Quality Management Process in Dynamics 365 Supply Chain Management – Part 2

Introduction

In my previous blog, I explained the required Quality Management setups.

In this blog, I will execute the Quality Management process with two scenarios; in the first scenario the Products passes all the Quality Control process, and in the second scenario will be where the Products fail a Quality Control Process.

To address the Second scenario, two products will be selected, specifically Brake Pads from two distinct manufacturers.

All the setups that I showed in my previous blog will remain the same.

To execute the second scenario, I will take two products from two different manufacturers. And an additional Item Sampling has been created for the second product.

Execution: (Scenario 1)

As all the necessary setups are completed let’s test this by creating a Purchase Order for quantity 10.

As per the Quality Association setup the Quality Order has been created after product receipt generation.

So now until the Product passes the Quality Test, the Purchase order cannot be Invoiced since the Event Block is set to Invoice.

Here the Quality Order is generated for 5 qty since the Item Sampling is 50% so the entire 5 qty needs to pass the Quality Test as the acceptable level is 100.

Select the Test and then click on Results to fill in the Test Results for the Product: Brake Pads.

In the Results Page, in the Results Quantity enter the Quantity which passed the quality test. Then select the Outcome and you can see a right tick in the Test Result column which means that the product has passed that particular Quality Test.

Repeat this process for all the Tests.

The Next step is to validate the Quality Order. For that click on Validate from the top of the screen.

Here I have disabled the Quarantine upon Validation failure because my product has passed all the Quality Tests so there is no need to enable that parameter unless it fails the Quality Tests.

Now since my Product has passed the quality order, I will now be able to generate the Purchase Order Invoice.  

Notice how the Quality Order status changes from “Open Quality Order” to “Closed Quality Order”.

Scenario 2

As I explained at the beginning of my blog, in this scenario, I will take two products from two different manufacturers (P-000017 and P-000018) and one of them fails the Quality Tests.

The products that failed to pass the Quality Order will be transferred to the Quarantine Warehouse for further processing.

The Quality Association has been set up for both the Products. For Product P-000017 the Item Sampling is set to 50% and the AQL is set to 100 and for Product P-000018 the Item Sampling is set to 100% with Full Blocking Parameter enabled.

Quality Order Processing

As per the Tests defined for both Items, the product P-000017 has failed the test as the acceptable quantity defined is 100 for all the tests. And for the other Product that is P-000018 has passed all the Quality Order tests. Refer below screenshot to view the failed Tests of product P-000017.

In the above screenshot, you can see that only 1 quantity of product P-000017 has passed the test and the other 2 quantity has failed to pass that particular quality test which ultimately leads to Quality Order failure.

Same is the case with the other two tests as well, which clearly state that Product P-000017 has failed the Quality Order process.

Now you can see that Product P-000017 has failed the Quality Order process so it is necessary to move this stock to a different location where it will be further inspected.

This process of segregating stock is referred to as Quarantine.

Quarantine Management

Quarantine management in Dynamics 365 Finance and Operations refers to the process of isolating and controlling items that are suspected of having quality issues or non-conformities.

The quarantine management system helps track and manage these items, allowing for proper inspection, testing, and disposition decisions. It ensures that only items meeting quality standards are released for further use or shipment, while those in quarantine undergo necessary actions, such as testing, repair, or disposal, to address any identified issues.

A new separate Warehouse should be created in the system to transfer the products that fail the Quality Order process. This warehouse is called a Quarantine Warehouse.

Attach this warehouse with a warehouse that you are going to use for transactions under the Quarantine Warehouse drop-down option.

Quarantine Process

As the Product P-000017 has failed the test it needs to be transferred to the Quarantine Warehouse.

To do that click on Validate from the top of the screen and then enable the Quarantine upon Validation Failure parameter and then click on OK.

In the below screenshot, you can see that as I clicked on OK, the System automatically generated a Quarantine Order.

Now if you go to that released product and click on Transactions under the Manage Inventory Fast Tab you can see that the Product P-000017 has been deducted from W1 and has been received in the Quarantine Warehouse.

Depending on the product type and inspection results, an item can be repaired to make it acceptable or returned to the vendor if it is deemed unfit for use. If there is an agreement with the vendor, and permission is granted, the item can be directly scrapped from the quarantine warehouse using the Scrap functionality.

If the items are to be returned back to the Vendor in such a case the inventory must be first returned to the default warehouse. A specific location can be defined in the Default Warehouse for this purpose.

In this scenario, I am assuming that the product was repaired and deemed fit for use after Quarantine Inspection. Now in order to receive this inventory in the Main Warehouse(W1) we need to use the Item Arrival Journal.

1. The first step is to open that Quarantine Order.

2. Click on Report as Finished from the top of the screen.

3. Click on End from the Top of the screen to end the Quarantine Order which will post the Arrival Journal and all the Inventory will be received back in the Main warehouse from the Quarantine Warehouse.

Now you can proceed with the Purchase Order Invoice as the Quality Order is closed for both the Products.

Here you can see that the Purchase Order is Invoiced Successfully. But the system says that the Product failed to meet the minimum requirements.

This finishes up the entire scenario where we observed that the quality order failed to meet the test requirements, leading to the inventory being transferred to the quarantine warehouse for additional inspection and evaluation.

That’s it for this blog.

Thank You!!!