Drag and Drop Question A company implements warehouse locations in Dynamics 365 Supply Chain Management. You need to configure location directives for inventory movement. Which configurations should…

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D365 SCM Location Directive Strategies - Explained

Important note: The question as presented is missing the requirements column (the left side of the drag-and-drop). The arrangement order (1, 2, 3) maps strategies to requirements. Based on standard D365 SCM exam format, the implied requirements are:

Placement 1: FEFO batch reservation

First Expired, First Out - this strategy is used on pick location directives for batch-tracked items. When selected, the system ranks available locations by the expiration date of the batch held there, ensuring the soonest-to-expire batch is consumed first.

Why here: Any requirement involving perishables, pharma, food, or compliance with expiration-date picking maps exclusively to this strategy. No other strategy considers batch expiry.

Common mistake: Confusing FEFO with FIFO. FIFO (First In, First Out) is about receipt date, not expiration date. FEFO is batch-specific and requires batch tracking to be enabled on the item.

Placement 2: Consolidate

This strategy directs put-away to a location that already contains the same item number. The goal is inventory consolidation - reducing the number of locations holding a given SKU to maximize warehouse density.

Why here: When the requirement is to co-locate like inventory (common in retail/distribution), Consolidate is the correct choice. It won't pick an empty slot; it actively seeks existing stock of the same item.

Common mistake: Thinking Consolidate works for picking - it is a put-away strategy. Also, candidates sometimes confuse it with "Fixed location" assignment, which is a different concept entirely.

Placement 3: Empty location with no incoming work

This strategy finds a location that is:

• Currently empty (no on-hand inventory), AND
• Has no open work directing inventory into it

Why here: If the requirement is to store items in a completely free slot, "Empty location with no incoming work" is more precise than a generic "empty location" strategy. It prevents double-booking a location that is physically empty but already has a pending put-away work order inbound.

Common mistake: Candidates sometimes select "Empty location" (without the "no incoming work" qualifier) and miss that a location can appear empty but still be reserved. The "no incoming work" clause is what makes this strategy warehouse-safe in high-throughput environments.

Key Takeaway

These three strategies cover the three most common location directive use cases in D365 SCM:

• Compliance/perishables → FEFO
• Space optimization (put-away) → Consolidate
• Clean slot reservation (put-away) → Empty location with no incoming work

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