Managing Non Conformance with Microsoft Dynamics 365 Supply Chain Management

“Each manufacturer is required to establish and maintain procedures to control product that does not confirm to specific requirements” (21 CFR 820.90). Nonconforming can be a Product or a Process that does not meets its specifications. A nonconforming process can lead to a nonconforming product. This blog discusses how Microsoft Dynamics 365 Supply Chain Management can help manufacturers in managing Non conformance.

Non Conformance business process

Why manage Non Conformance – In addition to the regulatory requirements there are many benefits -

1. Improved safety of manufactured products
2. Manage product recalls
3. Better process equals more effective products
4. Gain consumer confidence with product reliability

AI and data analytics can also be used on the data collected for predicting and preventing future errors. The business process in Microsoft Dynamics 365 SCM is shown above and discussed step by step here -

1. Product fails quality – This could be during the incoming product inspection or during the manufacturing production process that a product can fail quality testing. It can also be a return of a product from Customer due to product failure.

2. The QA tester will than create the Non Conformance for the Quality Order. The benefit of creating from a Quality Order is that it has all the necessary details (like Vendor, Purchase Order and Batch #). 

Create Non conformance

3. Approve and print Non Conformance Tag – The Tester can than approve and print the Tag and attach to the product. This becomes a visual indicator on the product itself. Tester will move the product/s to a caged or locked area along with other non conforming products.

Tag

1.     4. Review & identify corrections – The product engineer will review the non conformance and identify corrections. Also assign the correction to the worker. Power automate can be used to notify the worker of the task.

Corrections

The assigned worker completes the corrections. The product engineer can than write the justification for the disposition of the items (using Notes) and closes the Non conformance.

5.      Reporting and analytics – This can be used to for management review of non conformance. Some of the reports that can benefit are - 

• Vendors with recurring # of non conforming products – to improve vendor performance
• Products with highest # of non conformance – to improve process results
• Corrections most applied – to re-design the production process

I hope the above helps you to understand and manage the non conformance process using Microsoft Dynamics 365 Supply Chain Management. Let me know how you are managing your current product or process Non Conformance.

Mihir Shah

@mihircrm 

(originally published by Mihir Shah as a linked in article on 11-23-2019)

reference - 1. https://docs.microsoft.com/en-us/dynamics365/supply-chain/inventory/enable-nonconformance-management

Supplier Quality Management with Dynamics 365 F&O - part-1 Vendor On-boarding

"In the manufacturing world anything can be outsourced except accountability" (1). Manufacturing enterprise have to adhere to regulatory and statutory guidelines as set by various global organizations like FDA or EU. Manufacturers are responsible and accountable for managing their entire supply chain.  This requires ensuring managing product compliance and safety standards from raw material sourcing to customer service processes. Vendors form a vital part of the supply chain process. This blog is focused on how to enable Supplier Quality Management (SQM) process with Microsoft Dynamics 365 Finance and Operations (F&O).

SQM can be broadly classified into 3 areas -
1. Selection and on-boarding
2. Collaboration
3. Risk analysis / scorecard

In this blog we will discuss Supplier or Vendor selection and on-boarding process using Microsoft Dynamics 365 F&O.

Firms have to set-up processes to ensure that their prospective vendor partners are identified and evaluated based on a set enterprise wide criteria with proper due diligence. This could be a manual process in which a questionnaire is sent to the vendor prospect and based on the data provided the vendors are evaluated by Supplier Quality Management personnel.
The supplier may have to go through a denied trade list verification check for export regulations. The Vendor has to provide several documents such as quality certifications and financial stability. The Vendors are also evaluated based on stringent industry compliance requirements for example the source of minerals and other raw materials are not from a conflicting nation.

The above vendor evaluation and selection manual processes can be automated and enhanced using Vendor on-boarding process with Microsoft Dynamics 365 F&O as shown -

Vendor On-boarding process 

The steps are detailed below -
1. The purchasing / buyer user will create a prospective vendor registration request record in Dynamics 365. This will have the Vendor company and contact details with email.

Prospective Vendor Registration Request

The user will submit the Vendor prospect for an initial trade approval. The status changes from new to user requested.

2. Most enterprises will need to ensure that the Vendor prospect is not on a denied trade party list. This check and verification will need to be done before going further in the on-boarding process.
If approved the Vendor contact record is created in Azure AD B2C. (for more details on setting up Azure AD B2C with Dynamics F&O refer (2))

Security roles assigned to external user

An external user record is also created in Microsoft Dynamics 365 F&O with an external user limited security role. (for more details on setting up Azure AD B2C with Dynamics F&O refer (2))
An email is also sent to the Vendor contact to log into the Microsoft Dynamics 365 F&O.
The request status changes to user invited.

3. Once the Vendor contact logs into the system they have to change their password and are given access to the Vendor questionnaire. The questionnaire asks for the basic information of the Vendor. We can also create our own questionnaire for getting more detailed information in order to complete evaluation. Once the Vendor contact completes the questionnaire a task can be created for the Supplier Quality Management (SQM) team to start the evaluation process.  The record status changes to "registration in progress".

4. The SQM team can do the evaluation and can ask for more information such as certifications and other records as needed further by email. Once evaluation is complete they can accept or reject the Vendor prospect. The record status changes to user accepted or rejected accordingly.

5. If accepted the Vendor and Vendor contact record are created in Microsoft Dynamics 365 F&O. A request can be sent to Accounts Payable to now set-up the Vendor payment details as necessary.

The entire process is now digitized and records can be maintained for future audit purposes. This also helps in getting multiple approvals for on-boarding the Vendor.

Things to note -
1. The questionnaire is not as flexible as one would hope it to be. In the future it may be possible to use the enriched Microsoft Flow for creating the same.
2. It is currently not possible for the prospective Vendor contact to provide attachment along with the questionnaire.
3. The Vendor record once approved and created may also have been granted access to Vendor collaboration. This needs to be verified and access removed if not required to be given.
4. If the Vendor is rejected the system will remove the access from Microsoft Dynamics 365. In addition steps needs to be taken to remove the Vendor prospect record and also delete in Azure AD B2C.

Hope the above is useful and you can digitize the Vendor on-boarding process using Microsoft Dynamics 365 F&O. I will write more about Vendor evaluation and collaboration in my future blogs on Supplier Quality Management. Thanks for reading.

Mihir Shah
@365withoutcode

Reference
(1) - Ref - SQM on www.mastercontrol.com
(2) - https://docs.microsoft.com/en-us/dynamics365/unified-operations/supply-chain/procurement/set-up-maintain-vendor-collaboration

Digital Transformation in Manufacturing using Microsoft Dynamics 365 Finance and Operations

Technology has enabled digital transformation for many industries. The transformation impact has been more evident in services and service related firms. We have seen the evolution of new business models (example - Uber, Bitcoin) or new delivery and consumption channels (example - Netflix). Manufacturing firms have been typically lagging in the innovation, adoption and execution of digital transformation.

Microsoft provides cloud business apps like Dynamics 365, and Azure services to enable digital transformation like, Azure messaging service along with the Power Platform apps (Microsoft Flow, Power Apps and Power BI). They have largely been implemented and coupled with Dynamics 365 customer engagement - for Sales, Service and Marketing business applications. With the upcoming release wave 2, Fall 2019, Microsoft Dynamics 365 Finance and Operations will now be enabled to connect with Microsoft Flow, Power Apps and Power BI (the Power Platform) and Azure services. This will be the enabler and driving force in leading digital transformation in manufacturing firms using Microsoft Dynamics 365 Finance and Operations.

1. Integrations - In a multi-cloud and multi-app world it is essential for business apps to be able to talk and share information with each other. This requires a cloud based integration services capability like Azure messaging service. It also requires the ability to collect and store vast amount of data from multiple applications - a cloud data warehouse like Azure Data lake. The new release with data feeds feature will enable near real time export of data from Dynamics 365 Finance and Operations to both Azure messaging service and Azure Data lake.
2. Business events & Microsoft Flow - Business events is a great new feature that enables external systems to receive notifications from Dynamics 365 F&O. The business event can send data to Azure service bus or be a trigger for Microsoft flow. This opens new opportunities to drive an outside processes based on events happening within D365 F&O. Some of the use cases for business events are -

• Customer or Vendor on boarding - On boarding a new customer or vendor has been a manual business process - which may require getting the necessary business qualification details, evaluation and manager approval. When a customer or vendor is created a business event can be triggered that will enable the necessary flow actions for sending a questionnaire, verifying business information and triggering approvals.
• Sales Order or Purchase Order confirmation - When a Sales order is entered or a PO confirmed by vendor a business event is triggered. Various external processes needs to be enabled based on the Sales Order or Purchase Order entry and confirmations. This can be the picking and shipping process at an external warehouse to order planning and preparation for transportation, arrival and production. This can be enabled using Microsoft flow.
• Financial period end closing process automation - Every finance team follows a certain process for their quarterly or year end closing. The business events can be triggered on completion of a particular task and the team can be informed to start the next task using Microsoft flow. Also once the new period is opened the AP / AR team can be alerted to enable them to start entering data for the new period.

3. Power Apps and Common Data Service with F&O - The wave 2 release will enable dual write capability for Finance and Operations data to be in Common Data Service near real time. "This will allow businesses to exchange near real-time data seamlessly in a synchronous bidirectional fashion, beyond application boundaries" thus provide users a "One Dynamics 365" experience. This is to be released in phases with Phase-1 for Customers, Vendors and Products data and Phase-2 for the inventory and financial transactional data.

I can imagine the possibilities of creating power apps for F&O users and sharing the data with customer engagement. Add to it the ability to use PowerApps Control Framework (PCF) with F&O data would be amazingly useful for businesses.

4. AI insights- The above integration features now enabled to design and implement new AI capabilities. This now enables the Finance and Operations data to be integrated with data from other business apps in Azure Data lake and be able to get actionable AI insights to drive business transformation. Power BI data flows can now be enabled with the data in Azure data lake to generate insights using AI models. It will be possible to bring in the PowerBI custom visuals directly into Dynamics 365 F&O. In addition Azure IOT data can be coupled with Dynamics 365 F&O data to get more insights.

This all may still feel like a dream but it is becoming a reality and coming to your F&O apps very soon. The future of digital transformation for manufacturing and distribution firms using Microsoft Dynamics 365 Finance and Operations is now turning bright and glamorous. It is great to be part of an exciting future. 

In my next D365 F&O blog I will write more about the new Supply Chain management capabilities in Wave 2 release of Microsoft Dynamics 365 Finance and Operations. Till then do let me know how you plan to transform your manufacturing operations using the upcoming new features.

Mihir Shah @mihircrm

reference - Upcoming release wave 2 Finance and Operations features - https://docs.microsoft.com/en-us/dynamics365-release-plan/2019wave2/dynamics365-finance-operations/