Inventory management in Microsoft Dynamics AX and beyond – Intro

This posting has been inspired by the assignment we did recently in our Operations course at my business school taught by Professor David A. Johnston. We had special software application on the Internet that simulated the production facility consisted of: incoming customer orders, outgoing purchase orders, incoming materials from supplier, buffers and queues, stations (machinery), cash and completed jobs shipped to customers.

So, basically, our work on that assignment split into the following integrated streams:

• Capacity management – to ensure we don’t have bottlenecks and growing queues of materials and WIP at our stations on the shop floor
• Inventory management – not to get short of materials and ensure economic purchasing
• Cash management – the goal of the assignment was to maximize our cash position by the end of the simulation period of 268 days. We could pay for materials, receive payments from customers, buy and get rid of machines, and accumulate interest on our cash balance.
• Output management – focused on customer service quality in terms of customer’s order lead time (order lead time directly affected our prices and margin)

As we had several competitive teams going through this simulation in parallel, each team needed to be as lean as possible in terms of saving its cash and at the same time trying to maximize its net cash flow.

Even though that was a simplified model, it gave me some good practical sense of being in COO’s position and called for my experience in the real world of inventory management improvements in ERP implementation projects. In this series of posts I wanted to focus on various aspects of Inventory Management best practices and how they could be realized with Microsoft Dynamics AX.

To be continued ...

© Andrey Maslov