This is what happens in the video
In Microsoft Dynamics 365 Business Central, you organise your inventory using three different concepts: locations, zones, and bins. A location is your physical warehouse or site, and it controls planning, availability, and the financial value of your inventory. Zones and bins are part of the warehouse functionality, and you use them to track exactly where an item sits within a location.
You decide per location whether to use warehouse functionality with zones and bins, or just the standard inventory functionality. Warehouse functionality lets you track items down to the specific bin and handle them accurately, but it adds complexity to the system. Locations without warehouse functionality treat all stock as a single quantity available on that location.
Salespeople, purchasers, planners, and finance work with location codes and see the total quantity available on a location. Warehouse staff work with bins and zones, because they need to know exactly where to find and place each item. The same item can sit in many different bins within one location.
Locations control planning, availability, and inventory value
A location in Business Central is about money, planning, and availability. Locations are normally physically separated, meaning they represent your different real-life sites. You might have a production location, distribution locations, and sales locations, and you use transfer orders to move items between them.
A location holds item ledger entries with a location code, and underneath those sit the value ledger entries. This is why the people in purchasing, sales, finance, and planning all think in location codes. When you work only with the location, without bins and zones, you are working with the standard inventory functionality.
You can also have special locations like a quarantine location. It can sit physically on the same site as another location, but you set it up separately in Business Central.
Zones and bins divide a location for warehouse handling
Bins are a sub-level to zones, and zones are a sub-level to location. When you set up a location with warehouse functionality, you divide it first into zones, then into bins.
A zone could be a picking zone, a shipping zone, a receiving zone, or a high-bay zone for back-end storage. Each zone is divided further into bins, which is where you actually hold the items. The zone level and the bin level live in the warehouse entries, and this is warehouse functionality.
Bins are normally only relevant to the people working in the warehouse, because they need to know where an item is to be found. One item can be placed in many different bins within the same location. The sales and purchase people see this as one quantity available on the location, while the warehouse staff see it as stock spread across many different bins and handled bin by bin.
You choose a warehouse strategy for each location
You can set up each location separately. For example, your production location might use full warehouse zones and bins. Your distribution location might also use warehouse functionality with bins, but in a simpler way. Your sales locations might have no bins, no zones, and no warehouse functionality at all, using only the standard inventory functionality.
You can also run a sales location with complex warehouse functionality if that fits your needs. The point is that you have to consider your strategy for each location: do you want warehouse functionality with bin handling, or only the inventory functionality?
Advantages and trade-offs of warehouse functionality
The advantage of using warehouse functionality is that you can find an item on a specific bin within the location, and you can handle the bins very accurately. This gives you precise control over where stock sits and how it moves.
The trade-off is that warehouse functionality adds more complexity to the system. So you weigh the precision of bin-level tracking against the extra setup and handling it requires, and you make that decision location by location.
Q&A
What is the difference between locations, zones, and bins in Business Central?
A location is your physical site and controls planning, availability, and inventory value. Zones are a sub-level of a location, and bins are a sub-level of zones. Zones and bins are part of warehouse functionality and let you track exactly where an item sits within a location.
Do I have to use bins and zones on every location?
No. You decide per location whether to use warehouse functionality with zones and bins, or only the standard inventory functionality. You can mix approaches, for example full bins on a production location and no warehouse functionality on a sales location.
Can the same item be stored in multiple bins?
Yes. One item can be placed in many different bins within the same location. Sales and purchase staff still see it as a single quantity available on the location, while warehouse staff handle it across the individual bins.
Who works with locations versus bins?
Purchasing, sales, finance, and planning work with location codes and the total quantity available on a location. Warehouse staff work with zones and bins, because they need to know exactly where to find and place each item.
What are the advantages and disadvantages of warehouse functionality?
The advantage is that you can find an item on a specific bin and handle stock very accurately. The disadvantage is that it adds more complexity to the system, so you weigh precision against the extra setup and handling effort.