Reinventing Retail Inventory Management with Microsoft Dynamics 365 Supply Chain Management’s Cross-Docking Feature

Posted on: August 6, 2023 | By: Fred Liu | Microsoft Dynamics AX/365, Microsoft Dynamics Manufacturing

In the constantly evolving world of retail, businesses are continuously seeking efficient and cost-effective ways to manage operations, particularly inventory management. Microsoft Dynamics 365 Supply Chain Management’s (SCM) Cross-Docking feature takes inventory management to a whole new level, aligning with modern retail environments’ needs and demands. Let’s delve into the details of how it impacts various facets of retail inventory management.

Cross-Docking in Manufacturing

Cross-docking is particularly pertinent for manufacturers producing high-volume goods who aim to ship the finished products as soon as they are ready. Instead of building up inventory at the manufacturing site, the goal is to dispatch the products to distribution centers that are close to customer demand.

In cases where there is no immediate demand for a product, it is stored in warehouse locations at the manufacturing site. This approach, known as opportunistic cross-docking, implies that if a shipping demand arises for the product, this opportunity should be utilized instead of keeping the product in internal storage.

Consider a typical flow where a product is reported as finished and moved to the production output location. A forklift driver picks up the pallet at this location. Depending on whether there is a planned activity for transferring the product from manufacturing to a distribution center, the next steps vary:

  • If there is a planned transfer activity, the system will guide the truck driver to place the pallet at a bay-door location. If a trailer is already assigned to the bay door, the driver will be instructed to load the product directly onto the trailer.
  • If there is no planned activity for transferring the product, the driver will be directed to put the product away in a location in the internal warehouse.

Configuring Cross-Docking in Dynamics 365 SCM

The cross-docking process in D365 SCM is configured in work policies. A work policy includes a work order type, location, and product. For instance, cross-docking could be set up for product X and location Y. Currently, cross-docking can be configured for two work order types:

  1. Finished goods put away
  2. Co-product and by-products are put away

In the cross-docking policy, you define which document types are applicable for cross-docking. At present, the only supported document type is Transfer orders.

An example of a cross-docking policy configuration could be as follows:

  • Cross-docking policy name: Transfer order
  • Sequence number: 10
  • Work order type: Transfer issue
  • Cross-docking demand requires location: False
  • Cross-docking strategy: Date and time

Benefits of Cross-Docking in Dynamics 365 SCM

By utilizing the cross-docking feature, businesses can enjoy a variety of benefits, including:

  1. Decreased Inventory Holding Costs: Businesses can significantly reduce their inventory carrying costs, as goods spend less time in storage.
  2. Streamlined Operations: The time between receiving an order and fulfilling it is reduced, leading to increased customer satisfaction.
  3. Enhanced Vendor and Customer Relationships: Efficient supply chain processes can improve your relationships with vendors and customers.
  4. Data-Driven Decision Making: The integration of AI and machine learning offers advanced analytics and reporting tools, which can provide valuable insights into operational performance.

Next Steps

If you are interested in learning more about reinventing retail inventory management with Microsoft Dynamics 365 Supply Chain Management’s cross-docking feature in Microsoft Dynamics 365 for Supply Chain Management, contact us here to find out how we can help you grow your business. You can also email us at or call (312) 345-8817.

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