Stockouts and overstocks quietly drain profit at most mid-market manufacturers and distributors. A part runs out on the shop floor. A warehouse fills up with slow-moving stock nobody needed more of. Traditional inventory planning in Dynamics 365 Business Central reacts to these problems after they happen. Agentic AI changes that by acting on inventory signals in real time, before a stockout or an overstock situation costs you money.
The Real Cost of Stockouts and Overstocks
The scale of this problem is larger than most operations leaders assume. IHL Group's 2025 inventory distortion research puts the global cost of stockouts and overstocks at $1.73 trillion a year, equal to 6.5% of retail sales worldwide. Manufacturers and distributors carry a large share of that cost through expedited freight, write-offs, and orders that never make it to a sales report.
What Makes Agentic AI Different From Copilot?
Agentic AI is not the same as the Copilot suggestions many Business Central users already know. Microsoft's Dynamics 365 blog on agentic AI for inventory describes agents built specifically for inventory work. On a typical day, these agents:
Rebalance stock across locations based on live demand
Flag supplier risk before it turns into a missed delivery
Adjust reorder points on their own, without waiting for a planner to review every line
Why Production Scheduling Accuracy Comes First
Inventory accuracy and production scheduling are connected problems. An MRP schedule built on infinite capacity, a common default we cover in our guide to finite capacity planning in Dynamics 365, hands the inventory agent a plan that was never realistic to begin with. Fixing capacity assumptions first makes every downstream inventory decision more trustworthy.
What Does the Research Actually Show?
The upside is measurable. McKinsey's research on AI in distribution operations looked at companies that connected AI directly to demand data, and found real, not projected, outcomes:
20 to 30% reduction in inventory levels
5 to 8% improvement in fill rates, seen at one building products distributor
How Agentic AI Works Inside Business Central
Inside Business Central, this looks like an agent monitoring reorder points, lead times, and demand patterns continuously instead of during a weekly planning cycle. When a part trends toward a stockout, the agent can raise a purchase suggestion or flag the supplier automatically. When stock builds past what demand supports, it surfaces that overstock before it ties up another quarter of working capital.
Building on What You Already Have
This builds on capabilities already inside Business Central rather than replacing them. Our breakdown of Dynamics 365 Copilot and automation covers how Copilot's assistive suggestions and agentic AI's autonomous actions work together, with Copilot supporting decisions and agents handling approved, repeatable ones inside limits your team sets.
Does This Remove People From the Decision?
None of this removes people from inventory decisions. Every credible agentic AI deployment in Business Central runs inside approval workflows and thresholds a planner defines upfront. That split usually looks like this:
The agent handles volume, speed, and routine reorder adjustments
Your team keeps judgment calls, exceptions, and supplier relationships
That balance is what separates a useful inventory agent from a black box nobody trusts.
Getting Started the Right Way
Getting this right depends on how the agent is configured against your actual inventory data, not just whether the feature is switched on. As a Microsoft Dynamics 365 partner, NSquare works with manufacturers and distributors to map reorder logic, safety stock rules, and approval thresholds before any agent starts acting on live inventory.
Key Takeaways
Stockouts and overstocks costing your team more than they should is usually a sign your current setup needs a second look. A short inventory assessment can show where agentic AI in Business Central would have the most impact. Talk to NSquare about reviewing your inventory setup and finding where autonomous agents can start reducing waste without adding operational risk.
FAQs
Can agentic AI actually reduce stockouts and overstocks in Dynamics 365 Business Central? Yes, agentic AI agents inside Business Central monitor reorder points and demand patterns continuously, acting on stockout and overstock risk as it develops instead of waiting for the next scheduled planning cycle.
Is agentic AI the same as Copilot in Dynamics 365? No, Copilot in Business Central mainly offers suggestions for a person to review, while agentic AI takes defined actions on its own within approval limits a planner sets in advance.
Does adding agentic AI require replacing an existing Business Central setup? No, agentic AI capabilities extend your current Business Central environment and build on existing data, workflows, and Copilot features rather than requiring a new system.
Will agentic AI make inventory decisions without any human review? No, agentic AI operates inside thresholds and approval workflows your team defines, so routine decisions get automated while exceptions and judgment calls still reach a person.
