August 4, 2025

Using Business Central to Solve the Inventory Puzzle for Manufacturers

For many manufacturers, inventory is both the lifeblood of the operation and one of its biggest headaches. Balancing supply with demand, avoiding costly stockouts or overages, and tracking fast-moving items across multiple locations can feel like solving a puzzle with missing pieces.

Microsoft Dynamics 365 Business Central can help. As a comprehensive, cloud-based ERP solution, Business Central provides manufacturers with powerful tools to manage inventory with greater visibility, accuracy, and control, and integrates seamlessly with production, purchasing, and sales.

The manufacturing inventory challenge

Manufacturers face complex inventory management challenges, including:

• Managing raw materials, Work-in-Progress (WIP), and finished goods inventory
• Dealing with variable lead times, supplier reliability, and production schedules
• Accurately forecasting demand while addressing seasonality and custom orders
• Navigating disruptions in global supply chains
• Tracking inventory across multiple locations or production lines
• Preventing costly mistakes like overproduction or obsolescence

Traditional inventory systems, often accompanied by a myriad of spreadsheets, frequently fall short as companies grow or diversify. These manufacturers require connected tools that provide real-time insights and automation across the entire supply chain and production process.

Business Central can solve the puzzle

Business Central Premium comes with powerful features that will help manufacturers tame the inventory beast:

Real-time inventory visibility

Business Central delivers a single, unified view of inventory across warehouses, production floors, and locations. Features such as Item availability by location, event, or variant let you see:

• On-hand quantities
• Reserved or allocated stock
• Items in transit
• Safety stock levels
• Item usage history

Business Central allows users to factor in sales orders, production orders, and purchase orders so manufacturers can know what is available now as well as what will be available in the future.

Automated replenishment with Planning Worksheets

Manual reordering is inefficient and error-prone. Business Central uses reorder policies and planning parameters (like reorder point, maximum inventory, and lead time) to automate replenishment recommendations. (For more information on reorder policies and planning parameters, see our blog series, Understanding the Reordering Options in Business Central and When to Use Them.)

The Planning Worksheet can provide suggested actions such as:

• Create Purchase Orders
• Create Transfer Orders
• Suggest Production Orders
• Cancel or adjust existing orders

If you don’t use manufacturing or only have Business Central Essentials, you can still utilize the reorder policies with the Requisition Worksheet to generate purchasing suggestions.

These tools help avoid both stockouts and overstocking, freeing planners to focus on exceptions and strategy.

Integrated production and inventory

In Business Central, inventory and production planning are tightly connected. When you create a production order, Business Central checks inventory availability and allocates raw materials based on the Bill of Materials (BOMs).

You can also:

• Track component consumption
• Record output and scrap
• Monitor WIP inventory
• Use backflushing to automate material consumption posting

This integration ensures accuracy in both inventory and costing, helping manufacturers stay lean and responsive.

Lot, serial, and bin tracking

Traceability is critical for manufacturers in regulated industries or those working with complex assemblies. Business Central supports:

• Lot and serial number tracking for quality control and traceability
• Bin tracking for granular warehouse management
• Directed put-away and pick for optimizing warehouse efficiency

These capabilities reduce risk and ensure compliance with customer or regulatory requirements.

Inventory costing and valuation

Business Central supports multiple costing methods, including FIFO, LIFO, Standard Cost, and Average Cost, allowing manufacturers to align inventory valuation with their financial reporting strategy.

You can also:

• Run inventory revaluation to reflect market pricing changes
• Track variances between standard and actual costs
• Allocate overhead to production orders

This level of control helps ensure that profitability analysis and financial reporting reflect the actual cost of goods.

Forecasting and demand planning

Using historical usage, seasonality, and sales trends, Business Central can help generate purchasing and production forecasts. These forecasts feed into Material Requirements Planning (MRP), so you can plan ahead—even in volatile markets.

The Sales Forecast Worksheet allows you to:

• Create demand forecasts at the item or SKU level
• Analyze trends over time
• Compare forecasts against actuals
• Use AI-enhanced features (via integration with Azure AI and Power BI)

Extending inventory management with Microsoft ecosystem tools

Business Central’s inventory features are powerful on their own, but even more so when extended with other Microsoft tools:

• Power BI – Create dashboards to monitor slow-moving items, top SKUs, safety stock levels, and inventory turnover.
• Power Automate – Trigger workflows, such as notifying buyers when safety stock has been breached.
• Excel integration – Export planning worksheets to Excel for offline collaboration, then import changes directly.
• Copilot in Business Central – Use natural language prompts to analyze inventory trends or summarize variances.

Best practices for using Business Central to optimize inventory

Here are a few tips to get the most out of your Business Central system:

• Define and tune planning parameters regularly. Don’t “set it and forget it.” Review lead times, safety stock levels, and reorder points periodically.
• Use dimensions wisely. Apply item dimensions for location, product family, or batch to enhance reporting and segmentation.
• Leverage ABC classification. Focus efforts on high-value, high-volume items using the Pareto principle.
• Close the loop. Record consumption and output accurately to keep WIP and finished goods in sync.
• Audit regularly. Use physical and cycle counts to validate your on-hand inventory and catch issues early.

ArcherPoint can help

Inventory can be a complex puzzle for manufacturers, but Business Central provides the pieces you need to solve it. By connecting planning, production, purchasing, and warehouse operations into a unified system, you gain the visibility and control needed to streamline operations, reduce waste, and meet customer demand with confidence.

If you’re a manufacturer struggling with disconnected systems or outdated processes, now is a good time to contact the manufacturing experts at ArcherPoint by Cherry Bekaert and take a closer look at what Business Central can do for your inventory operations.

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