Dynamics AX/Dynamics 365 for Operations Negative Warehouse Inventory

The topic of Negative Inventory has been one of those “chicken or the egg” conversations for a long time. At first blush the answer may seem easy! But as the “what if” scenarios are brought up, the answer becomes a tangled web.

Staunch process-base material managers typically say there is no need to ever allow inventory to go negative because it is not logically possible. More liberal (possibly more realistic) inventory managers know timing may be the issue and it will all work out in the end.

Dynamics AX allows for negative inventory (physical and/or financial) in a controlled fashion. Negatives could be allowed only at the Item Model Group level. That means only groups of items would be allowed to go negative. Changing an item model group attached to an item once transactions occur, however, is not possible (or at least, not easily possible), so the initial item model group assignment could limit transaction capabilities at a later date. The so-called sticky wicket.

In addition, Dynamics AX allows for negative inventory at a Store level, if the Retail functionality was configured.

Continuous improvement on the part of Microsoft has resulted in the delivery of a hotfix (KB3135592) that enables Dynamics AX 2012 to be configured at a warehouse level to allow negative inventory. The hotfix is included in AX 2012 R3 CU11. The setting to allow the negative inventory at the warehouse level can be found in the Location Profile set up form in the General Fast Tab.

Allowing Negative Warehouse Inventory

1. Create a Location Profile to allow negative inventory:

  • Navigate to Warehouse Management > Setup > Warehouse Setup > Location Profiles
  • As a step in the Location Profile setup, check the “Allow negative inventory
  • Note that if License Plate Tracking is enabled, this location profile cannot allow negative inventory.
  • Save the Location Profile.

AX 2012 R3:

AX Negative Inventory

Dynamics 365 for Operations:

D365 for Operations Negative Inventory

2. Using the Location Set Up Wizard, a Location Profile is assigned to the Warehouse and Zone combinations:

  • Navigate to Warehouse Management > Setup > Warehouse Setup > Location Setup Wizard
  • Select the warehouse from the drop down
  • Select the Zone ID from the drop down
  • Select the Location Profile ID from the drop down
  • Click the “Build” button
  • The Location is built with the ability to allow negative inventory.

AX 2012 R3:

Dynamics 365 for Operations:

Note: Alternatively, Locations can be created and maintained, including assignment of a location profile directly by Navigating to Warehouse Management > Setup > Warehouse Setup > Locations.

AX 2012 R3:

Dynamics 365 for Operations:


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