How does Microsoft Dynamics 365 inventory management help a business?

November 25, 2021

Many companies execute their supply chain management through different applications that are either outsourced or developed internally. When applications and their data schemes are unique, the time spent in synchronizing them and avoiding duplication becomes quite a hassle.

Therefore, it is recommended to use software solutions such as Dynamics 365 to manage inventory as it seamlessly connects all applications. Its intelligent insights feature generates real-time reports granting businesses much-needed visibility in their supply chain and inventory.  

Below we will cover the key reasons why companies should use Dynamics 365 to manage their inventory. But before we do that, let us talk briefly about the industries this is relevant for.  

Retail industry

One of the core competencies on which the retail industry competes is agility, robust supply chain management, and quick order to delivery processes. All of this cannot happen without a sound, reliable, and blazing-fast supply chain, and inventory management system. Under the retail industry, the same need is prevalent for any vertical, be it Fashion and Apparel or Grocery.  

ECommerce industry

While it lies under retail, it is important to mention it separately due to the crucial nature of ensuring that the online or in-app customer sees the right (read: accurate) inventory at the right (read: in real-time) to avoid any unpleasant customer experiences.  

Textile industry

Textile factories need a software solution that could manage everything from managing raw materials to storing the final products in the warehouses or displaying them in online or physical stores. Dynamics 365 brings innovative functionalities that warrant operational efficiency and offer solutions to all the pain points in supply chain management. Businesses can get comprehensive control over their production management, product characteristics, quality checks, merchandise management, convenient store distribution, and mobile functionalities with Dynamics 365 textile industry.

Manufacturing industry

Manufacturing businesses face multidimensional challenges and can no longer conduct processes using old ways due to the mushroomed growth of the global economy. Businesses in the manufacturing industry can use Dynamics 365 to digitalize raw material procurement, product design, inventory management, production machine scheduling, process optimization, and resource allocation.

Wholesale and distribution industry

Many retailers and manufacturers have started utilizing online business models to keep up with the rapidly evolving customer demands. If businesses in the wholesale and distribution industry need to keep up with them, they need to move from a catalog-driven model to Dynamics 365. This software system will allow them to digitalize operations, run warehouse operations where inventory goods are moved frequently, manage clients, secure sales channels, optimize staff productivity, and feature products online.

Other industries

Goes without saying that this is applicable for any industry where you have a supply chain and inventory management process, which is one of the core business areas where cost and process optimizations can reap countless benefits. Be it pharmaceutical, health and hospital care, automotive, etc.

Now that we have covered the industries this applies to, here are 6 key reasons to implement and adopt Dynamics 365 to manage inventory:

All apps and modules integrated into a single solution

Dynamics 365 is a single software solution that integrates core business processes. This allows organizations to streamline planning, production, inventory, warehouse, stock, and transportation. Companies can manage inventory without encountering any data scheme conflicts and wasting time mitigating data duplications.  

AI-powered predictive insights with IoT capabilities

Dynamics 365 offers intelligent predictive insights powered by Artificial Intelligence (AI) and supports the Internet of Things (IoT) capabilities, allowing them to control the life span of perishable items and monitor fresh product storage from any location.  

Businesses operating at various locations need to move inventory items regularly. Dynamics 365 secures procurement process by not only identifying the fastest route to a particular warehouse but also by offering the least expensive shipment rate. It comes complete with all the tools needed to ensure coordination and agility and allows organizations to stay informed about inventory items and timely respond to orders.  

Real-time visibility into inventory items

Dynamics 365 inventory management offers real-time visibility into product inventory which allows them to control inbound and outbound inventory operations. Users can control the purchase order receiving process for batch-controlled items such as registering items at inbound locations, generating post product receipts, inventory design layout, location policies, etc.  

Outbound inventory operations such as planning process for outbound shipments, accurate picking against transfer orders, picking route for staff, batch picking based on the expiry date, replenishment processes after picking, stock counting, and warehouse labor utilization can also be controlled using Dynamics 365.  

Similarly, inventory management processes such as vendor lead time, managing aged inventory, and controlling shelving of top-selling items can also be digitalized. The software solution tracks inventory efficiently and features details into everything placed in different warehouses. Dynamics 365 supports cloud-based deployment which not only enables efficient item tracking but also allows inventory managers to easily locate any item from any device connected to the internet.  

Here is how an Advanced Warehouse Management System (AWMS) built with Microsoft Dynamics AX drove business efficiency at Bani Yas Cooperative Society.

Azure Analytics for data-powered forecasts

The software solution uses Azure Analytics to optimize planning for manufacturing fulfillment operations through real-time flexible resource management. Companies also gain data-powered forecasts into their demand and plan capacity which allows them to plan and gain a competitive edge over the competition. These forecasts are also used to manage inventory items and foresee shortages and overages.  

Develop scalable apps using Power Platform  

Depending on the business needs, inventory management staff may require new web or mobile apps to overcome roadblocks. Power Platform allows teams to develop low-code, no-code apps without requiring help from the IT department. These apps are scalable and come complete with data unification capabilities. Business can also build chatbots to assist fresh staff working with warehouse inventory to know about item placement and other knowledge they may be requiring at diverse levels.  

Power BI integration for inventory analytics and reporting

Organizations can integrate Power BI with their Dynamics 365 solution to gain business intelligence and data analytics into their supply chain and this includes inventory as well. The analytics can further be used to generate comprehensive reports on inventory items. Power BI also incorporates data from connected applications to measure relevant KPIs (Key Performance Indicators) and give businesses a complete view of all their operations.

Here is an example of how Ruba Digital, an electronics retailer, experienced a company-wide data-driven revolution through their customized business intelligence portal.


In the current business environment, companies need to synchronize their capabilities, strategies, resources, and operations to gain a competitive advantage over the competition. Therefore, organizations implementing inventory management solutions such as Dynamics 365 will always be a step ahead as they will not only be able to streamline inventory processes but will also efficiently predict customer demands to plan their future production batches.