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Microsoft Dynamics 365 Business Central Supply Chain Management

Microsoft Dynamics 365 Business Central Overview Series – Supply Chain Management

Supply chain management (SCM) is defined as the design, planning, execution, control, and monitoring of supply chain activities to create net value, build a competitive infrastructure, leverage worldwide logistics, synchronize supply with demand, and measure performance globally. Supply chain management is the lifeline of a significant company. It involves managing the flow of goods and services, money, and information between businesses and locations. It includes the movement and storage of raw materials, work-in-process inventory, finished goods, and end-to-end order fulfillment from the point of origin to consumption. Interconnected, interrelated, or interlinked networks, channels and node businesses combine to provide products and services required by end customers in a supply chain. Supply chain management (SCM) is the broad range of activities necessary to plan, control and execute a product’s flow from materials to production to distribution in the most economical way possible. SCM encompasses the integrated planning and execution of processes required to optimize the flow of materials, information, and capital in functions that broadly include demand planning, sourcing, production, inventory management, logistics, storage, and transportation. 

Supply Management through Microsoft Dynamics Business Central Sales integration 

Enabling integration between Microsoft Business Central into supply management will lead to efficient use of resources to integrate raw material sources into a company’s distribution channels. The Microsoft Business Central shall improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement of a business enterprise.  

Following are the factors a Supply Chain Management System shall address with the  Microsoft Dynamics Business Central. 

  1. Purchase and Payable 
  • Purchase Invoicing 

Set up, post, and print purchase invoices and purchase credit memos. 

  • Purchase Order Management 

Manage purchase quotes, blanket orders, and purchase order processes. Creating a purchase order differs from making a purchase invoice directly. The quantity available is adjusted as soon as an amount is entered on a purchase order line, but it is not affected by a purchase invoice until the invoice is posted. Use this functionality to manage partial receipts, receive and invoice separately, create prepayment invoices for the purchase order, use quotes and blanket orders in the purchase phase. Quotes and blanket orders do not affect inventory figures. 

  • Purchase Return Order Management 

Create a purchase return order to compensate your own company for wrong or damaged items. Items can then be picked from the purchase return order. You can set up partial return shipments or combine return shipments in one credit memo and link purchase return orders with replacement purchase orders. 

  • Alternative Order Addresses 

Set up multiple addresses to manage orders from vendors that, in addition to the central business address, have more than one site from which they ship orders. The purchasing agent can select these additional locations when creating a purchase order or invoice. 

  • Purchase Invoice Discounts 

Calculate invoice discounts automatically. The discount can differ from vendor to vendor with different minimum amounts (also in foreign currencies) and different rates, depending on the size of the invoice. The discount is calculated on the individual item lines and becomes part of the net sum of the invoice. 

  • Purchase Line Discounting 

Manage multiple item purchase price discounts that you have negotiated with individual vendors based on such parameters as minimum quantity, the unit of measure, currency, item variant, and period. The best, as based on the highest discount, the unit cost is calculated for the purchase line when the order details meet the conditions specified in the purchase line discounts table. 

  • Alternative Vendors 

Manage the purchase of the same item from different vendors. Set up alternative vendors for items, specify typical lead times, and record price and discount agreements with each vendor. 

  • Vendor Catalog Items 

Offer items to customers that are not part of the regular inventory, but you can order from vendors or manufacturers on a one-off basis. Register these items as non-stock items but treat them like regular items. 

  1. Inventory 
  • Basic Inventory 

Set up stock items and specify properties such as their unit of measures, costing method, inventory posting group, and unit cost and price. Post item transactions, such as sales, purchases, and negative and positive adjustments from item journals. Store quantity and cost records of posted transactions in the inventory ledger and use that as the basis for inventory valuation and other costing calculations. 

  • Item Categories 

Group items in a hierarchy and define custom categories that include specific attributes. 

  • Item Attributes 

Add custom data, such as color, country of manufacture, size, or product dimensions, to applicable items to supplement built-in global item fields. Use Azure AI to let Business Central analyze images of your items and automatically suggest item attributes. Define types of attribute options, including list and text, and integer and decimal, including units of measure. Translate attribute names and options for multiple languages. Block attributes or attribute options from being used, for example, if they are no longer applicable. 

  • Item Tracking 

Manage and track serial and lot numbers. Assign serial or lot numbers manually or automatically, receive and ship multiple quantities with serial or lot numbers from a single order line entry. 

  • Multiple Locations 

Manage inventory in multiple locations representing a production plant, distribution centers, warehouses, showrooms, retail outlets, and service cars. 

  • Stock-Keeping Units 

Manage stock-keeping units (SKUs). Identical items with the same item number can be stored in different locations and managed individually at each location. Add cost prices, replenishment, manufacturing information, and so on, based on the location. 

  • Location Transfers 

Track inventory as it moves from one location to another. Account for the value of inventory in transit and at various locations. 

  • Shipping Agents 

Set up multiple shipping agents (for example, UPS, DHL, external carriers, or your carrier) and relate their services (express, overnight, standard) with shipping time. Associate default shipping agents and their services with individual customers or specify those details on sales orders and transfer orders to improve order accuracy. 

  • Calendars 

Set up calendars with working and non-working days. Assign a base calendar to customers, vendors, locations, companies, shipping agent services, and the service management setup and make changes when needed. Use calendar entries in date calculations on sales, purchase, transfer, production, and service orders, and the requisition and planning worksheets. 

  • Item Charges 

Manage item charges. Include the value of additional costs such as freight or insurance in the unit cost or unit price of an item. 

  • Item Cross References 

Identify the items a customer is ordering based on item numbers other than your own. Store and easily access cross-reference information from customers, vendors, manufacturers, generic numbers, universal product codes (UPCs), and European article numbers (EANs). 

  • Item Substitutions 

Link items with similar characteristics suggest alternatives for out-of-stock items on orders. Provide extra service to customers by offering lower-cost options. 

  • Item Budgets 

Define sales and purchase budgets on the customer, vendor, and item levels. Prepare and record a sales budget that can serve as input to decision-makers in operational areas such as purchasing and logistics. Get information about expected demand and use it in business discussions with customers. Finalize budgets and track the actual sales performance by calculating the variance—export budget figures to Excel for flexible calculations in the budgeting process. 

  • Analysis Reports 

Provide decision-makers, especially those with responsibility for sales, purchases, and product portfolio management, with meaningful information that informs day-to-day decisions. Build on item entries to provide customizable analytics that let you add and combine analysis objects, such as customers, items, and vendors, according to your needs. 

  • Cycle Counting 

Manage cycle counting to verify inventory record data used to maintain and increase inventory accuracy. You can set up cycle counting on the item or SKU level. 

  1. Supply Plan and Availability 
  • Supply Planning 

Plan material requirements based on demand with support for master production scheduling and materials requirements planning. Generate optimal suggestions for replenishing inventory transfers based on the item’s current and future demand and availability, as well as a variety of planning parameters, such as minimum and maximum quantities and reorder quantities. Use automatic orders for assembly, purchase, production, and transfers, and action messages to balance supply and demand. Use time buckets when planning material requirements. 

  • Demand Forecasting 

Manage demand forecasting based on items. Input demand (sales) forecasts for products and components more conveniently (daily, monthly, quarterly). Create production and purchase orders that consider the demand forecast, available inventory, and plan requirements. 

  • Sales and Inventory Forecasting 

Get deep insight into potential sales and a clear overview of expected stock-outs using the Sales and Inventory Forecast extension. Leverage its built-in Azure AI capabilities to generate reliable forecasts that make it easier to manage replenishment. 

  • Order Promising 

Promise accurate order shipment and delivery dates based on an item’s current and future availability. When items are not available to meet a customer’s requested delivery date, calculate the earliest shipment date as either an available-to-promise date is based on an upcoming uncommitted supply or a capable-to-promise date is when items can become available. 

  • Drop Shipments 

Handle orders that ship directly from the vendor to the customer without having to physically stock items in your inventory. Keep track of order costs and profit—link sales orders to purchase orders to control the sequence of posting tasks. 

  • Order Planning 

Plan supply for all types of demand on individual orders using a simple supply planning tool. 

As companies look for innovative ways to respond to changing customer demands in this era of the COVID-19 epidemic, Microsoft Dynamics 365 provide an integrated business support system. Microsoft Dynamics 365 business central is a cloud business application supported through a network of partners like VISTAS CLOUD. At VISTAS, we have over ten years of experience serving small to medium-size businesses with all business needs, including supply chain management. We support the unique needs of companies and have the expertise to customize Microsoft Dynamics 365 business central to fit your specific needs.  


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