Backflushing in Dynamics NAV

Just got a very interesting question from an user, related with backflushing.

Let's begin with the definition of Backflush (setting available in the Item Card). This is the automatic deduction (consumption) of the components used in manufacturing triggered by the completion of the production order (status change to finished). Backflushing could lead to inaccurate inventory records. Consequently, it is only recommended when:
- component has a short or inmediate replenish lead lime
- component is not critical from a stock availability perspective
- manufactured item in the production order is also very short

The three above pre-conditions to use backflush lead to a minimize the consequences of having a inaccurate stock data from the time where components where actually consumed (mostly when releasing the production) to the moment where consumption was actually posted (when finishing the production order).

To emphasize the above is just APICS ... it is not Dynamics NAV interpretation.

So, user came with a question why backflushing is trigered when finishing the production order and not when posting the output. As described:
- component stock is not critical ... so it should not matter since there would be enough stock
- component has a very short or minimal lead time ... again, it should not matter when we record the consumption since replenishment will be done almost inmediately
- or, lead time of the manufactured item is short ... so, again, the moment when we record this should not matter since it should not take significant time from the released of the production order to when it is finished

Binding flag in table 337

When using "Order" replenishment policy in item card, Binding flag in table 337 will be populated to "Order-to-Order". This how Dynamics NAV solves the implementation of the pegging concept.

When executing planning routine from any Worksheet, it is important to know what is the value of this flag to better understand the actions suggested. In some cases, Navision will propose to cancel a supply (ie. Purchase order) when it is also suggesting to create a new supply on the same date with same quantity. In other words, it seems to propose cancelling a supply when it needs the exact same supply profile (date and quantity).

Even though this does not seem correct (which sounds like to be understable), this might be working as intended in some cases. As an example of what could be the reason for this odd behaviour is:
- it proposes to cancel the supply since it is not pegged to any demand (in other words, binding column does not have any value).
- secondly, it proposes to create another supply which would be pegged to the demand. This means a new reservation entry will be created with Binding column set to Order-to-Order.

Again, this is not to say current design in Dynamics NAV is optimal. This is just to describe what is the design in the back.

Planning Flexibility: firming vs. fixing supplies

Planning Flexibility ... very frequently, users expect this flag as a tool to firm supplies. However, the right way to define what is this flag for is as a tool to Fix supplies but not to firm supplies. How is this flag used in the planning engine?

Just to start with, Planning routine in Dynamics NAV actually performs two actions:
- checks inventory availability
- then, based on the inventory availability, it suggests action messages with proposed changes on the inventory profile.

In the other hand, Planning Flexibility is a flag, which is available on production and purchase orders, with two permissible values: Unlimited and None.

When Planning Flexibility is set to Unlimited means supply (purchase, production) will be use during the planning routine in both inventory availability calculation and the action message proposals. Therefore, planning could request a quantity or due date change of this supply with flag set to Unlimited.

However, if Planning Flexibility is set to None, change proposals (action messages from second step in planning) will ignore any supply (purchase, production) with this flag set to None. This means, supply will be used to calculate inventory availability but will not be considered to propose changes (date, quantity changes) since it is considered as a fixed supply.

SCM related with NAV? Why for?

Or better ... why not?
I just got a word with one of my friends at work (thanks Luis :-) ) and he suggested this would be a nice way to share Dynamics NAV SCM knowledge with other people out there.

I am dealing with Dynamics NAV on my daily work: bugs, design questions on how is Dynamics NAV suppoused to work, ... But besides dealing with Dynamics NAV ... I am an SCM evangelist, dreamer, believer ... Yes, I have been working with SCM tools for the last 10 years from both ERP and/or MRP II functional perspective.

Having this in mind, I would be adding content to this blog of all those nice questions, tips, tricks or functional comments related with SCM which would good to share. Final goal would be to use this blog to compile all those tips and tricks and use it as a reference.

Just to ensure we all readers of this blog have common understanding, SCM is considered to be all those business processes related with:
- Sales & Purchase Profit (sales and purchase order management)
- Inventory Optimization (planning, inventory management)
- Warehouse Management
- Cost Reduction (Cost method and application)
- Service Management