Location Movement Scanning in Dynamics 365 Finance & Operations: How a Leading North American Commercial Vehicle Manufacturer Improved Warehouse Traceability

1. Introduction

In Microsoft Dynamics 365 Finance & Operations, the warehouse is only as accurate as the data captured on the floor. Every receipt, put-away and internal move has to be recorded against a precise physical location, otherwise on-hand inventory, replenishment and downstream planning all drift out of alignment. For high-volume manufacturing and distribution operations, keying that information manually is slow, error-prone and impossible to audit after the fact.

Location movement scanning solves this by making the warehouse location itself the anchor of every transaction. Instead of typing where something is, an operator scans it. Dynamics 365 F&O Warehouse Management (WMS) turns those scans into directed work — the mobile device tells the worker exactly where to go, what to pick and where to put it, and the system records each step in real time.

This article walks through how location movement scanning was designed and delivered for a North American commercial vehicle manufacturing operation as part of a Warehouse Management, Inventory and Scanning rollout. It covers how the physical warehouse was modelled in D365, how the Aisle–Rack–Shelf–Bin location structure was created, and how Work templates, Location directives and Mobile device menu items work together to convert a floor movement into a traceable, scanner-guided sequence — all closing out cleanly against inventory.

2. The Business Problem

The operation runs a large, multi-zone warehouse footprint where materials move continuously between receiving, pick stations, sub-assembly areas and staging. Before the D365 F&O rollout, location tracking depended heavily on manual entry and local knowledge. Workers knew where things were, but the system frequently did not.

As volume and layout complexity grew, several operational problems surfaced:

1. On-hand inventory did not reliably reflect the physical location of stock.
2. Internal movements between aisles, racks and stations were captured inconsistently, or after the fact.
3. There was no directed, enforced sequence for multi-step movements, so steps were skipped or done out of order.
4. Work could not be traced — it was difficult to prove who moved what, from where, to where, and when.
5. Manual keying of long item and location codes introduced errors that rippled into planning and replenishment.
6. Reconciling inventory at the end of a work order required time-consuming manual investigation.

The business needed the physical warehouse represented accurately inside D365, and every movement on the floor captured through scanning — directed by the system, enforced in the right order, and reconciled against inventory without manual guesswork.

3. The Solution

Dynamics 365 F&O Warehouse Management provides the full building blocks for scanner-directed movement: a structured location hierarchy, Work templates that define the sequence of steps, Location directives that decide where each step happens, and Mobile device menu items that expose the process on the handheld scanner.

The solution was assembled in layers — first the physical location model, then the worker enablement, then the three configuration objects (templates, directives, menu items) that turn a movement into directed work, and finally the inventory reconciliation that closes it out.

3.1 Building the Warehouse Location Model (Aisle–Rack–Shelf–Bin)

The foundation of location scanning is a location structure that mirrors the physical warehouse. In this rollout the model followed an Aisle–Rack–Shelf–Bin hierarchy, using a location profile (RSBA) applied consistently across warehouse zones such as floor locations, tugger lanes and rack storage.

Each physical position becomes an addressable location in D365 that a barcode can represent. Getting this hierarchy right is what allows a single scan to resolve to an exact bin.

Location hierarchy
  Site
   └─ Warehouse
       └─ Aisle
           └─ Rack
               └─ Shelf
                   └─ Bin   ← scannable location

3.2 Creating Locations with the Location Setup Wizard

Locations were generated using the Location setup wizard rather than created one by one, which keeps naming consistent and saves considerable effort across a large footprint.

Navigation

Warehouse management > Setup > Warehouse > Locations
                             > Location setup wizard

Steps

1. Open the Location setup wizard
2. Set up all relevant details (profile = RSBA, aisle/rack ranges)
3. Click Create
4. Repeat per bin identifier:
     Enter "A" → Create
     Enter "B" → Create
     Enter "C" → Create

Because the bins were A, B and C, the create step was repeated for each. To verify, open the Location field, filter by “C”, and confirm every location generated for the “C” rack is present. The same wizard-driven approach was reused across the different warehouse zones.

3.3 Enabling the Worker on the Warehouse Mobile App

Scanning is performed by a warehouse worker signed into the Warehouse Management mobile app. Each worker must be linked to the warehouse (or warehouses) they operate in before they can be directed to its locations.

Navigation

Warehouse management > Setup > Worker

Steps

1. Select the worker
2. Click Warehouse
3. Click New and add the required warehouse

Once the worker is associated with the warehouse, the mobile device can present directed work for that location set.

3.4 Work Templates

Work templates define what steps a movement consists of — the ordered sequence of Pick, Custom and Put operations the worker is guided through on the scanner. Different processes get different templates.

Purchase order receipt

Work order type : Purchase orders
Template name   : PO Receipt
Work class ID   : Purchase  (all lines)
Sequence        : 3 lines → Pick · Custom · Put

Inventory movement (multi-stage routing)

Work order type : Inventory movement
Template name   : MaterialPick
Work class ID   : InventoryM  (all lines)
Sequence        : 12 lines → Pick · Custom · Put
Stop work flag  : Enabled on lines 4, 7 and 10
                  (subsequent Pick lines → enforces session breaks)
Directive codes : LaserPort, Brakes, Ecoat/SLC  (assigned to Put lines)

The 12-line routing with enforced stop-work breaks is what makes complex, multi-station moves reliable: the worker cannot skip ahead, and each stage is confirmed by a scan before the next begins.

3.5 Location Directives

Location directives decide where each template step happens — which location to pick from, and which location to put to. They are the logic layer that resolves a step to a physical bin.

Purchase orders (Pick directive)

Work order type          : Purchase orders
Directive name           : MaterialPickStation
Directive code           : MaterialPickStation
Locate by                : Item
Applicable disposition   : Exact match

Inventory movement (Put directive)

Work order type : Inventory movement
Directive name  : LaserPort
Directive code  : LaserPort   (links to the matching work-template step)
Scope           : Single item

The directive code is the thread that ties a directive to its work-template step, so the right location logic fires at the right point in the sequence.

3.6 Mobile Device Menu Items

Mobile device menu items expose the process on the handheld scanner — they are the buttons the operator taps to start or resume work.

Purchase Put menu

Menu item name        : Purchase Put
Mode                  : Work
Use existing work     : Yes
Directed by           : None
Handle by license plate : Disabled
Work class ID         : Purchase

Movement menu (resuming existing work)

Menu item name        : Movement
Mode                  : Work
Use existing work     : Yes
Directed by           : User directed
Handle by license plate : Disabled  (prevents scanner looping)
Work class ID         : InventoryMovement

Disabling Handle by license plate on the Movement menu was a deliberate choice to prevent the scanner from looping, keeping the operator moving cleanly through the directed steps.

3.7 The Multiple Scanning Movement Process

With templates, directives and menu items in place, movements within a warehouse zone are captured step by step exactly as the location directives dictate. Every movement is created as work with status Open, and the operator executes it against that open work.

Flow
  1. Movement is generated → Work created (status = Open)
  2. Operator taps "WH Movement" on the mobile device
  3. Device directs each step per the Location directives
  4. Operator scans location / item at each Pick and Put
  5. Stop-work breaks enforce the correct multi-stage sequence
  6. Work completes → inventory reflects the new location

Because each step is scanner-directed, the sequence cannot be short-circuited, and the movement is traceable end to end — who moved what, from where to where, and when.

3.8 Inventory Adjustment Journals for Work-Order Closure

To close the loop at work-order completion and correct any residual variances, inventory adjustment journals reconcile on-hand quantities.

Navigation

Inventory management > Journal entries > Items
                     > Inventory adjustment

Steps

1. Open the existing journal, or click New
2. Click New in the bottom pane to add an item line
3. Enter the details, for example:
     Item      : (representative part number)
     Quantity  : +10 LB
     Warehouse : 018
     Location  : 018
4. Click the Inventory tab to check the resulting quantity
5. Click Post to post the journal

4. Implementation

The end-to-end flow was designed around the physical movement patterns observed on site. Locations were first modelled with the Location setup wizard, workers were associated with their warehouses, and the three configuration objects — Work templates, Location directives and Mobile device menu items — were built to work as a single directed-work engine.

A purchase-order receipt flows through the three-line PO Receipt template (Pick, Custom, Put) via the Purchase Put menu, landing stock in the correct location. Internal moves flow through the twelve-line MaterialPick routing, with stop-work breaks on the subsequent pick lines forcing the operator through each stage in order, resumed through the Movement menu. At every step the location directive resolves the exact bin, and the operator confirms it with a scan.

Movements are captured step by step as work with status Open; the operator taps WH Movement and proceeds through the directed steps on the handheld. Once movement is complete, inventory adjustment journals reconcile any residual variance so the work order closes against accurate on-hand inventory.

5. Considerations & Limitations

Scanner-directed movement is powerful, but a few configuration decisions materially affect how it behaves on the floor. The table below summarises the key design levers used in this rollout and what each one controls.

Note: Location scanning depends on a correctly modelled location hierarchy. If the physical layout changes — new racks, relocated stations, added zones — the location model, directives and templates must be revisited so the scanner keeps directing to the right place.

6. Business Impact

Moving from manual location tracking to scanner-directed movement changed how the warehouse runs day to day, without adding bespoke applications on top of standard D365 F&O.

Key benefits included:

1. Real-time, accurate on-hand inventory tied to precise bin-level locations.
2. Every movement directed and enforced in the correct sequence, eliminating skipped or out-of-order steps.
3. Full traceability of who moved what, from where to where, and when.
4. Fewer keying errors, because operators scan rather than type long item and location codes.
5. Faster, more reliable reconciliation at work-order closure through inventory adjustment journals.
6. A scalable model — the wizard-driven location setup and reusable templates extend cleanly to new zones and warehouses.

The result is a warehouse where the system and the floor stay in sync, giving planning and replenishment a trustworthy foundation to work from.

7. FAQs

8. Conclusion

Location movement scanning turns the warehouse floor from a blind spot into a live, accurate data source. By modelling the warehouse down to the bin and pairing that model with Work templates, Location directives and Mobile device menu items, Dynamics 365 F&O converts every material movement into directed, enforced and fully traceable work — captured on a handheld scanner rather than keyed in after the fact.

For manufacturing and distribution operations wrestling with inventory accuracy and untraceable internal moves, the pattern is repeatable: get the location hierarchy right, let the templates and directives do the thinking, and let the scanner guide the worker. The payoff is a warehouse where physical reality and system data finally agree — in real time.