AX 2012 R3 and the Use of License Plates in Warehouse Management

This blog post will focus on the implications behind three required setups for the use of license plates.

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Dan McAllister


One of the new tools for tracking inventory in Microsoft Dynamics AX 2012 R3’s Warehouse Management module is license plating. License plates in AX are a unique ID that can be barcoded and assigned to a pallet, location, forklift, etc. They are useful in warehouses where inventory needs to be tracked at a more granular level than just a location. In a dock location, for example, license plating your pallets of incoming goods allows your forklift operators to know what inventory came from which shipment, as well as what they should be putting away first. License plates allow you to track back items reviewed in QC to a specific vendor, and offer an alternative to the higher-overhead lot tracking to handle FIFO in your warehouse. License plates are integrated with the AX 2012 R3 Warehouse Mobile Device and other functionality in the Warehouse Management module. This blog post will focus on the implications behind three required setups for the use of license plates; please note that depending on your requirements there may be more to do.

First key question: Where in the warehouse should inventory be License-plate-tracked? Here are two scenarios:

  1. You have a warehouse where goods are manufactured or purchased. You want them license plated by pallet once they are received or become finished goods. Those goods are then put away in bulk locations, still being tracked by license plate. When your picking locations are replenished from bulk, you will take a whole pallet of inventory (a license plate) and put it to a picking location. You want to practice strict FIFO, so you continue to track inventory by License plate and have your picking team pick directly from a license plate; at this point a unit of inventory will no longer be associated with its initial license plate. Instead the Picker will have what is considered a “traveling pallet” with its own license plate (alternatively the Picker can have a license plate associated with themselves). Therefore the quantity of the item being picked will be reduced on the original license plate and increased on the traveling license plate. The picked quantities will then be delivered to a staging area where the shipment of goods has a license plate for tracking purposes until it is shipped to a customer.
  2. Alternatively, it might be too much to ask your picking team to distinguish inventory by license plate. If the picking location is replenished and license plate tracked, and the system directs the Picker to take a unit from a license plate that is not easily accessible, it can significantly slow down the picking process. In this case you would want to keep your bulk locations license plate tracked to respect FIFO, but leave your picking location non-license plate tracked; the rest would be the same. The end result would be that items that move into the picking location will lose their license plate and be indistinguishable from other pallets of goods in the system. When picked for shipment, those goods would follow the same process seen in #1.
location profiles in Dynamics 365

These are two of many scenarios, designed to give a clear picture of why it might make sense to not license-plate-track your entire warehouse. The configuration for this is done in Location Profiles, which are assigned to Locations. The option in question is called “Use license plate tracking”. This can be found in Warehouse Management -> Setup -> Warehouse Setup -> Location Profiles.

Inventory Reservation Hierarchy in Dynamics 365

Second key question: To what unit should inventory be grouped for license plates?

If your warehouse receives many boxes of an item that is combined onto a pallet, it makes sense for that pallet to share one license plate instead of putting one on each box of inventory. License plating boxes of goods requires a great deal of overhead in scanning for your warehouse team. This configuration is found in Unit Sequence Groups that are assigned to your released products; find this at Warehouse Management -> Setup -> Warehouse Setup -> Unit sequence groups. In the below screenshot this unit sequence group is configured to use Pieces, Boxes, and Pallets. Pieces and Boxes are meant to be grouped onto Pallets for license plating, but two pallets are not designed to be grouped together. A unit conversion from Pieces to Boxes to Pallets may be set up in the background.

Inventory Reservation Hierarchy in Dynamics 365

The third setup to consider is your reservation hierarchy. The system is designed to not reserve goods down to a License Plate level; instead, it is designed to reserve goods at a location and automatically dictate a license plate to pick from if appropriate. This can be found at Warehouse Management -> Setup -> Inventory -> Reservation hierarchy. See my previous blog post on Reservation Hierarchies for more detail behind this functionality.


License plate functionality in Microsoft Dynamics AX 2012 R3 is a powerful way of tracking goods in your warehouse, improving the effectivity of your warehouse mobile device, and efficiently managing staging areas. It is not to be confused with lot tracking, which requires a considerable amount of overhead but is also possible in AX 2012 R3. Warehouses wishing to use this for item receipt will need to have the advanced warehousing functionality enabled along with a number of other configurations in order to work properly. Stay tuned for future blog posts on AX 2012 R3 WMS systems and other functionality.

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