A: Commitment types

Each line in a purchase agreement is a commitment to buy something. You can use lines from multiple purchase orders (POs) to fulfill the commitment. There are four types of commitments:

Product quantity commitment – You purchase a specific quantity of a product.

Product value commitment – You purchase a specific currency amount of a product.

Product category value commitment – You purchase a specific currency amount in a procurement category. The amount can be for a catalog item or a non-catalog item.

Value commitment – You purchase a specific currency amount of any product or products in any procurement category.

Policies for purchase agreements

B: The following policies affect the way that the link between a purchase agreement commitment and the corresponding PO lines works:

Max is enforced – The total quantity or amount for all order lines can't exceed the quantity or amount that is specified on the related commitment.

Price and discount is fixed – The price on an order line and the price on the related commitment must be the same. If the price is changed on the order line, the link to the commitment is broken. If the link is broken, the order line doesn't contribute to the fulfillment of the commitment.

Minimum release amount and Maximum release amount – If an amount is specified, you receive a message if you make any change to an order line that causes the order line to differ from the related commitment.

Note: As whiteboard paint grows in popularity, so does the demand. This causes supply shortages. Whiteboard paint is ordered six months in advance.

Requirements. Customers and sales

(A) Schools must agree to the amount of whiteboard paint they will purchase for the whole school year.

(B) Sales of whiteboard paint must be limited so that one school does not buy all the inventory and force backorders for other schools.

Box 1: Standard

Standard conversions – Set up standard conversion rules for all products.

Box 2: Intra-class

Crayons are stored as separate item numbers depending on whether they are in a box or a case. This creates issues when counting inventory to determine the total number of crayons in stock.

Intra-class conversions – Set up product-specific conversion rules for units in the same unit class. For example, you can set up a conversion rule for a product that converts a box to the number of pieces in a box. Pieces and boxes are both assigned to the Quantity unit class.

Incorrect:

Inter-class conversions – Set up product-specific conversion rules for units across unit classes. For example, you can set up a conversion rule for a product that converts kilograms to liters. Kilograms are assigned to the Mass unit class and liters are assigned to the Liquid volume unit class.

Box 1: Price group

A school that is part of the special paint program reports that a sale price on canvas last month was a better price than its paint program price. The school requests a price adjustment.

Trade Agreement Logic

Before we go and set up a trade agreement let’s first discuss how the system evaluates trade agreements. When Dynamics 365 Finance and Operations evaluates trade agreements it tries to find the most specific pricing that falls within the validity dates. What I mean by “most specific” pricing is, the system checks the “Party type code” as well as the “Product code type” to see if there is a valid price specific to that customer or vendor for the specific product selected on the sales order or purchase order line respectively. Then if it cannot find that most specific combinations it looks for the next level up which are the price groups and then finally if it can’t find prices at the group level it looks for prices that may apply to all vendors or customers.

Box 2: Find next on trade agreement line for select customers only

The next trade agreement type is a line discount. As the name suggests a line discount will appear on the sales order line as a percentage discount or a per unit discount depending on how the trade agreement is set up.

Box 1: Planned

If a vendor can no longer deliver the raw materials for the energy drinks due to supply chain issues, the costs for using an alternative vendor to source the raw materials should be used to determine the impact on profits.

Planned costs

A costing version can contain a set of planned cost records about items and manufacturing processes. A costing version that contains planned costs is often used to support cost calculation simulations, such as simulations of the effect that cost changes to purchased materials or manufacturing processes has on the calculated costs of manufactured items. The item cost records for planned costs can also be used to support an actual cost inventory model by providing the initial values for item costs. These values include the calculation of planned costs for manufactured items.

Box 2: Standard

The profitability for nutritional supplements manufacturing processes needs to be expressed in terms of the cost categories for routing operations and the calculation formulas for manufacturing overheads.

Standard costs

A costing version can support a standard cost inventory model for items, where the costing version contains a set of standard cost records about items and manufacturing processes. Cost data about manufacturing processes is expressed in terms of the cost categories for routing operations and the calculation formulas for manufacturing overheads.

Box 1: Price Group

Note: Requirements. White labeling

• Trey Research will provide and maintain a 'Compare to' price for customers to use to compare the white-labeled products. This Compare to price will also be the default item price for the customer if the customer accidentally lets a contract price expire.

Price Group

In Microsoft Dynamics AX, price groups can be used to specify a set of prices that you want apply to a group of customers, vendors, or items.

* For item transactions, prices are derived from price groups that are referenced in trade agreements in the Sales and marketing module.

Box 2: Trade allowance

Note: Customers are categorized into four pricing tiers (A, B, C, and D) based on sales volume over the past 12 months.

Promotional fund and Trade allowance agreement

A trade allowance agreement is an incentive program where pay-for-performance monetary rewards are offered to customers that achieve specific volume targets and/or behavioral goals. Promotional funds are budgeted expenditures. In that way, the promotional campaigns can be captured.

Box 3: Price Group

Box 1: Product dimension

There are five product dimensions: color, configuration, size, style, and version.

Box 2: Product variant

Product variants are also referred to as items. An item is a tangible product, which isn't the same as a service.

A product variant can be generated based on the product dimension values.

Example

A company sells denim jeans. The item, Jeans, uses the color and size product dimensions. The jeans are sold in three different colors and six different sizes. The colors are blue, black, and brown. The sizes are XS, S, M, L, XL, and XXL. Not all sizes are available in all three colors. If all combinations were available, there would be 18 different types of jeans. However, in this example, only the following nine product variant combinations are produced.

Box 3: Tracking dimension

Scenario: If products in the warehouse must be blocked from transactions for a specific reason, such as a health and safety review, warehouse users should be able to block the products quickly from the ERP system.

Box 1: Owner tracking dimensions

Requirements. White labeling

• Trey Research wants to start white labeling its products under the brands of major nutritional retail store brands. These products would only be sold to specific customers.

• Trey Research will provide and maintain a 'Compare to' price for customers to use to compare the white-labeled products. This Compare to price will also be the default item price for the customer if the customer accidentally lets a contract price expire.

• The configuration of these restrictions must be applied automatically when creating new products for those customers.

The tracking dimension is a lower-level assortment of products, irrespective of whether it is a serial number for electronic inventory items or a batch number.

Box 2: Released product

To change the Tracking Dimension Group for Products in Dynamics Operations, you need to change settings on both on the product level and the released product level. However, you need to delete the tracking dimension group at the product level prior to making changes to the corresponding released product.

Box 1: discount

Requirements. Pricing

Trey Research plans to do promotional pricing. Certain products will receive special pricing during the hours of extreme sporting events that Trey Research sponsors. Before or after the event, normal pricing will resume.

Box 2: periodic

A discount period defines the period during which a price adjustment or discount is valid.

Box 3: catalog

A product catalog is a collection of products with their pricing information. The product catalog entities let you create a rich product classification system in Dynamics 365 for Customer Engagement that provides support for:

* Defining multiple pricing and discounting models. You can also use custom pricing instead of the Customer Engagement system pricing to calculate prices when you associate a product or bundle to an opportunity, quote, order, or invoice. Further, you can select whether to apply discounts for products at the per-unit or line level.

* Etc.

Note: Price groups are at the heart of price and discount management in Commerce. Price groups are used to assign prices and discounts to Commerce entities (that is, channels, catalogs, affiliations, and loyalty programs). Because price groups are used for all pricing and discounts, it's very important that you plan how you will use them before you start.

* trade agreement discounts

The capability to work with categories is a key differentiator between discounts and trade agreement discounts, and the main reason that we discourage you from using trade agreement discounts. Categories are organized in a multi-level hierarchy. By contrast, the item discount groups that are used by trade agreements are only a single level of grouping, and each group is specific to one of the three trade agreement discount types, such as Line discount, Multiline discount, and Total discount. Therefore, for trade agreements, if you want to use the same set of products in all three trade agreement discount types, you must create and manage three independent discount groups.

* An affiliation identifies customers who are members of a group, or are associated with one, for example, seniors or students. Before you can add affiliations to customer records, you must set up affiliations and their discounts.

Box 1: Product

Current environment. Items

Product numbering

All items are numbered by using a smart numbering format: [Product SKU+Size+Color+Style]. For reporting, items are queried for sales and inventory reports by using the first six digits of the item number or until the first dash is encountered.

• A t-shirt could be 01001-S-Red for item 1001 in a size small with the color red.

• A single energy drink could be 02001-12oz or 02001-20oz for the different sizes that product 02001 is sold in.

Product attributes

• All clothing shares the same set of product attributes.

• Supplements may share the same Product SKU but can have different attributes for the different size, color, or style variations of the product.

• Product attributes that are unnecessary for an item should be excluded from the item.

Box 2: Product variant

Product masters and product variants

In an agile world, where products must be quickly adapted to customer requirements, product definitions specify a set of products instead of distinct products. In Supply Chain Management, those generic products are known as product masters. Product masters hold the definition and rules that specify how distinct products are described and behave in business processes. Based on these definitions, distinct products can be generated. These distinct products are known as product variants.

A product master is associated with a product dimension group and a configuration technology to specify the business rules. The product dimensions (Color, Size, Style, and Configuration) are a specific set of attributes that can be used throughout the application to define and track specific behaviors of the related products. These dimensions also help users search for and identify the products.

Box 1: Test groups

Requirement 1: 100 percent of all nutritional supplements and 50 percent of all energy drinks must be tested when production orders are completed. After a product is in testing, 100 percent of all tests must be completed.

You use the Test groups page to set up, edit, and view test groups and the individual tests that are assigned to them. The upper part of the page shows the test groups, and the lower part shows the tests that are assigned to a selected test group.

You assign several policies to a test group, such as a sampling plan, an acceptable quality level (AQL), and the requirement for destructive testing. Then, when you assign an individual test to a test group, you define additional information, such as the sequence, documents, and validity dates. For a quantitative test, the information that you define also includes the acceptable measurement values. For a qualitative test, the information includes the test variable and default outcome.

The test group that is assigned to a quality order defines the default set of tests that must be performed on the specified item. However, you can add, delete, or change tests for the quality order. Test results are reported for each test on a quality order.

Box 2: Quality groups

Requirement 2: 75 percent of all nutritional supplements and energy drinks should be tested against their required tests during an outbound process.

Quality groups

A quality group represents common testing requirements for items.

Use and create item quality groups to logically group products so that they can be assigned to quality associations for the automatic generation of quality orders.

Example of an item quality group

A manufacturing company purchases various raw materials that have the same testing requirements for incoming inspection. Therefore, the company defines a quality group and then assigns the item numbers that are associated with the raw materials to that group. Later, the company purchases a new type of raw material that has the same testing requirements. Instead of setting up new testing requirements for the new material, the company adds the item number for the new material to the existing quality group.