Dynamics 365 Business Central: Supply & Demand
I just went out for a run, we are going to talk about supply and demand, I was running so I got thirsty. Its similar to the body losing water. Supply and demand, basically the body supplies water, you have to supply to keep it balance so you have to hydrate. We are not going to talk about the body or the water, we are actually going to talk about Business Central.
Let's take a look at supply and demand in a graph. We have set up a graph with the inventory on a vertical axis and Time on the Horizontal axis. I’m going to go through 2 scenarios. One of them where we have an issue and one where we have fixed the issue.
In this scenario, on the 9th of April, we start out with 30 in inventory. and then on the 15th, we get a sales order which is supposed to be shipped that day for 50. That actually puts our inventory into –20, this is bad, so we have a situation where supply is less than demand and that is a problem. We never want to be in a situation where we have less supply than demand, we always want to fulfill the orders that come in and even anticipate those. So what did we have to do in order to fix this? we would have to put in a purchase order somewhere between the 9 and the 15th. So let's take a look at that scenario.
We have the same scenario, we started with inventory on 30 on the 9th, and then on the 12th, we got a purchase order in for 20. Now this purchased order could have been issued by the system automatically because it was anticipating the sales order coming in on the 15th, now this anticipation could have been because the sale order earlier and we know it's going out on the 15th, or the system is forecasting, anticipating demand that is regular. So even though the sales sir is now in. The system can forecast using artificial intelligence to figure that out.
Then, we get into the same situation where the sales order comes in for 50 on the 15th and that puts everything into 0 inventory and supply is equal demand, and actually supply equal demand on the 15th, we went down to 0, we have no problem because we fulfilled everything. The idea here is to get the purchase order in before we have to ship anything out so that we never have a supply less than demand situation. We could have supply a little bit more than demand, equal or a little less.
How do we work with that inside business central? I’m going to get into my items here and for now I have 20 pieces in my inventory of the inecta coffee mug, If I go in here, I’m going to record a sales order into Adatum corporation, which is requested to go out on the 15th of April, it's for the coffee mugs and we got 50. Like our scenario in the power point. Now I have a problem here let's say with 5 dollars, the available inventory for this item is lower than the quantity in this location, so we need to do something, basically, our demand is higher than the supply at this moment.
Create purchase order to fix this problem
In business central, we can go right up here into create purchase order to fix this problem, and if I click on that, it gives me the scenario, I have 50 on the sales order and I must buy 30 in order to fix this problem. Also, if I go into the event, available by event. I can see this nice screen, where it shows me the current quantity on hand is 20 and at the 15th of April, there is 30 there are going to go out. So, I need to buy 20 in order to fix my problem right here, so it's suggesting me to do that, If I close out here, go back into this screen. I can go and pick my trusty vendor, Fabrikam, the supplier of this and hit ok. This will create a purchase order for the 30 that I was missing, which is great. So, we have the purchase order issued, and I’m going to put in the receipt day as the 12.
The orders are all set up, I have the sale order and I have the purchase order. I can get back to my items and I have the coffee mug right here and what I want to do is just take look at the inventory availability buy event again, for this particular item. Just to highlight what is going on. So, we have current inventory at hand 20 and then we get 30 coming in, which raises it to 50 and then the sales order comes out, so it goes back to 0.
Basically, we have 20, we go a purchase of 30 which raises it to 50 and then sales comes in for 50 which puts it down to 0. And that basically describes the scenario that we are doing. It's neat that Business central can take care of this easily with a few clicks. This, however, it might not be very good if you have lots of inventory that you must be calculating this for. You might want to do that in a worksheet and you can do that as well in business central. This is more of a simple scenario for an item that you are running out of.