Dynamics 365 directs every pick. Why is the walking still whatever it is?

Dynamics 365 directs every pick. Why is the walking still whatever it is?

Four configuration objects decide where your picker goes and in what order, and every criterion inside them is about which stock rather than how far. In version 10.0.49 Microsoft added a preview step that does measure distance. Read precisely, it tells you which part of the walk the ERP now owns and which part still belongs to nobody.

The walk is an output, and before version 10.0.49 nothing in the chain measured it

Order picking is the largest single component of warehouse labour cost, and travel is roughly half of order-picking time — the figure is Edward Frazelle's, in World-Class Warehousing (1996), and the geometry it describes has not changed since.

So the walk is the cost. And the walk is not configured anywhere in Dynamics 365. It is an output — of a wave template, a work template, a set of location directives, and a sort.

That is not a criticism. Dynamics 365 is the system of record for the warehouse: it knows what is where, who may touch it, and what happened. Directing a pick and optimizing a pick are different jobs, and the ERP does the first one well.

Ask a distribution leader whether their WMS (warehouse management system — the module that directs work on the scanner) optimizes the pick path and you get a confident yes or a confident no. Both are now wrong.

Four objects decide the walk, and Microsoft names all four

Microsoft is unusually direct about the configuration surface. The warehouse management overview (ms.date 2025-11-19): "The most important components that you must configure are wave templates, work templates, work pools, and location directives."

Each answers a different question, and Microsoft states each answer on its own page:

• Wave template [GA] — The question it answers: When work is created, and by which steps · Microsoft's own words: "When a wave is processed, the system creates picking work based on the work template and location directive specified for the warehouse"
• Work template [GA] — The question it answers: What tasks, and how they split into work records · Microsoft's own words: "Work templates determine how the work is performed for each warehouse process"
• Location directive [GA] — The question it answers: Where the stock is taken from and put · Microsoft's own words: "Location directives are rules that help identify pick and put locations for inventory movement"
• Sort criteria [GA] — The question it answers: In what order the worker does the lines · Microsoft's own words: "The sorting criteria control the order in which the worker performs the work"

Rows one to three come from wave templates (ms.date 2026-06-22) and work templates and location directives (ms.date 2025-08-06).

Row four is from the cluster picking page (ms.date 2026-04-24), describing the cluster profile's own sorting criteria.

Note Microsoft's word for row three: rules. A rule is evaluated, not solved — "the system first finds all location directives that match a particular work line … It then sequentially evaluates the directives that it has found."

Now the part that decides the argument. A location directive can delegate its choice to a predefined Strategy, and Microsoft says those strategies "find an optimal location". Here is the complete published list from work with location directives (ms.date 2025-11-19), grouped by what each optimizes for:

• Stock age — The strategies: FEFO batch reservation · Location aging FIFO · Location aging LIFO · The criterion: Expiry date, or the date inventory entered the warehouse
• Handling unit — The strategies: Round up to a full LP · Round up to the full LP and FEFO batch · Match packing quantity · License plate guided · The criterion: The unit, the pallet, the packing quantity
• Putaway density — The strategies: Consolidate · Consolidate including incoming work · Empty location with no incoming work · The criterion: Whether stock is already there, or the location is empty

Ten strategies, three criteria, and not one of them is distance. The closest Microsoft comes is a remark under Consolidate: "Consolidation of goods makes later picking more efficient." That is a sentence about tidiness, not about a route.

So "optimal" on that page means the optimal location to satisfy this line, given age, unit and capacity. That is a good answer to a question about stock. It is not an answer about walking, and it never claimed to be.

In 10.0.49, Microsoft started measuring the distance — in preview

Anyone who writes that Dynamics 365 does not optimize a pick route is one link from being refuted, so here is the link.

The warehouse spatial location feature [PP] (ms.date 2026-04-24; the page opens "This article is prerelease documentation and is subject to change") does what its name suggests:

"The warehouse spatial location feature lets you assign X, Y, and Z coordinates to warehouse locations. The system uses these coordinates to calculate optimized picking routes that minimize the travel distance required for warehouse workers to move between locations during pick work."

The mechanism is a new wave method, Sort picking work lines, and it is real engineering. You choose a distance model — Straight Line (Euclidean) or City Block (Manhattan, for aisle-based buildings) — and a sorting algorithm.

Fast calculation is nearest-neighbour. Optimized route starts from the same route and "repeatedly examines pairs of segments in the route and checks whether reversing the section between them produces a shorter total distance." That is the classic 2-opt improvement on a travelling-salesman route, shipped inside an ERP wave step.

The setup page (ms.date 2026-04-24) states the conditions: "You must be running Microsoft Dynamics 365 Supply Chain Management version 10.0.49 or later", the feature "must be turned on in feature management", and preview features "aren't meant for production use and might have restricted functionality."

If you run a DC (distribution centre) on Dynamics 365, that is the most interesting thing on your roadmap. Read it before your next slotting conversation.

What the sort decides, and the four decisions above it that it does not

Read the same page for the scope, because the scope is where the design conversation lives.

The sort reorders pick lines inside one work record, and only those "that appear before the first put line in a work." It validates first: "at least two pick lines to sort", a put location with valid coordinates, and at least one pick location with coordinates — and "if validation fails, the system skips the work and keeps the pick lines in their original order."

The objective is fixed. Both algorithms "produce a route that starts at the farthest pick location and ends at the pick location nearest to the put location." And the coordinates come from one place — "the X, Y, and Z coordinate values directly from the fields on the location record", which you maintain, one location at a time.

So it sequences a list it was handed. Four decisions determine what is on the list, and none of them is in that step:

• Which orders travel together — Which object makes it today: Wave template, cluster profile · What it optimizes for: Query criteria and thresholds — weight, shipments, lines
• What shares one work record — Which object makes it today: Work template header breaks and split criteria · What it optimizes for: Estimated pick time, Volume, Weight, Quantity, Unit
• Which location each line is taken from — Which object makes it today: Location directive, and its Strategy · What it optimizes for: Stock age, handling unit, putaway density
• Which item lives in which slot — Which object makes it today: Slotting template, fixed locations · What it optimizes for: Demand quantity, unit, physical dimensions, capacity

The last row is the one people assume is handled, and it is where the biggest travel savings live. Warehouse slotting [GA] (ms.date 2026-05-28) "lets you consolidate demand by item and unit of measure from orders that have a status of Ordered, Reserved, or Released", applied to picking locations "based on quantity, unit, physical dimensions, fixed locations, and more."

Its Assign slot criteria field takes three values: Assume empty, Consider qty, Consider on-hand. Those are capacity tests, answering will this demand fit in this location. On that page no criterion is pick frequency, item velocity or distance from the dock — so which item has earned the golden zone is not a question the slotting template is being asked.

Dynamics 365 is the system of record for the warehouse. The optimization above it is a second system, and it is a modelling problem, not a configuration problem.

How we build it: above the WMS, writing into the objects Dynamics already runs

Our position, stated as a capability rather than as a report on somebody's building.

Pick-Path & Slotting Optimizer decides which orders travel together and which item earns which slot, re-plans both as demand moves, and writes the answer back into the wave, cluster and slotting objects Dynamics 365 already executes — behind an approval step, without changing a single warehouse object.

Four commitments, each with a reason:

• Optimize the decisions above the sort, never the sort itself — Microsoft is shipping the route sort and will finish it. A second one is duplication; deciding what is on the route is the open problem
• Write into existing objects, never new ones — The wave template, the cluster profile and the fixed location are already executed by the ERP and understood by your team. An optimizer needing its own execution layer has become a second WMS
• Every write goes behind a human approval step — A slotting plan is a week of physical moves. The first time the model is wrong you want a rejected proposal, not four hundred movement work records
• Model outside the ERP, on Azure — Coupling a re-planning workload to a wave's runtime couples your data science to your picking

We do not touch the ERP core, and we do not step on your implementation partner — the configuration above stays theirs.

The thirteen questions underneath this one

Each is a decision a DC makes once and lives with. Each links to the article that settles it.

• Is advanced warehouse management a setting you can turn on later? — What it settles: Whether the WMS decision is still open on your items · Chapter: 1
• Batch above or below location — which did you choose, and can you change it? — What it settles: What picking flexibility your reservation hierarchy left you · Chapter: 2
• Why does your pick path zig-zag? Your location format is a sort key — What it settles: Whether location IDs sort in the order a worker walks · Chapter: 3
• One wave template, or four? What wave design says about your building — What it settles: Whether parcel, pallet and line-feed work can be tuned separately · Chapter: 4
• Why is one worker doing the pick, the put and the load? — What it settles: How work splits, and who is asked to do it · Chapter: 5
• Work creation failed at 07:05. Which location directive did it stop on? — What it settles: Your escalation path when the directive set has no catch-all · Chapter: 6
• Is Dynamics 365 WMS fast enough for a high-volume distribution centre? — What it settles: The scale objection, argued from Microsoft's retirement notices · Chapter: 7
• Which demand documents can Dynamics 365 actually cross-dock? — What it settles: Whether your cross-dock scope survives UAT · Chapter: 8
• Power Fx is in the warehouse execution path. What does dynamic work classification decide? — What it settles: Whether work class can be an expression instead of a setting · Chapter: 9
• From May 2027 your scanner app has a twelve-month support window — What it settles: Whether your device fleet is a commitment you have staffed · Chapter: 10
• Cluster picking: process by location, or process by position? — What it settles: The setting that deletes your sort criteria on save · Chapter: 11
• Can Dynamics 365 run as a standalone WMS beside another ERP? — What it settles: Whether WMS-only mode fits, and what disqualifies it · Chapter: 12
• What will Dynamics 365 WMS not decide for you? — What it settles: The negative space, bounded to the pages searched · Chapter: 13

Read chapter 11 first if you cluster-pick tracked items: saving the new strategy deletes sort criteria you may have spent a year tuning.

Where we would draw the line

We would not replace your WMS, and we would not propose it as a phase two. The execution layer works, your team knows it, and the decisions worth optimizing sit above it.

We would not build a route optimizer. Microsoft is shipping one and it is competently designed; we advise rather than build wherever the vendor can credibly ship it from data it already holds, and coordinates are data it already holds.

We would not sell a slotting optimizer into a building whose location format does not sort. If aisle A1 sorts after A10, the sequence is wrong before any model runs — a rename project, not an optimization one. Chapter 3 is the test.

And we would not write a slotting plan into fixed locations with no person in the loop. A plan is physical work for a shift you have to staff.

What to do this week

1. Find your version number. In Finance and Operations, go to Help & Support > About. 10.0.49 decides whether the route sort is available to pilot at all; 10.0.48 decides the cluster-picking question in chapter 11.
2. Open one location record and look for the coordinate fields. Go to Warehouse management > Setup > Warehouse > Locations. If X coordinate, Y coordinate and Z coordinate are absent, either you are below 10.0.49 or the Warehouse spatial location feature is off in feature management. Five minutes, and you know which.
3. Count your wave templates for the warehouse. Go to Warehouse management > Setup > Waves > Wave templates. One template for a mixed building means parcel, pallet and line-feed work cannot be tuned separately, whatever else you do.
4. Ask who last changed a fixed location, and when. Not which system — which person, which month. If the honest answer is go-live, your slotting map is as old as your ERP and the walking is paying for it every shift.

About Cognilium Cognilium is the AI optimization layer for Dynamics 365 — complementary apps that optimize the pricing, inventory, warehouse and planning decisions your ERP manages but can't optimize. Built on Power Platform, Dataverse and Azure. https://cognilium.ai · https://www.linkedin.com/company/37180269/

If you are inside the slotting or wave design decision, book a fifteen-minute call and we will walk your configuration with you — which object decides what, and which decision is still nobody's. No deck. https://cognilium.ai

Sources

• Warehouse management overview
• Control warehouse work by using work templates and location directives
• Work with location directives
• Wave templates
• Wave creation and processing
• Warehouse spatial location overview (preview)
• Set up warehouse spatial locations (preview)
• Warehouse slotting
• Set up cluster picking
• Frazelle, Edward H. World-Class Warehousing (1996) — the travel share of order-picking time

Sources

• learn.microsoft.com — warehouse management overview
• learn.microsoft.com — control warehouse location directives
• learn.microsoft.com — create location directive
• learn.microsoft.com — wave templates
• learn.microsoft.com — wave processing
• learn.microsoft.com — spatial location overview
• learn.microsoft.com — spatial locations setup
• learn.microsoft.com — warehouse slotting
• learn.microsoft.com — set up cluster picking