This document provides a comprehensive guide on configuring and managing products and inventory in Microsoft Dynamics 365 for Finance and Operations, covering aspects such as item and dimension groups, inventory management, and reporting. Key functionalities include setup for inventory journals, management of transfer orders, and utilization of the ABC classification system to prioritize inventory control. Additionally, it outlines inventory tracking, product attributes, and the creation of warehouse structures to facilitate smooth operations and reporting.

1. 81204AE:Configure and Manage Products and
Inventory in Microsoft Dynamics 365 for Finance and
Operations, Enterprise edition

2. Manage Products and Services for Procurement
Enrich Product Data
Basic Inventory Management Setup
Process Inventory Journals
Process Transfer Orders
Configure, Run, and Review Inventory Reportin
Course Modules

3. Manage Products and Services in Microsoft Dynamics
365 for Finance and Operations, Enterprise edition

4. Creating Item and Dimension Groups

5. Item Groups
Item Model Group
Storage Dimension Group
Tracking Dimension Group
Product Dimension
Objectives

6. Item Groups
• Groups similar items together that share a posting profile
• Item groups are used to manage transactions postings
• All items must be associated to an item group before use

7. Item Model Group
• Determine how items are controlled and handled on receipt and issue
• Determine calculation of consumption
• Can be associated with more than 1 item
• Allow you to control several items by using the same setup

8. Storage and Tracking Dimensions
• Storage and tracking dimensions:
• Determine where and how a product is stored and tracked
• Can be associated with the product after it has been created
• Requirements for a product to be applied on a transaction line

9. Product Dimension
• Product dimensions identify product variants
• Every product master is assigned to a product dimension group
• Product dimensions are Configuration, Color, Size, Style

10. Managing Inventory

11. Inventory Tracking
Unit of Measure and Conversion
Owner dimension
Released Product
Released product with Variants
Objectives

12. Inventory Tracking
• Serial and batch numbers are used to trace products using Microsoft
Dynamics 365 for Finance and Operations
• Tracking, quality assurance, warranties

13. Unit of Measure and Conversion
4 unit of measure fields on released product:
• Sell
• Purchase
• Inventory
• BOM
Unit of measure conversations must be in place if for example the
purchase UOM is different from the Inventory UOM

14. Owner dimensions
• The owner dimension is used during the consignment process
• Found in the tracking dimension group setup
• Inventory ownership change journals can be used to move product

15. Released Products
• Products and product masters shared across all legal entities
• Item vs. Service product type
• Products can be created from the Released product maintenance
workspace or directly from the Product information management
module

16. Released Products and Variants
Color= Blue
Size= Large
Style= Short Sleeves
Color= Red, Green, Grey
Size= Small, Medium, X-Large
Style= 3/4 Sleeves, Long Sleeves
Variants

17. © Copyright Microsoft Corporation. All rights reserved.
Key takeaways
• Item groups are used to manage transaction postings
• Item model groups determine how items are controlled and handled
during receipt, issue, and consumption
• Storage and tracking dimensions determine how a product is storage and
tracked in Finance and Operations
• Product dimensions and combination of product dimensions are used to
identify product variants
• Tracking dimensions of serial number, batch number, and owner can be
used for Inventory tracking throughout Finance and Operations

18. © Copyright Microsoft Corporation. All rights reserved.
Key takeaways
• Unit of measure conversations can be managed globally or at the
released product level
• The owner dimension in the tracking dimension group can be used to
track consignment inventory by vendor
• Products and product masters shared across all legal entities and can be
released to individual companies
• Released products and product variants define the details about the
product's specific variations

19. EnrichProductDatainMicrosoftDynamics365forFinanceandOperations,Enterprise
edition

20. Set Product Attributes
Create Product Attributes
Create and Maintain Category Hierarchies
Objectives

21. Set Product Attributes
 What are product attributes?
 Product attributes record details about products
 These attributes can be used for tracking and analysis purposes
 Product attributes are not assigned directly to items
 They are dynamic and assigned to categories
 Each product attribute has an attribute type
 Attribute types specify the type of data used by the attribute
 Currency
 DateTime
 Decimal
 Integer
 Text
 Boolean

22. Create and Maintain Category
Hierarchies
Software
Electronics Subcomponents
Office Supplies
Sales Procurement

23. © Copyright Microsoft Corporation. All rights reserved.
Key takeaways
 Product attributes record details about products
 Product attributes are not assigned directly to items
 They are dynamic and assigned to categories
 Category hierarchies are used to classify products or transactions
 For reporting and analysis
 Each product attribute has an attribute type
 Attribute types specify the type of data used by the attribute
 Currency
 DateTime
 Decimal
 Integer
 Text
 May be flagged as a fixed list, this will allow users to define a list of values
for the attribute
 Boolean

24. Basic Inventory Management Setup
in Microsoft Dynamics 365 for
Finance and Operations, Enterprise
edition

25. Create a Site
• Sites are a grouping of business resources such
as a warehouse or production units
• A single site cannot be shared by multiple legal
entities.

26. Create a Warehouse
• When you have several warehouses, you can
divide the total on-hand inventory among these
warehouses
• A warehouse can only be associated to 1 site
• 3 types of warehouses
• Default
• Quarantine
• Transit

27. Create a warehouse
Default
Quarantine
Transit
• Main warehouse
• Stores inventory
• Attached to warehouses used for storing quarantined inventory
• Can be linked to default warehouses
• Intermediate warehouse for transferring inventory from one
location to another
• Represents the location of the items as they are moved from
one warehouse to another within the same legal entity
• Must be attached to default warehouse before transfers are
completed

28. Configure warehouse and warehouse items
• Warehouses are denoted as anything that can or
will hold inventory.
• Warehouse items are created by associating
products and product variants with a specific
warehouse, a counting group, and location
information.

29. Setup Inventory Aisles and Locations
• It's important to note that Inventory Aisles and
Locations are only required for items that have a
storage dimension group with the location
dimension activated.
• Aisles
• Inventory aisles are used to specify a particular aisle within a
warehouse.
• The aisle ID, which typically is the first part of the location name

30. Setup Inventory Aisles and Locations
• Locations
• Locations let us set up the various different location types, such as
bulk locations and picking locations.
• We also override the sorting information on the individual
locations.
• Sort codes
• Use sort codes to optimize the handling of picking lines
• During the picking process, Finance and Operations will look for
item locations with the lowest sort code to pick first

31. Boxing logic
• Boxing logic is part of the process to release
items for picking, and for grouping items on a
picking route.
• Boxing logic automatically finds the most
efficient way of boxing items, and factors in
weight, volume, and dimensions

32. Boxing logic
• The next step is to define the dimensions and boxing
requirements of an item. The picking and shipping functions then
determine whether multiple items are boxed together.
123 Main
Street

33. Picking Workbench Profiles
• Workbench profiles enable you to create
templates for search criteria that can be
used to start a picking session in the
picking workbench
• When you create a profile, you specify the
values that you want to use in the picking
session. You can change these values
before generating picking batches.

34. Update an existing pick
• A picked line can be reversed, edited, or split
• A transaction must be reversed to update a pick
on a sales line.

35. Key Takeaways
• Sites are a grouping of business resources such as a warehouse or production units
• A warehouse can only be associated to 1 site
• Warehouse items can be used to associate products and product variants with a
specific warehouse
• Inventory Aisles and Locations are only required for items that have a storage
dimension group with the location dimension activated.
• Location sort codes can be used to help determine the best picking order

36. Key Takeaways
• Boxing logic automatically finds the most efficient way of boxing items, and factors in
weight, volume, and dimensions
• Workbench profiles enable you to create templates for search criteria that can be
used to start a picking session in the picking workbench
• The picking workbench is used to batch picking lists together to help streamline the
picking process. Boxing logic can be used in conjunction with the picking workbench
to also suggest box sizes during the packing process.

37. Process Inventory Journals in Microsoft
Dynamics 365 for Finance and
Operations, Enterprise edition

38. Objectives
 Setup Inventory Journals
 Manage Inventory Adjustments and Inventory movement Journals
 Create Transfer, BOM journals
 Create and Process Cycle Counting Operations
 Tag counting
 Process Inventory Blocking
 Setup Item Registration

39. Set up inventory journals
• Inventory journals are a method of making
manual updates to the inventory.

40. Manage Inventory Adjustments and Inventory Movement
Journals
• Key difference
• Movement journal allows an offsetting general ledger account
• Inventory adjustments post according to inventory posting profiles.

41. Manage Inventory Adjustments and Inventory Movement
Journals
 Movement Journal:
• One use for the movement journals is for bringing in open
inventory balances during system setup
• This will allow you to post an inventory receipt or issue to a specific
ledger account

42. Manage Inventory Adjustments and Inventory Movement
Journals
 Use Inventory Adjustments form when:
• Items are removed form Inventory (Loss)
• Items are added into Inventory (Gain)
 When Inventory Adjustment Journals are posted:
• Inventory receipt or issue is posted
• Inventory level and value is changed
• Ledger transactions are generated

43. Create Transfer Journals
 Transfer journals reflect immediate movement of
material without requirement to track in-transit
inventory.
 Note: Transfer orders should be if in-transit inventory needs to be
tracked.

44. Create Bill of Material (BOM) Journals
 A BOM journal is used by companies where
production routes are not specified or required
 Upon posting, the BOM item will be received into
inventory and items included in the BOM will be
consumed and relieved from inventory

45. Counting Journals
 Counting Journals:
 Calculate current on-hand inventory for an item or group of items
 Post physical counts to make adjustments necessary to reconcile
differences
 Counting groups and policies can be created for items meeting the
same criteria.

46. Setup and Manage Cycle Counting Operations
 Warehouse items allow you record multiple
product dimension configuration for you items
in each warehouse.
 Each warehouse item setup can have different:
 Counting groups
 Inventory dimensions
 Receipt and issue locations
 Counting status and associated active journal is
shown for each warehouse item

47. Setup and Manage Cycle Counting Operations
Counting groups let you create logical groupings of items. Counting
codes include:
• Manual
• Period
• Zero in stock
• Minimum

48. Create and Process Cycle Counting Journals
 Counting groups
 Used to group items to be counted
 Determines how counting journal lines are created when journals
are created automatically

49. Create Tag Counting Journals
 Tag Counting is used when automatic counting
lines are generated
 Some companies use tags with pre-assigned
numbers to conduct a physical inventory
 A tag count is used to tag count lots with a
numbered tag that includes:
 Tag Number
 Item Number
 Quantity

50. Create Tag Counting Journals
 This tag counting journal represents an
approach to tag control.
 Creates a counting journal with used tag journal lines
 A separate tag counting journal is used to
record:
 Tag Number
 Status
 Count

51. Processing Inventory Blocking
 Inventory items are blocked in the following
ways:
 Manually
 By creating a quality order
 By using a process that generates a quality order
 By using inventory status blocking

52. Processing Inventory Blocking
 The Inventory Blocking form is used to block a
quantity of an item by transaction
 Only available-as-on-hand inventory can be blocked
 Consider if expected receipts should be included
in planning activities, as an expected on-hand
Qty
 Cancel blocking of a manually blocked quantity
with the deletion of the transaction in the
Inventory Blocking form.

53. Setup Item Registration
 Finance and Operations allows users record item
information performing a physical update.
 Item model group flag of Registration
requirements controls if the item receipt must be
registered before the product receipt for the
item is updated.
 This is useful when a company must ensure batch or serial numbers
are recorded at arrival and tracked through inventory.

54. Key Takeaways
 Movement journal allows an offsetting general ledger account to be
manually specified
 Inventory adjustments post according to inventory posting profiles.
 Transfer journals do not track in-transit status. Transfer orders
should be used if tracking is needed.
 BOM journals are used to increment inventory for finished good
while consuming items contained in the bill of materials

55. Key Takeaways
 Items are not locked for counting when added to a tag counting
journal
 4 ways to use Inventory blocking
 Item arrival can be used to register an item prior to physically
posting

56. Process Transfer Orders in Microsoft Dynamics 365
for Finance and Operations, Enterprise edition

57. Setup transfer orders
Use transfer orders form
Pick, ship and receive items
Objectives

58. Setup transfer orders
Transfer orders are a process-oriented functionality used to
manually handle and master schedule created transfer orders
between warehouses in the same company.
Specify a
Transport
Time
Track Item
Progress
Forms and
Printouts
Release Transfer
Order Picking Form
Delivery Date
Control

59. Setup transfer orders
Create Transit
Warehouse
Attach Transit
Warehouse to From
Warehouse
Create Transport Days

60. Use Transfer Orders Form
This form is used to process transfer orders. Transfer orders can be manually created or
created from firmed planned transfer orders generated by master scheduling.
Transfer

61. Transfer Picking
The item pick process can be performed for items that require picking as a mandatory stage.
Picking of items for a transfer order can be performed from the transfer order form by creating a
picking list and then updating the picking list registration.
The Release transfer order picking form provides an overview of all transfer order lines with on–
hand inventory that have the same inventory dimensions as the transfer order line that fulfills the
order line completely or partially.

62. © Copyright Microsoft Corporation. All rights reserved.
Key takeaways
Transfer orders can be used to move items between warehouses within the same
company
Default transit days can be setup to default the time the product will take to arrive at
the To warehouse
Transfers can be individually released for picking or batched to release multiple
transfers for picking at one time

63. Configure, Run, and Review Inventory
Reporting in Microsoft Dynamics 365 for
Finance and Operations, Enterprise edition

64. Understand ABC Classifications
• The ABC inventory classification system helps
determines the importance of items.
Have many low value
items
Reduce inventory of high
value items

65. A Items
• Require high priority level of control
• Controls include keeping accurate records, frequent review by
management, frequent review of demand forecasts, close follow-up
and expediting to reduce lead time
• Have medium level of control
• Have typical controls with good records, regular attention, typical
processing
B Items
• Has lowest priority level of control
• Use the simplest possible controls
• Order large quantities and carry safety stock
C Items

66. Configure, Run, and Review ABC Classifications
• ABC classifications can be manually configured
for items in Finance and Operations or they can
be automatically updated using a periodic job.

67. Determine Physical Inventory using the Inventory Dimension
Report
• The Physical inventory by inventory dimension
report displays the inventory quantity for each
inventory dimension for the date selected.
• This allows you to filter by inventory dimensions

68. Inventory aging report
• FIFO algorithm is used to calculate how old the
inventory is
• Report will display quantities in aging buckets
that have been defined in the parameters

69. Manage the Inventory Close Process
• Typically run by a company during their month
end activities.
• The inventory close is a process of settling issue
transactions with receipt transactions based on
your item model group’s inventory valuation
method.
• An inventory recalculation will make
adjustments but does not make settlements to
inventory transactions.

70. Key Takeaways
• The ABC inventory classification system helps determines the importance of items.
• Inventory aging report uses FIFO algorithm to calculate how old inventory is
• Inventory close is not required when using a inventory valuation method of standard
cost
• The inventory close is a process of settling issue transactions with receipt transactions
• An inventory recalculation will make adjustments but does not make settlements to
inventory transactions.