AX2009_ENUS_TL1_01

Chapter 1: Introduction to Trade and Logistics

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CHAPTER 1: INTRODUCTION TO TRADE AND LOGISTICS Objectives

The objectives are:

• Review the concepts of Logistics and Inventory Management • Examine Logistics and Inventory features in Microsoft Dynamics®

AX 2009 • Determine the information flow in Microsoft Dynamics® AX 2009

Introduction Introduction to Trade and Logistics provides an overview of Microsoft Dynamics AX 2009 features in Trade and Logistics, which is the flow of purchase orders, sales orders and inventory throughout a company.

Microsoft Official Training Materials for Microsoft Dynamics ® Your use of this content is subject to your current services agreement

Trade and Logistics I in Microsoft Dynamics® AX 2009

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Logistics and Inventory Management Logistics is defined as the process of planning, implementing, and controlling the efficient and cost-effective flow, and storage of the following:

• Raw materials • In-process inventory • Finished goods • Related information from the point of origin to the point of

consumption

Specifically, logistics helps companies meet customer requirements.

Inventory is the material and supplies a business carries either for sale or to provide input in the production process. Inventory consists of many different items held by the company, which can include:

• Raw materials and supplies • Goods in production • Sub assemblies • Finished goods ready for sale

Inventory management is planning and controlling inventory from the raw material stage to the customer. Companies must consider inventory at every planning level.

Companies can manage inventory at both the aggregate level and the item level. A company's management team must establish decisive rules about inventory items including consideration of the following:

• The most important items to keep in inventory • The control of items through a company • The quantity of inventory to be ordered • The timing of when an item should be ordered

Microsoft Dynamics AX manages the cost and quantities of the items bought and sold. Regardless of whether a company is a retail business with merchandise inventory or a manufacturing company with finished goods, materials, and work in process, the system provides inventory from two standpoints: Physical and Financial.

Logistics and Inventory Features Microsoft Dynamics AX 2009 includes two types of inventory: physical and financial. These inventory types include many dynamic features that help companies keep status of the financial and physical value of their inventory, and profits and improve customer service.



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Additionally, the new mulitisite feature provides the Site dimension that helps a company capture and reflect the movement and status of items between multiple production or distributions sites.

Physical Inventory

Physical inventory is the physical movement, status and control of items throughout the supply chain in a company. Specific features can help companies control these items. These features include:

• Inventory tracking • Master planning • Automatic ordering • Reservations • Inventory transactions • Quality management

Inventory Tracking

Inventory tracking tracks inventory items by using:

• Item ID • Lot ID • Configuration specifications, which can consist of the following

individual identifiers: o Size o Color o Configuration o Warehouse o Site o Batch number o Location o Pallet ID o Serial number

Master Planning

Master planning calculates what is necessary to fill an order when it is received. Master planning is covered in the Microsoft Dynamics AX 2009 Master Planning course.

Automated Ordering

After calculating what is needed to fill an order, Microsoft Dynamics AX 2009 - in cases of insufficient inventory - will automatically create production and purchase order proposals to complete a customer request.



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Reservations

Microsoft Dynamics AX 2009 reserves items for sale or production. This puts the items on hold and guarantees their availability for a specific order.

Inventory Transactions

When increases and decreases in inventory occur due to sales and purchase orders, Microsoft Dynamics AX 2009 automatically updates inventory information to reflect the actual levels.

Quality Management

Full integration for managing quality processes and non conformances on items is provided in Microsoft Dynamics AX 2009. It helps manage, track and handle quality processes and issues throughout a company.

Financial Inventory

Financial inventory is the financial value of a company's inventory. Specific features can help companies keep track of the financial value. These features include:

• Inventory value • ABC Classifications • Forecasting

Inventory Value

When companies use the most current information from all related modules in the system, they can calculate inventory value at any time. Inventory costing and evaluation is covered in the Microsoft Dynamics AX 2009 Inventory Costing and Valuation course.

ABC Classifications

Companies can analyze which items are the most profitable from a sales perspective, and consider the carrying costs (how long inventory remains in stock and other factors) of the item(s) in inventory.

Forecasting

Based on the calculations that Microsoft Dynamics AX 2009 performs, companies can produce sales and purchasing forecasts.

Companies can project future sales by using the statistics on quantities sold and the company's own estimates.

From purchasing trends, a company can estimate its budget.



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Multisite

Supply chain management involves a highly interactive process of controlling, planning, and implementing all the activities associated with moving goods from the raw material stage to the end user stage, as efficiently as possible, with the lowest cost and the highest quality.

Regardless of whether a company operates with a single production/distribution site or multiple sites in different geographical locations, the system must capture and reflect the elements that will enable optimal and appropriate decision making and monitoring throughout the company.

Adding multiple site capability to Microsoft Dynamics AX 2009 therefore affects all functional feature areas that support supply chain transactions that are relevant to the various sites.

The following table provides an overview of how multisite functionality is integrated into the various Inventory, Trade and Source feature areas. Some of these features are covered as an integrated part of the topics in the Microsoft Dynamics AX 2009 Trade and Logistics series.

Multisite Feature Area Replenishment control by warehouse, for example, min / max and standard quantity by warehouse

Inventory

Preferred supplier by combination of item and warehouse / site (currently item level only)

Inventory

Replenishment logic across sites (basic modeling of replenishment routes extended)

Inventory

Decentralizing of pick, pack and ship (output orders) by facilitating a site grouping

Trade

• Sales order processing support with centralized order taking. • Static available to promise (ATP) logic across sites. • Sales lines associated with one site (validate site – warehouse

relation). • Method of delivery by sales lines. • On-hand visibility extended with filtering by site.

Trade

• Ability to aggregate demand for each site or across sites by supplier.

• Multiple ship to by line and site. • Validate three way matching scenarios effect with site level

matching. • Purchase order processing support / centralized purchasing.

Source



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Information Flow The Inventory management module is linked to related modules to provide an efficient flow of information through Microsoft Dynamics AX 2009. The information flow matches the inventory flow and provides lots of information about the financial aspect of the process.

Ledger transactions and Inventory transactions are the backbones of Logistics.

Inventory information is linked to the following:

• Accounts Receivable • Accounts Payable • Master Planning • Production • Product Builder • Human Resources • Projects • General Ledger

The Main form in Inventory is the Items form. It contains information about the company's goods, services, and bills of material.

Similarly, the Accounts receivable, Accounts payable, and Master planning modules also use the information that is stored in the Items form.

Summary The Introduction to Trade and Logistics course reviewed the following:

• Concepts of Trade and Logistics, in addition to Inventory Management

• Feature set of Microsoft Dynamics AX 2009 within the Trade and Logistics area

• Information flow of Inventory Management in Microsoft Dynamics AX 2009

The features within the Trade and Logistics area of Microsoft Dynamics AX 2009 will help companies keep track of the flow of purchase orders, sales orders and inventory across all distribution and production sites; both physically and financially.



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Quick Interaction: Lessons Learned Take a moment and write down three key points you have learned from this chapter:

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