The document provides steps for creating a purchase order in Microsoft Dynamics 365 Finance and Operations. It describes creating a vendor, purchase order, receiving goods against the purchase order via a goods receipt, and invoicing and paying the vendor. Key steps include creating a vendor master, entering line items in a new purchase order, receiving items which increases inventory, invoicing to match the receipt to payment, and checking the on-hand inventory and purchase order status after each step.

1. MICROSOFT DYNAMICS 365 F&O
Supply Chain Management

2. PRODUCT & PRODUCT MASTER
 PRODUCT:
 Product is a Base product or Standard product.
 No variation w.r.t. size, color, style and configuration
 PRODUCT MASTER:
Product master is a product having variation w.r.t. size, color,
size and configuration.
Example: shirt
 SIZE: S,M,L,XL,XXL,XXXL, etc
 COLOR: RED,BLUE,BLACK, WHITE, etc
 STYLE: half hands, Full hands, neck, neck less, etc
 CONFIGRRATION:
Predefined variants, Dimension based configuration, Constrained
based configuration and Rule based configuration.

3. PRODUCT & PRODUCT MASTER
 Product and product master are Enterprise level data or cross
company data or across the company data
 It means that , if you created in once company, it will be
available in all companies
 Product creation path:
 Product information management>Products>Products
 Click on NEW Button, Product type: Item
Product subtype: Product
 Enter Product number: 9879 or Ball pen
Enter Product name: Ball pen
Enter Search name: Ball pen, Click on OK Button
Checking of created product:
Product information management > Products > All products and product masters

4. PRODUCT creation

5. PRODUCT creation

6. PRODUCT creation
Product information management > Products > All products and product masters
Enter: ballpen in the search

7. PRODUCT MASTER creation
Product information management > Products > product masters CLICK ON NEW

8. PRODUCT MASTER creation
Product information management > Products > product masters

9. PRODUCT MASTER creation

10. Product release to legal entity
Product information management> Products > All products and product
masters

11. Product release to legal entity
Product information management> Products > All products and product
masters
 Click on Released products>next>select LE’s>

12. Product release to legal entity
Product information management> Products > All products and product
masters
 Click on Released products>next>select LE’s>

13. Product release to legal entity
Product information management> Products > All products and product
masters
 Click on Released products>next>select LE’s>next>Finish

14. Product release to legal entity
Product information management> Products > All products and product
masters
 Click on Released products>next>select LE’s>next>Finish

15. PRODUCT & SERVICE
PRODUCT:
PRODUCT IS PHYSICSL PRODUCT WHICH CAN BE
 STORED,
 PHYSICAL INVENTORY TRANSANCTIONS POSSIBLE, FINANCIAL
TRANSANCTIONS POSSIBLE,
 ONHAND INVENTORY UPDATION POSSIBLE.
EX: TV, MOBILE, CAR, PEN etc.
SERVICE:
SERVICE IS NOT A PHYSICSL PRODUCT WHICH CAN BE
 NOT STORED,
 PHYSICAL INVENTORY TRANSANCTIONS NOT POSSIBLE,
 FINANCIAL TRANSANCTIONS ARE POSSIBLE,
 ONHAND INVENTORY UPDATION NOT POSSIBLE.
EX: AC INSTALLTION, TRAINING, SOFTWARE INSTALLLATION,
etc.

16. CUSTOMER MASTER CREATION
PATH: Sales and marketing>Customers>All customers
CLICK ON NEW BUTTON

17. CUSTOMER MASTER CREATION
PATH: Sales and marketing>Customers>All customers
CLICK ON NEW BUTTON, ENTER DETAILS, CLICK ON SAVE

18. CUSTOMER MASTER CREATION
PATH: Sales and marketing>Customers>All customers
(OR) PATH: Account Receivables>Customers>All customers
CLICK ON NEW BUTTON, ENTER DETAILS, CLICK ON SAVE, AFTER SAVE

19. VENDOR MASTER CREATION
PATH: PROCUREMNT& SOURCING> VENDORS>All VENDORS
(OR) PATH: Account PAYABLES> VENDORS>All VENDORS
CLICK ON NEW BUTTON, ENTER DETAILS, CLICK ON SAVE, AFTER SAVE

20. PRODUCT & ITEM
Product number serves as a main product
identification (ID) in the system. It helps to identify or
to search for the same product across different legal
entities or across the entire organizational structure.
Item number is the legal entity-specific identification
of the released product.
A product is primarily defined by a product
number, name, and description. However, other data
is also required in order to describe a product or
service: Product type: Item or service. Product
subtype: Distinct products or product masters
Products are shared across all legal entities, while
items are legal entity-specific

21. RELEASED PRODUCT/ITEM CREATION
Item
group
Item
model
group
IU
PDG
SDG TDG
PU
SU
PP SP
IP CATEGORY
ITEM CREATION

22. RELEASED PRODUCT/ITEM CREATION
Product information management>Products> Released products
Product type: ITEM OR SERVICE
Product subtype: PRODUCT OR PRODUCT MASTER
Product number: ANY THING(MEANING FULL)
Product name: ANY THING(MEANING FULL)
Search name: AS YOUR WISH
Item number: ANY THING(MEANING FULL)
Search name: ANY THING(MEANING FULL)
Item model group: FIFO OR ANYTHING FROM DROP DOWNLIST
Item group: AUDIO RM
Storage dimension group: SITE OR ANYTHING FROM DROP DOWNLIST
Tracking dimension group: NONE /BN/SN/OWNER
Product dimension group: any option from drop downlist
Inventory uni: ea
Purchase unit:ea
Sales unit:ea
BOM unit:optional
Purchase price, Sales price, Inventory price, category are optional

23. RELEASED PRODUCT/ITEM CREATION
Product information management>Products> Released products
ENTER ALL MANDATORY DETAILS AND CLICK ON OK BUTTON

24. RELEASED PRODUCT/ITEM CREATION
Product information management>Products> Released products
.AFTER CLICK ON OK BUTTON

25. RELEASED PRODUCT/ITEM CREATION VALIDATION
Product information management>Products> Released products
.AFTER CLICK ON OK BUTTON, GO TO ACTION PANE>PRODUCT> VALIDATE

26. Procure to Pay (P2P)
Procure to Pay (P2P) process steps:
1- Create a new Vendor
2-Create a purchase order for Vendor.
3-Receive Purchase order or register the product receipet.
4- Invoice Purchase Order
5- Vendor payment Journal to settle the payment.
Resource for reference:
https://community.dynamics.com/ax/b/microsoftoperationsscmguide/posts/d365f-amp-o-
procure-to-pay-process

27. Purchase order configuration setup
Purchase order configuration setup
Path: Procurement and sourcing>Setup>Procurement and sourcing parameters

28. PURCHASE ORDER CREATION
PATH: Procurement and sourcing>Purchase orders>All purchase orders
PURCHASE ORDER: A purchase order (PO) is a document that represents an agreement with
a vendor to buy goods or services. The document also helps keep track of product receipts
that are made toward the order and, later, the accounting of vendor invoices that the vendor
bills toward the order.
Types of purchase orders:
Purchase order type Description
Journal Use as a draft. This type does not affect stock quantities and does
not generate item transactions. The purchase order journal lines
are not included in master scheduling.
Purchase order Use when the vendor confirms an order.
Returned order Use when you return goods to the vendor. The returned item
number, this is the RMA number, that the vendor gives you must
be entered on the Other tab.
Purchase order statuses
Open order – Orders have been created, and quantities are on order.
Received – Some of the quantities have been received, but they haven't been invoiced yet.
Invoiced – The full quantity on the order has been invoiced. ...
Canceled – An order was confirmed but later canceled.

29. PURCHASE ORDER CREATION
PATH: Procurement and sourcing>Purchase orders>All purchase orders

30. PURCHASE ORDER CREATION
PATH: Procurement and sourcing>Purchase orders>All purchase orders
Go to Action Pane>click on NEW button.

31. PURCHASE ORDER CREATION
PATH: Procurement and sourcing>Purchase orders>All purchase orders
Go to Action Pane>click on NEW button.
Vendor account:1001,Site:1,Warehouse:11,Click on OK Button

32. PURCHASE ORDER CREATION
PATH: Procurement and sourcing>Purchase orders>All purchase orders
Go to Action Pane>click on NEW button.
Vendor account:1001,Site:1,Warehouse:11,Click on OK Button

33. PURCHASE ORDER CREATION
SELECT THE ITEM NUMBER: NICIP(WHAT YOU CREATED NOW)
QUANTITY: 10
GO TO ACTION PANE, CLICK PURCHASE TAB,CLICK ON CONFIRM BUTTON UNDER ACTION
IN SURFACE AREA PAGE
Po status

34. PURCHASE ORDER CREATION
NOW CHECK ONHAND INVENTORY:
PATH: Product information management>Products>Released products
SEARCH BY: Item numbe OR Item numbe OR Item numbe
CLICK ON MANAGE INVENTORY ON ACTION PANE
CLICK ON ONHAND INVENTORY ON VIEW SURFACE AREA PAGE

35. PURCHASE ORDER CREATION
NOW CHECK ONHAND INVENTORY:
Open duplicate page:
PATH: Product information management>Products>Released products
SEARCH BY: Item number OR product number OR Item
number
CLICK ON MANAGE INVENTORY ON ACTION PANE
CLICK ON ONHAND INVENTORY ON VIEW SURFACE
AREA PAGE
NOW CHECK :
Ordered in total(coming inside or we are purchasing): 10

36. PURCHASE ORDER CREATION
PATH: Procurement and sourcing>Purchase orders>All purchase orders
Click on Receive button on Action pane, Goto Generate surface area page, Click on product Receipt

37. PURCHASE ORDER CREATION- Product receipt
PATH: Procurement and sourcing>Purchase orders>All purchase orders
Click on Receive button on action pane, Goto Generate surface area page, Click on product Receipt
Product receipt:
Product receipt is the process of recording that products that were ordered have
been received, so that the purchase order (PO) lines can then be processed for
invoicing.(this number will provide by vendor or supplier on product receipt copy)
Enter
product
receipt
number

38. PURCHASE ORDER CREATION
PATH: Procurement and sourcing>Purchase orders>All
purchase orders
• Click on Receive button on action pane, Goto Generate
surface area page, Click on product Receipt
Product receipt:
Product receipt is the process of recording that products that were ordered have
been received, so that the purchase order (PO) lines can then be processed for
invoicing.
• This number will provide by vendor or supplier on product receipt copy
• Product receipt means receiving goods in to warehouse and on hand inventory will be
increased.
• Product receipt is also known as Goods receipt Number (GRN)or Material receipt
number (MRN) or Receipt
• Purchase orders status is changed from open order to received order

39. PURCHASE ORDER CREATION
PO status is changed from open order to received order

40. PURCHASE ORDER CREATION
Onhand inventory checking
Ordered in total count =10 is transferred to Physical inventory
i.e. on hand inventory will be increased

41. PURCHASE ORDER CREATION-Vendor invoice
Go to action pane>click on Receive tab> click on invoice button under Generate surface
area page>click on update match status>click on post
Enter invoice
number
Enter invoice date

42. PURCHASE ORDER CREATION-Vendor invoice
Go to action pane>click on Receive tab> click on invoice button under Generate surface area
page>click on update match status>click on post> check the po status
Po status is changed from received to Invoiced

43. PURCHASE ORDER CREATION- On hand inventory check
Go to action pane>click on Receive tab> click on invoice button under Generate surface area
page>click on update match status>click on post> check the po status
Po status is changed from received to Invoiced

44. PURCHASE ORDER CREATION- On hand inventory check
NOW CHECK ONHAND INVENTORY:
Open duplicate page:
PATH: Product information management>Products>Released products
SEARCH BY: Item number OR product number OR Item number
CLICK ON MANAGE INVENTORY ON ACTION PANE
CLICK ON ONHAND INVENTORY ON VIEW SURFACE AREA PAGE
Click on Transanctions
NOW CHECK :Receipt status: Purchased