techone --guide=logistics
Logistics and ERP: the system must follow the material flow
Lean without ERP data is blind. ERP without lean processes is just an archive. The right setup connects both.
Production and Distribution Logistics: Different ERP Requirements
Internal logistics moves materials within the company. Distribution logistics ships finished goods to customers. Both at once is the everyday reality of manufacturing businesses. ERP must cover both, or data blind spots emerge that people work around with spreadsheets.
Internal Logistics
Supplying production lines, inter-warehouse transfers, kanban loops. ERP must track material movement in real time and connect it to the production plan.
Distribution Logistics
Shipping finished goods, packaging, transport documents, shipment tracking. EDI connectivity to carriers and customer systems.
Inbound Logistics
Receiving materials from suppliers, incoming inspection, put-away. FIFO (First In, First Out) and FEFO (First Expired, First Out) must be in the system, not just in the warehouse manager's head.
Reverse Logistics
Returns, warranty claims, repair orders. In automotive, every movement requires documentation and traceability. ERP must handle reverse logistics as a proper process, not an exception.
Lean and ERP: Where They Complement, Where They Clash
Lean eliminates waste. ERP makes waste visible and measurable. The problem arises when lean is implemented on the shop floor but ERP is configured around a different process logic. Planning data and actual operations then diverge.
5S in the System: Master Data and Standard Procedures
Every workcentre, warehouse and handling unit must have a clear identity in ERP. Inconsistent master data is the most common root cause of planning errors. This should be cleaned up during process analysis, before implementation starts.
Kanban in ERP: When It Makes Sense
Dynamics 365 Business Central supports kanban cards and replenishment loops. It works where material consumption is relatively stable. With volatile demand, kanban in ERP breaks down and planners bypass it manually.
Standard Times and Capacities Must Align
Lean knows takt time and cycle time. ERP works with standard hours and workcenter availability. These must be aligned, otherwise the capacity plan is built on different numbers than lean calculations.
Visual Management: Dashboards Instead of Boards
Lean demands visibility. ERP can provide real-time status: what is being produced, where stock is, what is waiting for dispatch. Without integration, lean boards stay physical and manually updated.
EDI: When Automotive and Retail Leave No Choice
EDI (Electronic Data Interchange) is the exchange of business documents between systems without manual intervention. In automotive, EDI connectivity to customers is typically a condition of doing business. FMCG retail chains require it too.
EDIFACT and EANCOM
The most widely used EDI standards in Europe. EDIFACT covers orders, delivery notes, invoices and acknowledgements. EANCOM is a retail-specific subset with EAN barcodes.
Automatic Order Processing
A customer sends an order as an EDI message; ERP automatically creates a sales order. No manual re-entry, no delay, no transcription errors.
EDI Platform or Direct Connection
EDI providers (Editel, Seeburger, OpenText) act as intermediaries. They translate formats and manage connectivity to hundreds of trading partners. Direct API integration only makes sense for a single partner with an open interface.
Monitoring and Error Handling
Every EDI message must be acknowledged. A quantity or date discrepancy must trigger a workflow in ERP. Without active monitoring, EDI errors cause late deliveries that customers penalise.
WMS: ERP Module or Standalone System?
D365 Business Central has built-in warehouse functions that cover the needs of most manufacturing and distribution companies. When is that enough, and when is a dedicated WMS needed?
D365 BC warehouse is sufficient
- Goods receipt and issue with mobile terminals
- Batch and serial number tracking
- Stocktakes and cycle counting
- Inter-warehouse transfers and handling units
- FIFO and FEFO issue
- Warehouse up to approximately 5,000 active SKUs (stock keeping units)
Consider a dedicated WMS
- Automated warehouse (AGV - automated guided vehicles, automated storage and retrieval)
- Complex putaway strategies and zone management
- More than 20,000 active SKUs with dynamic locations
- Pick and pack with complex packing rules
- Cross-docking and shipment consolidation
- Standalone warehouse operation with no connected production
| Area | What ERP Handles | When It Falls Short |
|---|---|---|
| Receiving | Barcodes, incoming inspection, put-away | Automated receiving with robots or conveyors |
| Warehouse | FIFO/FEFO, batches, stocktakes, transfers | Automated storage systems, AGV, dynamic locations |
| EDI | Platform connectivity, message processing | Running own EDI infrastructure or more than 50 trading partners |
| Dispatch | Packing, transport documents, customer labels | Complex consolidation and cross-docking |
| Metrics | Turnover, fill rate, OTIF from system data | Real-time BI dashboards connected to ERP |
Logistics Metrics ERP Calculates Automatically
If a planner calculates inventory turnover in Excel, ERP is working as an archive, not a management tool. Here are metrics D365 can track without custom development.
Inventory Turnover
How many times per year stock is replenished. Low turnover means tied-up capital. ERP tracks all material movements and can calculate turnover by item, warehouse or category.
Fill Rate and OTIF
Fill rate: what percentage of orders are fulfilled completely. OTIF (On Time In Full): complete and on time. Automotive customers track these metrics and penalise misses.
Order Lead Time
From order receipt to dispatch. ERP captures every step and shows where orders wait. This is the input data for lean analyses and improvement projects.
Inventory Accuracy
The difference between ERP stock and physical stock. Daily discrepancies signal process problems. ERP shows where and when losses occur, not just at the annual stocktake.
Frequently Asked Questions
Do we need a dedicated WMS or does ERP warehouse suffice?
For most manufacturing and smaller distribution companies, the warehouse functions in D365 BC are sufficient. A dedicated WMS makes sense for automated warehouses, more than 20,000 active SKUs or complex putaway strategies. We evaluate this during process analysis.
What is EDI and when do we need it?
EDI (Electronic Data Interchange) is the automatic exchange of business documents between systems without manual intervention. Automotive customers typically require it as a condition of doing business. FMCG retail chains too. If a customer is asking for EDI or penalising you for manual order processing, start with an EDI platform evaluation before the first penalty invoice arrives.
How long does EDI integration take?
Connecting through an EDI platform to a single customer typically takes 4-8 weeks. It depends on the standard (EDIFACT, EANCOM, proprietary format) and how cooperative the customer is during testing. A direct API connection can be faster.
Can you implement kanban in ERP? How to connect lean with D365?
D365 BC supports kanban replenishment signals and can feed capacity data back to lean boards. The critical dependency is consistent routings and work centre setup. Without that, system data and physical boards diverge.
How do we measure OTIF or fill rate in ERP?
D365 BC records order date, promised delivery date and actual dispatch date. OTIF and fill rate can be calculated from this data without an external tool. For a real-time dashboard accessible to customers, the answer is a Power BI connection.
How do we transition from a paper-based warehouse to ERP with terminals?
First we reconcile the physical stock with the system state. Then we configure mobile terminals or handheld scanners. The key is training warehouse staff on the terminals in the warehouse, not in a meeting room. We document the paper processes first, then digitise them.
What ERP data is needed for a lean or Six Sigma project?
A lean project without ERP data is blind. You identify waste by observation and manual data collection, but cannot sustain the results. Without system enforcement, variance creeps back in within weeks. ERP gives lean projects the data for analysis and the metrics to hold gains.
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