Inventory Management in Dynamics NAV with Planning Worksheet (MRP)

By Rob Jolliffe | December 3, 2018
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One of the main reasons companies purchase ERP systems is for inventory control. Inventory Management in Dynamics NAV is done with their MRP (Material Resource Planning) module, called Planning Worksheet. This is an advanced and powerful feature of any ERP system. Planning Worksheet in Microsoft Dynamics NAV is one of the key features of the manufacturing modules available in the extended pack.  It is often paired with MPS (Master Production Scheduling) and creates a full set of material and production planning features.   

It is very common for manufacturing companies to purchase their new Microsoft Dynamics NAV system specifically to take advantage of inventory control. The planning worksheet (and it's cousin requisition worksheet) can make huge improvements to purchase automation and stock control. MRP systems like these can be be very complicated and hard to use. It is critical that the implementation partner understand how they work.

Sabre Limited has spent years working with manufacturers implementing Planning Worksheet in Microsoft Dynamics NAV. We have developed some tips to make improving your planning and purchasing process as efficient as possible.

Here are some of the features of inventory management in Dynamics NAV.

Reorder Points

Before computerized MRP was introduced (in the days of paper and pencil) companies typically used a reorder point system. Planning worksheet still supports this method of handling inventory. Reorder Points is a method of waiting until stock falls below a certain level and then ordering a fixed quantity. It is a very easy system to implement, but it tends to result in a lot more inventory. You need to have either a very gradual and steady demand of the item, or a lot of safety stock. Otherwise there is a risk you may run out of materials.

We still run into companies today that do not have ERP systems (ie: they use spreadsheets) and they often use this approach.

The biggest downfall is that a Reorder Point system can't react to a large order (something bigger than usual) being entered into the system. Users need to keep their eyes open for this and adjust.

Lot for Lot

In today's system, inventory management in Dynamics NAV is usually done by setting Lot for Lot planning on items. The item can be replenished via; a purchase ; a warehouse transfer order; a production order or an assembly order. The goal is for the system to generate a set of "suggestions" that purchasing or planning can quickly accept and create orders. The planning worksheet and requisition worksheet automate this process. Sabre focuses on making sure this inventory management in Dynamics NAV is up and running correctly and appropriately for your business.

Order by Order

The third way that planning worksheet (and the planning factors) work is via Order by Order planning. This is used in businesses where the need is to have materials specifically allocated to specific orders. This will create more orders and more order lines than the other two methods. It will be the best choice if you have a lot of orders that are very specific and need product bought to the order.

Warehouse using MRP - Example of Inventory Management in Dynamics NAV
MRP in Microsoft Dynamics NAV is frequently used for purchasing and inventory management

How it works

Projected Net on-Hand

Planning worksheet In Microsoft Dynamics NAV works by calculating the quantity of material you should have on hand in the future. You specify how far into the future you want calculate this. MRP calculates your projected on-hand inventory for every day between now and a selected point in the future.

The concept of Projected Net On-Hand is the critical part of the inventory management In Dynamics NAV - knowing how much inventory of items will be available at a point in time, MRP will suggest purchases and production orders.

Planning Factors

It then goes further and suggests orders based on its calculations and which of the type of replenishment you selected (see above). These are all controlled with settings applied to items (called planning factors). The goal is to produce accurate suggestions to help purchasing make efficient orders and keep stock on the shelves.

There are some companies that find it hard to get the planning factors right. It can take an element of experience and training that not everyone has. It also isn't strictly necessary nor efficient to use the full capabilities of MRP to automate purchasing that way. If your quantities on orders is small, using the projected on-hand calculations can be an effective way to manually create orders almost as quickly.

Lot Accumulation and Reorder Frequency

The Order for Order and Reorder Point planning are going to be based on the projected net on-hand, and are going to generate simple order quantities. Lot for Lot has the additional capabilities of aggregating orders together over periods of time. This time based planning is the tricky part of setting up planning worksheet. Lot for Lot is pretty easy to understand in general, but it can be a lot of work to setup the right planning factors.

It takes time to learn MRP and inventory management In Dynamics NAV. There are a lot of calculations happening in the background. None of them is particularly complicated, but the sheer number can be overwhelming. MRP will generate "suggestions" when run, and if you are unsure how it works you can be overcome by noise and details of your entire supply chain and purchasing needs.

We recommend running scenarios through the system by choosing one or two "product types." For instance, you may want to start with structural steel, electronic components, fabricated parts etc... Don't try and turn all your inventory commodities on at the same time if you've never done MRP. Run one example or commodity through until you have it working well. Then add a few more of these item classes. Eventually your inventory management in Dynamics NAV will be entirely automated and much, much easier!

Inventory Management in Dynamics NAV Benefits

You are going to start to notice a few large benefits as the system is running.

  • Your purchasing team won't be spending nearly as much time for clerical activities
  • You should find fewer inventory stock outs (when you are missing inventory)
  • You should have less inventory overall (unless your new efficiency causes an explosion of business growth!)

This is when you'll definitely notice the benefits of getting NAV planning worksheet up and running.

Need some help?

Sabre implements planning worksheet for inventory management in Dynamics NAV all the time and are experts in this module. It is one of the more difficult parts of Microsoft Dynamics to learn and use, but is a critical part of a proper implementation of inventory control in the Dynamics NAV system and a major part of a manufacturing implementation.

You can check out our Sabre Limited YouTube videos outlining key areas of function of Dynamics NAV on Sabre Limited's channel - including the Planning Worksheet and Requisition Worksheet.

If you need help with MRP In Microsoft Dynamics NAV give us a call at: (519) 585-7524 x.45 or contact our team, we are excited to talk with you soon!

Rob Jolliffe

Robert has been an ERP consultant in the Manufacturing space for over 25 years, starting immediately after graduating University of Toronto Engineering. In addition to a deep knowledge of Manufacturing (including teaching MRP at the Supply Chain program at Conestoga College in Kitchener, Ontario, Canada) Robert holds a Microsoft Systems Engineer designation and is much less of an expert in Networking and IT infrastructure than he thinks, but is still pretty good. He also has applied his engineering skills to learning programming, and is warned frequently by the professional developers who work for him that he is pretty good, but don't write any code for customers without letting them check it.

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