What is Warehouse Management Only Mode? Your Key to Growth

In This Article

Manufacturing and distribution have faced relentless pressures in recent years, as tariffs, rising costs, and persistent labor shortages continue to strain operations.

At the same time, customer expectations have never been higher. Consumers increasingly demand the perfect order: Delivered fast, defect-free, and personalized at every touchpoint. 

To stay resilient, operators need to find ways to do more with less, combining smarter processes with technology that empowers teams to adapt, scale, and deliver consistently. 

That’s where Warehouse Management Only Mode comes into play.

What is Warehouse Management Only Mode?

Warehouse Management Only Mode is a deployment option in Microsoft Dynamics 365 Supply Chain Management that enables organizations to use Microsoft’s full Warehouse Management System (WMS) independently from the broader Enterprise Resource Planning (ERP) suite.

In other words, it allows businesses to streamline warehouse operations without implementing the various other modules they may not need.

Microsoft outlines two main scenarios for Warehouse Management Only Mode:

External ERP Integration

Warehouse Management Only Mode can be used to manage warehouse functions while maintaining your current ERP (SAP, Oracle, etc.). This allows rapid deployment of advanced WMS features, like automation, carrier integrations, and mobile warehousing, without overhauling your entire tech stack.

Shared Warehouse Entity

Traditionally, sharing one physical warehouse across multiple legal entities required duplicating setups or complex workarounds. Warehouse Management Only Mode changes that by allowing you to create a single, dedicated warehouse entity that multiple companies can all use. Each entity sends its orders into the shared warehouse, while ownership of inventory stays clearly separated. 

Why Warehouse Management Only Mode Matters

Warehouse Management Only Mode matters because it makes the all-powerful Microsoft Dynamics 365 WMS accessible, scalable, and adaptable to your business needs.

In addition to the flexibility offered in an ERP integration and the coordination of multi-entity operations, big benefits include:

Trusted Microsoft WMS

Microsoft’s WMS has been battle-tested for more than a decade, with thousands of customers already running it. With Warehouse Management Only Mode, the same mature, best-of-breed platform can now operate independently or integrate with other ERP systems. The result is flexibility and reliability backed by Microsoft’s continuous investment.

Advanced Capabilities

Microsoft Dynamics 365 WMS comes with robust, configurable capabilities, including:

Third-Party Logistics Opportunities

Warehouse Only Mode makes it easier for organizations to expand into third-party logistics (3PL) services. By supporting multi-owner inventory within a single warehouse, it ensures each client’s stock is accurately tracked and securely separated. So you can maximize your warehouse investments while opening up new revenue streams.

Reduced Technical Debt

Other WMS platforms require costly, time-consuming upgrades across multiple facilities. Warehouse Management Only Mode reduces that burden by leveraging Microsoft’s continuous SaaS updates and opt-in features. You can activate only the capabilities you need, where you need them, keeping costs down while staying current with innovation.

Automations

The automation market is evolving quickly, with robotics emerging at a rapid pace. Your WMS has to be able to integrate easily with all of this equipment to stay competitive.

With Dynamics 365 WMS, that integration is built in, allowing companies to adopt automation and robotics (AGVs, AMRs, AS/RS, sorters, AutoStore, etc.) at their own pace without sacrificing flexibility.

Efficiency Without Cutting Labor

The key to maximizing efficiency with powerful platforms is enhancing workers’ capabilities, not replacing them.

WMS capabilities enable companies to grow — one and a half, two, even three times — with the same team. Reducing travel time, improving picking productivity, and reducing errors, all capabilities offered by Warehouse Management Only Mode, are what really move the needle.

AI and Agentic Capabilities

The future of warehouse management lies in AI. Microsoft Copilot, embedded in Microsoft’s WMS, and other compatible agentic AI open new opportunities to:

For example, MCA Connect’s prototype Warehouse Advisor Agent demonstrates how AI could identify scattered inventory, recognize fast-moving items, and automatically generate journal entries to consolidate them.

The result is a shift from reactive reporting to proactive, AI-assisted decision-making.

Getting Started with Warehouse Only Mode

Today, more than 160 companies across the globe are considering Warehouse Management Only Mode. 3PLs are evaluating it, distributors are adopting it, and forward-thinking enterprises are implementing it alongside their ERP systems.

If you want to stay ahead, it may be the right time to explore what Warehouse Management Only Mode could mean for your business.

A partner with both industry expertise and deep knowledge of Microsoft Dynamics 365 can help you avoid common pitfalls, uncover quick wins, and build a roadmap that ensures every improvement ties back to measurable outcomes.

Wrapping Up: Making the Most of Warehouse Management Only Mode

The challenges facing distribution and manufacturing today can’t be ignored. But Warehouse Management Only Mode, powered by Microsoft Dynamics 365, gives operators a path forward.

With Warehouse Management Only Mode, organizations can build on proven processes while taking advantage of automation and data-driven insights. The result is a single, flexible platform that strengthens operations today and positions them for tomorrow.

For tailored warehouse solutions and help identifying inefficiencies in your process, contact MCA Connect today.