What will Dynamics 365 WMS not decide for you?

Four decisions determine how far your pickers walk, and none of the objects that direct a pick is being asked any of them. This is the honest version of that claim: what the product does decide, which three features come closest to deciding the rest, and what each of their own pages actually says.

The claim, and the pages it was checked against

Travel is roughly half of order-picking time — the figure is Edward Frazelle's, in World-Class Warehousing (1996) — so the walk is where the money is.

Dynamics 365 decides the walk as an output. A wave template decides when work is created, a work template decides what shares a work record, location directives decide where each line is picked from, and a sort decides the order. Chapters 4, 5, 6 and 11 are those four objects.

Four decisions sit above them, and this article's claim is that no object in that chain is being asked them:

Which orders should travel together — The object that would have to make it: Wave template, cluster profile · Where the cluster covers it: Chapters 4 and 11
What should share one work record — The object that would have to make it: Work template header breaks · Where the cluster covers it: Chapter 5
Which location a line should be taken from — The object that would have to make it: Location directive and its Strategy · Where the cluster covers it: Chapter 6
Which item deserves which slot — The object that would have to make it: Slotting template, fixed locations · Where the cluster covers it: This article

An absence claim is only as good as the search behind it, so here is the search. The pages read for this article are the two spatial-location pages, warehouse-slotting, the dynamic item placement release-plan entry and the wave-1 planned-features table, create-location-directive, control-warehouse-location-directives and wave-templates.

Everything below is bounded to those pages. Where a claim depends on something not being on them, the sentence says so.

Start with what it does decide, because that is what bounds the absence

Microsoft is precise about the criteria its objects use, and the criteria are the evidence.

A location directive's predefined Strategy values are published in full on work with location directives (ms.date 2025-11-19). The published list has eleven values, and the first is None. Grouped by what each of the other ten optimizes for, they come to three criteria:

Stock age — FEFO batch reservation · Location aging FIFO · Location aging LIFO
Handling unit — Round up to a full LP · Round up to the full LP and FEFO batch · Match packing quantity · License plate guided
Putaway density — Consolidate · Consolidate including incoming work · Empty location with no incoming work

On that published list, not one criterion is distance. The closest Microsoft comes is a remark under Consolidate: "Consolidation of goods makes later picking more efficient" — which is a sentence about tidiness, not about a route.

Wave thresholds, on wave templates, are weight, shipments and lines. Work-split criteria, on work templates and location directives, are "Estimated pick time, Volume, Weight, Quantity, and Unit" — Microsoft's list, introduced with its own "such as". Each is a property of the work, not of the walk.

Refutation one: Microsoft does measure distance, and here is exactly what that step does

Anyone claiming Dynamics does not compute a pick route is one link from being refuted, so here is the link.

Warehouse spatial location [PP] (ms.date 2026-04-24) assigns "X, Y, and Z coordinates to warehouse locations" and uses them "to calculate optimized picking routes that minimize the travel distance required for warehouse workers to move between locations during pick work."

The Optimized route algorithm "repeatedly examines pairs of segments in the route and checks whether reversing the section between them produces a shorter total distance." That is real optimization. Now read its scope, which is where the boundary is.

Reorders within one record — "within a work record", and only lines "that appear before the first put line in a work"
Fails safe — "if validation fails, the system skips the work and keeps the pick lines in their original order"
Toward a fixed objective — a route that "starts at the farthest pick location and ends at the pick location nearest to the put location"
From coordinates you maintain — "directly from the fields on the location record"

It is preview, with a floor of "10.0.49 or later", per the setup page.

So the step sequences a list it was handed. It does not decide what is on the list — which orders travel together, what shares the work record, or which location each line came from. Those are the first three rows of the table above, and the sort runs after all of them.

Refutation two: warehouse slotting exists, and its criteria are capacity tests

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."

The decisive field is Assign slot criteria, and it takes three values: Assume empty, Consider qty, Consider on-hand.

Read what those three are asking. Each is a question about whether this demand fits in this location. None is a question about whether this item deserves this location.

On that page, no criterion is pick frequency, item velocity, or distance from the dock. That is an absence claim and it is bounded to the page: the three Assign slot criteria values, the template line fields and the demand statuses are the full criterion set published there. Slotting generates and places demand. Ranking items by how often they are picked is a different input set, and it is not on that page.

Refutation three: dynamic item placement, and what its own page claims

This is the sharpest candidate refutation, because the name promises exactly the missing decision. It also turns out to be the clearest case in the cluster of reading a page rather than a label.

The feature has a release-plan entry, Enhance warehouse efficiency with dynamic item placement (ms.date 2026-02-05, updated_at 2026-04-22). Three things on it matter.

First, its status. The page opens with an Important callout:

"Some of the functionality described in this release plan has not been released. Delivery timelines may change and projected functionality may not be released".

Its table lists Public preview as Jun 2026 and General availability as Jun 2026.

Measured against the wave-1 planned-features table (ms.date 2026-07-28), whose legend says a check mark "shows which features have been released for public preview and general availability":

It carries no check mark in either column. One other warehouse row is in the same position: Improve database health by archiving load data, which shows - against public preview and Sep 2026 against general availability. Every other warehouse row carries a preview check mark. So two of the six are unreleased on both counts, and this is one of them.

Second, what it says it does, from Feature details: "Warehouse and item storage policies are now available, giving you dynamic control over where and how much inventory is stored. Define preferred storage locations and target quantities for each item, either by editing directly or importing data at scale. The system intelligently balances inventory during inbound processes, ensuring optimal placement for fast fulfillment."

Read the second sentence again. You define the preferred storage locations and target quantities — manually or by import. The system then balances inventory against the policy you defined, during inbound. That is execution of a placement decision, and the decision is an input.

Third, what its own page does not contain. No criterion for ranking items is named — not pick frequency, not velocity, not distance from the dock.

The page also links to no product documentation for the feature. The searches run for this article surfaced warehouse-slotting and release-plan entries, and no product documentation page for dynamic item placement. That is a claim about the searches I ran, not about Microsoft's documentation set — if such a page exists, it did not surface, and the release-plan entry does not link to it.

The page does connect the two features: "Warehouse spatial locations further optimize routes, cutting travel time and boosting picking speed." Which is the same division as section 3 — placement policy, then route optimization over it.

The four decisions, and why they are a modelling problem

Put the three refutations together and the shape is consistent. On the pages read for this cluster, Microsoft ships execution for all four decisions, and criteria that are about stock, capacity and handling — not one that weighs travel. The table below is the evidence, column by column, and the criteria it credits the product with are the reason the claim is about which criteria rather than about their absence.

Which orders travel together — What the product provides: Wave and cluster thresholds — weight, shipments, lines · What is missing from the pages read: Any criterion that weighs the resulting travel
What shares a work record — What the product provides: Header breaks on a field you nominate · What is missing from the pages read: Which field to nominate, given today's order profile
Which location a line comes from — What the product provides: Ten strategies plus None, on three criteria · What is missing from the pages read: Distance, on the published list
Which item earns which slot — What the product provides: Slotting templates, storage policies you define · What is missing from the pages read: A ranking of items by how often they are picked

Every row has the same shape: the object faithfully executes a rule, and choosing the rule is left to you. That is not a criticism of the product. A wave template that guessed your cut-off would be worse than one that asks.

But it is why this is a modelling problem rather than a configuration one. Choosing which orders travel together is a grouping problem over today's demand. Choosing which item earns the golden zone is a ranking problem over pick frequency and physical constraints. Both change as demand changes, and neither is a value you type once into a template.

How we build it, and where we would draw the line

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.

A working demo exists; it is not off the shelf. We build it against your systems and your constraints on request, and we have no delivered warehouse engagements — so this is a capability, not a report on somebody's building.

Dynamics is the system of record for the warehouse. The optimization above it is a second system, and it writes into the first one's objects rather than replacing them.

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

We would not sell a slotting optimizer into a building whose location format does not sort. Chapter 3 is that test, and a model on top of a broken sequence produces confident answers about the wrong order.

And we would not write a slotting plan into fixed locations with no person in the loop. A slotting plan is a week of physical moves, and the first time a model is wrong you want a rejected proposal rather than four hundred movement work records.

What to do this week

Open one location directive and read its Strategy values against your walk. Eleven values — None, then ten strategies on three criteria, and the criteria are stock age, handling unit and putaway density. If you expected distance, that expectation is the gap this article is about.
Open a slotting template and look at Assign slot criteria. Three values, all capacity tests. Then ask who decides which item sits closest to the dock, and when they last revisited it.
Check the release plan before you plan around dynamic item placement. Its own entry carries an unreleased-functionality warning and no released check mark in either column.
Ask when a fixed location was last changed, and by whom. Not which system — which person, which month. If the answer is go-live, your slotting map is as old as your ERP.

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 spatial location overview (preview)
Set up warehouse spatial locations (preview)
Warehouse slotting
Enhance warehouse efficiency with dynamic item placement — 2026 release wave 1 plan
New and planned features for Dynamics 365 Supply Chain Management, 2026 release wave 1
Work with location directives
Wave templates
Control warehouse work by using work templates and location directives
Frazelle, Edward H. World-Class Warehousing (1996) — the travel share of order-picking time

What will Dynamics 365 WMS not decide for you?