Picking list journal: Inventory dimension Location must be specified

One – if not the – notorious error in Dynamics 365 related to production and warehouse management manifests itself at the “Production floor execution” terminal during reporting as finished (RaF). On the screen, the error message “An error occurred while processing the job…” is displayed.

In the activity center, you receive the following detailed error message:

Posting – Picking list journal
Inventory dimension Location must be specified.

This is due to the failed material withdrawal following the Finish backflushing principle (actual quantity = planned quantity, see The case of a missing flushing principle). The causes are diverse, with the most common being an incomplete warehouse work. This means that the materials haven’t been brought to the machine’s input location, yet someone is trying to report the finished or semi-finished product as complete.

This error pops up very often during the testing phase of the Dynamics 365 implementation. You may say: “Hey, let them finish the picking work first; this may never happen in real life, since the materials are going to be missing for the assembly! The sequence of production steps must be adhered to!”

It is not that simple. I’d say we are talking about a significant design flaw in the Dynamics 365 for SCM system.

Let’s conduct a thought experiment. In an MTS (make-to-stock) scenario, imagine 3 production orders planned for the same product on the same day. All of them get released at once early in the morning, all of them produce warehouse work for the picking of the same raw material. If they are not consolidated into one production wave, it may happen that the warehouse work for the PO3 has been completed much earlier than the warehouse work for the PO1, but the PO1 is started and finished earlier. There is namely no particular order or priority in the warehouse work. The material is going to be at the inbound location of the work centre, the machine operator does not care if it’s for the current or for the next order. Yet reporting the progress at the terminal fails due to the mis-allocation of the material.

Explanation

Presuming the Automatic BOM consumption parameter in Production control > Setup > Manufacturing execution > Production order defaults is set to Flushing principle, and the Post automatically is set to Yes, then the material consumption becomes an integral part of every RaF transaction at the Production floor execution terminal. If the picking list posting fails, the whole transaction is rolled back:

In reality, it is even worse than a clean rollback. On each failed attempt of Progress reporting, a new picking list journal is created. The mere presence of such a picking list prevents any further attempts because the open line(s) in the picking list journal block a portion of the bill of materials through a TransChildRefId identifier – a relationship between the journal line and the BOM line.

With the advanced Warehouse management in Dynamics turned on, the warehouse locations in the master BOM must remain empty. They are allocated during the Release or Release to warehouse phase in Production. If the Resource consumption checkbox is set in every BOM line, then the input location of the work centre is evaluated by the Warehouse management module at the run time as the picking list journal lines are getting created. While doing do, for some reason they are looking for the location in the picking warehouse work. If the particular inbound location is not reserved there in the InventTrans, or the work is not closed yet, the Location dimension in the picking journal is going to be empty:

Troubleshooting

The troubleshooting steps are as follows:

First and foremost, search for any open picking lists for the production order with the button View / Journals / Picking List.
Alternatively, use the list of all open picking journals in the menu Production control > Adjustments > Picking List using the order number. This list should actually be empty, meaning all picking lists should have been posted.
Select the open (not posted) picking list journals and delete them all at once.
Look for any open warehouse work for production, meaning the warehouse work for materials picking: Pick at the main warehouse, Put to the inbound location of the machine. Use the button Warehouse / General / Work details at the production order.
If there is open work, ensure it is processed on the mobile device.
If there is no open warehouse work for the production order, initiate the warehouse picking process again using the button Release to warehouse. A new production wave will be generated, and new warehouse work will be created in the background. If the materials and parts are already at the machine’s location, this warehouse work will automatically be closed, and the materials will be reserved at that location for the production order. The next picking list will have the correct location in all lines, and posting this entry will likely work.
This deals with the racing condition in the above thought experiment, too: the material already found at the location will be rearranged to the current order. However, any open warehouse work for the current order shall be cancelled first. This re-release of released orders may also be automated.
If the report as finished continues to fail at the terminal, the operator may forcefully reduce the quantity using the Adjust material button: click on Adjust material, enter a zero. Repeat this process for all BOM lines. Then confirm the Adjust material screen with OK. Reporting as finished should work now, while the excess material can be eliminated in a manual picking list journal.

If the error happens often, some drastic measures may need to be taken. The point in time for the consumption of materials must namely be changed to At location for most materials and parts. This de-couples the material backflushing from the Report as finished feedback.

Production and Manufacturing blog series

Consumable “Kanban” parts in D365 Warehouse management

Consumable “Kanban” parts in D365 Warehouse management

Low value parts such as bolts, screws, gaskets, clamps, and other fasteners, as well as small electric parts, are rarely retrieved from the main warehouse in the precise quantities by production order. Instead, they are stored in surplus at the workbenches, typically organized in boxes of various sizes. The usage of these parts is not actively monitored; rather, they are automatically deducted from the inventory based on the production bill of materials. Additionally, there is no manual counting of these items at the workbenches. Once the quantity reaches a predefined minimum level, the boxes must be promptly restocked, that’s why they may call them “Kanban” items.

The “canonical” solution in the Dynamics 365 Warehouse management is the Min/Max replenishment: https://learn.microsoft.com/en-us/dynamics365/supply-chain/warehousing/replenishment#minmax-replenishment The locations to replenish are the input locations of the resources. One box typically stores one item. One screw may be needed at multiple machines = locations. From the list of items at every location you derive the list of locations per item, and these become the fixed locations of the items at the production warehouse. In accordance with the Set up a min-max replenishment process – Supply Chain Management | Dynamics 365 | Microsoft Learn guidance, you choose Replenish empty fixed locations (because a voluntary non-fixed location must have a quantity > 0 to get initially replenished, but this condition is not necessarily met) and Replenish only fixed locations.

In practise, this canonical solution does not always work well. First, the min/max replenishment must be set up to happen often, every 5-20 minutes to simulate an immediate response to the demand. Yet the processes in the Dynamics 365 Warehouse management are essentially PULL processes, and the replenishment is as fast as the warehouse personnel pulls the new work from the queue. It is a different sense of emergency as opposed to seeing a red Kanban card brought by the production worker. If the warehouse workers fall behind, the D365 system is going to detect the critical shortage and include the small parts into the regular production waves, and pick them for the production order(s) in small quantities.

Second, the min/max replenishment relies on the stock level monitoring in the boxes, and the backflushed quantity should better be exact. But the workers sometimes use more parts than stipulated in the BOM. The stock levels in the locations are going to start accumulating errors, and the actual quantity in the boxes is likely to be less than expected, while manual triggering of the replenishment is not possible. In the end, some sort of a spot counting will be needed.

Moreover, at the factory I am consulting right now some of the items are vendor-managed (VMI): a salesperson visits the factory regularly and replenishes the boxes; only a few days later the invoice for the goods is received by the accounting. This makes the internal stock level monitoring an impossible task.

One may suggest deleting these items from the BOM altogether, but this is going to (1) remove the “sink” for the quantities so that the stock levels will continuously grow, (2) distort the price of the product and (3) confuse the workers who use the BOM as a reference. Another suggestion was to make these items non-stocked [in the item model group], but a non-stocked item may not be added to a BOM in Dynamics 365. One may also declare a product not eligible to the Warehouse management, but this choice of the Storage dimension group may only be made once at the beginning of the product lifecycle, while the list of “Kanban” items undergo optimization often.

The below solution that really works relies on the negative picking from a non-advanced warehouse. The negative stock and the auto-consumption at the machine will deplete the stock. The usual purchase delivery note / VMI invoice will increase the stock. Sometimes the stock level recorded in D365 will be higher than the real one, sometimes it will be lower, sometimes it may even be negative, but the production process will not stop because of one allegedly missing screw. The replenishment happens outside of the system in a manual Kanban process triggered by the worker at the machine, or it may be vendor managed, or driven by the warehouse personnel regularly looking for empty boxes.

The setup is as follows:

Create a new warehouse (e. g. NA) where the mode Use warehouse management processes is turned OFF. Set some Default input and production input locations.
Choose this warehouse in the Default order settings of the item as the default purchase and inventory warehouse.
Create if needed a dedicated Item model group, where the Physical negative inventory = Yes. Apply it to the item.
At the released product, keep the usual options Flushing principle = Finish, Material picking in license plate locations = Order picking. You may also want to set the coverage group to Manual.
Make sure the production parameter Journals / Picking list journal / Pick negative is ON, because the negative picking is only allowed when both Physical negative inventory + Pick negative are ON.
In the BOM, use the “Kanban” items mostly as usual, but do NOT select the Resource consumption as we want to consume them from the virtual warehouse NA.

Refer to the blog The case of a missing flushing principle for more insight on the backflushing.

Production and Manufacturing blog series

Dynamics 365 SCM: Do not reserve in Inbound

Dynamics 365 SCM: Do not reserve in Inbound

You are going to have this error in Dynamics 365 Warehouse management, guaranteed. The error manifests itself at the production order picking or at sales order picking: the picking location is empty. Depending on the Location directive failures setup under the Warehouse management parameters this is going to either create a broken warehouse work or throw an error, but the outcome will be bad in any case. This issue can occur when materials or merchandise have arrived but have not yet been put away in their expected location. They are not on the shelves but still somewhere in a staging area, possibly waiting for sorting or expecting a quality control. If your location directives are correct, you may need to adjust your inventory status settings to prevent this issue from happening.

The below recipe was invented either by Carsten or Thomas, maybe Nicolas, all kudos to them, I have just picked up the torch, refined the recipe and shared it with my colleagues and customers at 2 other implementation projects.

In a nutshell, create a new Inventory status called INBOUND and assign it to every purchase order. Make sure every sales or transfer order becomes the regular inventory status AVAILABLE. When a production order covers the demand, it will inherit the “Available” status and pass it to the BOM lines. Only “Available” raw materials will be reserved, not “Inbound”. If you attempt to release the production order, it will fail, because the reservation will misfire (but only if you install my fix Production order should not get Released on material shortage). This is a desired behaviour, because the materials have not been inspected or deconsolidated yet. The “Inbound” inventory status remains transparent to master planning and won’t be replenished unless the quality inspection fails and the goods become BLOCKED.

To implement this scenario, you’ll need to adjust some very specific parameters throughout the system. Below are the notes to myself:

In Warehouse management > Setup > Inventory > Inventory statuses, add a new inventory status called “Inbound“. Do not mark it as inventory blocking; it only needs to differ from the “Available“.
In Warehouse management > Setup > Warehouse > Warehouses, do not set the default inventory status ID at your advanced warehouse, as it will overrule other settings.
In Warehouse management parameters, set the default inventory status ID to “Available” and mark Use default status for sales orders and transfer orders to force most material demand to look for Available items only.
Ensure that every purchase order line becomes a different status by assigning the default inventory status ID “Inbound” to every supplier, new or existing (Accounts payable > Vendors > All vendors).
Turn OFF the Reserve ordered items inventory parameter in Inventory management > Setup > Inventory and warehouse management parameters. To be honest, I have not seen any customer yet who benefited from the reservations in purchase orders not yet received, it just messes things up. If you do let the system reserve in open purchase orders, it is going to reserve the Inbound status, which is clearly not our intent, and the picking location will be empty again.
Now it becomes tricky. If you use master planning, do not firm planned orders in the Standard or– God forbid – Extended Update marking mode. This marking will again be later converted into a fixed reservation of the materials / merchandise in the Inbound status. Instead, carefully set the default Update marking mode in Master planning > Setup > Master planning parameters. In a retail/distribution scenario, choose “None”. In a MTO (manufacture-to-order) or a ETO (engineer-to-order) scenario, choose Single level standard. The latter is quite a new addition to Dynamics 365 SCM: D365 New Feature – Make to order supply automation – Logan Consulting. This will establish a link between the Sales order and the production order, but not their lines or lower-level production orders to purchase orders. If there is a strong need for a chain of assembly / sub-assembly’s production orders, you may still use the Pegged supply BOM line type. This will make the upstream production order a derived requirement and it will establish a firm marking between the top-level and bottom-level production orders.
Configure a recurring batch job in Warehouse management > Periodic tasks > Change inventory status to quickly update the status of “Inbound” items to “Available” once they are put away in their regular storage locations. Find a good set of criteria to capture all regular locations for storage and picking: