Dynamics 365 Finance & Operations supports three practical “warehouse patterns” that you can mix across sites/warehouses depending on operational complexity and industry needs:

1. Basic warehousing (Inventory management–driven)
2. Advanced warehousing (Warehouse management / WMS–driven)
3. Warehouse Management only mode (WMS-only / warehouse-only legal entity)

Below is a crisp guide to help you choose.

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1) Basic warehousing (Inventory management–driven)

What it is

• You run warehouse operations primarily through Inventory management concepts: sites/warehouses, locations (optional), inventory status, counting, simple receiving/picking/packing processes.
• Best when you don’t need directed work, wave planning, or mobile-driven task flows.

Typical industries / scenarios

• Professional services + small stockroom (spares, demo gear)
• Light distribution (low SKU count, low throughput)
• Project-based inventory (construction projects holding stock at depots)
• Wholesale with mostly “pick from one area” and minimal put-away rules

When it’s the right fit

• You have few warehouse workers, minimal scanning, and processes can be handled with simple location control and manual picks.
• Your top priority is speed of implementation and lower process overhead.

Microsoft’s broader inventory/warehouse operations guidance frames this as the “core” inventory/warehouse capability set before you move into more automated WMS patterns.

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2) Advanced warehousing (Warehouse management / WMS–driven)

What it is

• You enable the Warehouse management module for a warehouse and run operations using:
  • Work (system-directed tasks)
  • Waves (planning/release)
  • Location profiles & policies
  • License plate / handling unit concepts
  • Warehouse Management mobile app with role-based menus and flows

Microsoft positions Warehouse management as a full WMS that supports manufacturing, distribution, and retail, and it integrates tightly with transportation, quality, purchasing, sales, transfers, and returns.

Typical industries / scenarios

• 3PL / Logistics providers (SLA-based operations, scanning discipline)
• Retail/DC operations (high volume outbound, wave release, cartonization patterns)
• Manufacturing (raw material staging, replenishment, quality holds, production supply)
• Food & beverage / pharma (traceability, controlled processes, compliance-driven execution)

When it’s the right fit

• You need system-directed execution (put-away rules, replenishment, picking routes).
• You want mobile scanning, guided task flows, and fewer “tribal knowledge” steps.
• You need strong controls (who did what, where inventory moved, when).

A practical “tell” is when you start designing mobile menus and step-by-step task flows for warehouse roles (receiving, put-away, picking, packing). Microsoft’s docs (and the public GitHub mirror) show how granular those mobile menu/work setups can get.

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3) Warehouse Management only mode (WMS-only / warehouse-only legal entity)

What it is

• A deployment option where Dynamics 365 SCM is used to run warehouse execution as a focused WMS, while you keep your existing ERP/OMS for finance/order capture.
• Microsoft’s documentation describes it as providing deployment options to run warehouse processes based on business needs, and includes setup for source systems, master data, and business events/integration patterns.

Typical industries / scenarios

• Companies modernizing warehousing without replacing ERP (e.g., legacy ERP, home-grown OMS)
• Group structures / M&A where the warehouse must serve multiple source systems
• 3PL-like shared warehouses that integrate to multiple clients/platforms

When it’s the right fit

• Your warehouse is the bottleneck, but an “ERP replacement” is not on the table this year.
• You want Microsoft’s mature WMS execution (mobile, work, wave, policies) while integrating with another system-of-record.

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Quick decision checklist

Choose Basic warehousing when:

• Low throughput, low automation needs
• Minimal scanning, simpler processes
• Fast rollout is the priority

Choose Advanced warehousing (WMS) when:

• You need directed work + mobile execution
• Higher volume, more workers, more locations/zones
• Stronger operational control (policies, workflows, traceability)

Choose WMS-only mode when:

• You want enterprise WMS execution but must keep an external ERP/OMS
• Integration-first approach is required (source systems + master data + events)

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Real-world examples (simple, concrete)

• Basic: A construction company has 2 depots and 1 storeperson. They receive materials weekly and issue to projects. They mainly need on-hand visibility and occasional cycle counts.
• Advanced: A retail distributor runs 25,000 order lines/day, needs wave-based picking, replenishment, and mobile scanning to reduce pick errors and ramp new staff quickly.
• WMS-only mode: A manufacturer keeps SAP for finance and order processing, but implements Dynamics 365 WMS to standardize warehouse execution across regions with mobile processes and directed work—integrated back to SAP.