In Dynamics 365 Supply Chain Management with Advanced Warehouse Management, sales order reservations can reserve inventory that is physically available in the warehouse but not yet available for warehouse execution.

For WMS-enabled warehouses, sales order reservations are typically performed above the Location level to allow Location Directives to determine the actual picking location during warehouse work creation.

However, this creates a functional gap in high-volume distribution centers:

• Inventory is received and becomes physically available immediately.
• Automatic reservation reserves this inventory for sales orders.
• The inventory is still located on receiving, staging, quality, or other non-pickable locations.
• The picking location is empty and replenishment/put-away work is still in progress.
• When waves are released, no warehouse pick work can be created because no suitable pick location is available.
• The sales order appears fully reserved, but cannot be fulfilled completely, resulting in unexpected partial shipments.

This behavior is especially problematic in large distribution centers where inbound receiving, put-away, replenishment, wave processing, and picking operate continuously in parallel.

The requested improvement is not to force Location-level reservation, because this would reduce the flexibility and benefits of Warehouse Management processes and Location Directives.

Instead, introduce an additional reservation or release strategy that considers warehouse execution availability:

• Keep reservation above Location level.
• Exclude inventory on non-pickable locations from automatic sales order reservation or fulfillment availability.
• Consider only inventory that can realistically be converted into warehouse pick work.
• Alternatively, provide a parameter to define which location profiles/types are eligible for automatic reservation.

This would align inventory reservation with actual warehouse execution capability while preserving the advantages of advanced WMS processes.

Business impact:

Without this capability, customers running large distribution centers may experience:

• Sales orders appearing fully reserved but not being picked.
• Unexpected partial shipments.
• Manual intervention by warehouse planners.
• Additional monitoring and reprocessing activities.
• Reduced reliability of automated fulfillment processes.

A solution would improve the integration between Inventory Reservation and Warehouse Work Creation and provide a more accurate view of true fulfillment availability.