirements, sometimes it doesn’t make sense to go through line by line on the item journal to see where the differences are.

A rule of thumb I always go by is to let Navision determine what the inventory value should be in the G/L based on the positive adjustments posted from the Item Journal.

To accomplish this, do the following:

Suppose you have the following G/L accounts:
11000 – Inventory
58850 – Inventory Adjustment

When posting a positive adjustment in the Item journal, it will post a debit to Inventory and credit to Inventory Adjustment.

When you’re ready to enter your beginning G/L balance, enter the G/L balance for Inventory to account 58850. This way, the difference between the inventory G/L balance from the legacy system and Navision will be reflected on account 58850.

If you do not want to reflect the adjustment in the current period due to financial reporting reasons, you can adjust the difference into an asset account. We usually recommend create a separate account (i.e. 11100 – Inventory Suspense) to store this difference until you can depreciate it.

By not posting any general journal entries to the inventory accounts, you’ve ensured that inventory valuation reports will ALWAYS match G/L, making everyone happy in the process.