Fundamentals of Modeling Inventory Locations Using Microsoft Dynamics AX

Editor's Note: The following article is drawn from Dr. Hamilton's new book about Supply Chain Management using Microsoft Dynamics AX. The book focuses on supply chain management in manufacturing and distribution businesses, and covers the software capabilities within the new Dynamics AX as well as AX 2012 R3.   

The definition of physical sites containing inventory represents a key part of modeling any supply chain in manufacturing and distribution. The fundamental options for modeling these physical sites in Microsoft Dynamics AX involve the use of AX sites and AX warehouses within a legal entity. In this article, we will use the generic term of physical site or inventory location for conceptual explanations, and the terms "AX site" and "AX warehouse" when explaining system-specific functionality. In addition, we will use the term bin location when referring to the locations within an AX warehouse.

The model of inventory locations has multiple impacts. It impacts the definition of items, bills of material (or formulas), resources, routings, product costs, coverage planning data and S&OP game plans. It impacts the business processes related to inventory, such as sales orders, purchase orders, transfer orders, production orders and quality orders.

The article starts with the major variations of modeling inventory locations within one or more legal entities, and then covers the unique considerations about using AX sites and AX warehouses. After defining this information ...