A common conversation we have with distributors after a Dynamics 365 Finance & Supply Chain Management implementation goes something like this: “We turned on replenishment, but it’s not really helping us.”
In most cases, the issue isn’t the system. Dynamics 365 Finance & Supply Chain Management (D365 FSCM) has strong warehouse management capabilities, and replenishment is one of the features designed to make warehouse operations more efficient. The real challenge usually comes down to process discipline and operational planning.
Replenishment is a powerful capability when it’s implemented correctly. But without the right processes and the right people responsible for executing them, it’s easy for distributors to fall back into reactive warehouse management.
Why replenishment matters in warehouse operations
At its core, replenishment tools and processes exist to keep pick locations stocked so orders can move through the warehouse without interruption. When inventory levels in a pick location drop below a certain threshold, the system generates work to move additional inventory from bulk storage to the pick location.
When this process runs consistently, it creates a clear separation of responsibilities:
- Pickers focus on fulfilling orders.
- Replenishment teams focus on keeping pick locations stocked.
That separation improves efficiency throughout the warehouse. Pickers aren’t waiting for product, and inventory moves predictably.
But when replenishment processes break down, the warehouse shifts into a reactive mode, moving inventory only after orders are already waiting to be fulfilled.
2 common replenishment strategies in Dynamics 365
Dynamics 365 Finance & Supply Chain Management supports multiple replenishment methods, but two approaches appear most frequently in warehouse implementations: min/max replenishment and wave demand replenishment.
Min/Max replenishment
Min/max replenishment is proactive. Each pick location is configured with a minimum and maximum stocking level for specific items. When the inventory level drops below the minimum threshold, the system generates replenishment work to move additional inventory from bulk storage to the picking location so that stock levels return toward the maximum quantity.
This approach helps maintain adequate inventory in picking locations and ensures that products are available when warehouse workers begin fulfilling orders. In many warehouses, this replenishment process is run periodically, often as a scheduled batch job, so pick locations can be stocked before active order picking begins.
Wave demand replenishment
Wave demand replenishment works differently. Instead of replenishing locations based on predefined inventory thresholds, replenishment is triggered by actual outbound demand.
When orders are released to the warehouse and the system determines that the quantity required for an order cannot be allocated from the pick location, the system generates replenishment work during wave processing.
This ensures the order can eventually be fulfilled, but it can also introduce operational complexity because replenishment work may occur while orders are actively being processed.
That can lead to:
- congestion in warehouse aisles
- delays while pickers wait for inventory
- competing tasks between picking and replenishment
For this reason, wave demand replenishment is often used to supplement min/max replenishment, helping ensure enough pick-face inventory is available between scheduled replenishment cycles.
Why replenishment breaks down
Replenishment doesn’t typically fail because of system configuration. It fails because the operational processes required to support it aren’t maintained. One of the most common issues is reverting to pre-implementation practices.
After a new system goes live, teams often closely follow replenishment routines. They run replenishment in the morning, locations stay stocked, and the warehouse operates smoothly. But over time, those routines fall away. Replenishment work doesn’t get completed regularly, and pick locations start running empty. At that point, the warehouse starts relying on reactive replenishment again.
Another challenge is staffing. Many warehouses don’t have dedicated replenishment teams. The same employees responsible for picking orders are also expected to replenish inventory.
When order volume increases, picking naturally takes priority. Replenishment work gets pushed aside, and inventory flow becomes inconsistent.
Getting the most out of replenishment in F&SCM
Distributors implementing replenishment can improve results by focusing on both technology and operations.
A few best practices we recommend include:
- Establish a consistent replenishment schedule at the start of each shift.
- Separate picking and replenishment responsibilities when possible.
- Regularly review min/max thresholds to ensure they reflect actual demand patterns.
- Monitor replenishment work queues to prevent backlog.
- Train warehouse staff so they understand how replenishment fits into the broader fulfillment process.
When these practices are in place, replenishment becomes a powerful operational tool rather than just another system feature.
Technology works when the process works
Dynamics 365 Finance & Supply Chain Management offers strong warehouse management capabilities, and replenishment is one of the features that can significantly improve warehouse efficiency. But technology alone doesn’t guarantee success.
Distributors that see the greatest benefit from replenishment pair system automation with disciplined processes, trained staff, and clear operational ownership.
This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.
