TL;DR

Learn how to set up and use the new Quality Management functionality in Dynamics 365 Business Central. This walkthrough covers quality inspection templates, automated inspection generation rules, quality testing, lot-controlled inventory inspections, handling failed lots with QC holding areas, and the built-in quality reporting tools that help organizations improve quality control processes.

The new Quality Management functionality in Dynamics 365 Business Central provides organizations with a structured way to manage quality inspections, automate quality control processes, and ensure products meet predefined standards before they enter inventory or move through production and shipping processes.

In this walkthrough, we’ll review the Quality Management setup, quality inspection templates, inspection generation rules, a receiving example, and the standard reports included with the solution.

Understanding Quality Inspection Templates

Quality inspection templates are the foundation of Quality Management in Business Central. A template is a collection of quality tests that can be grouped together and applied to products entering, leaving, or being processed within your organization.

This approach provides flexibility because individual tests can be reused across multiple templates. Instead of creating entirely new inspections for each product, organizations can build standardized tests and combine them as needed.

Example: Coffee Product Inspection Template

For this demonstration, a quality inspection template has been configured for a packaged 12-ounce bag of coffee. The template includes five quality control tests:

• Package net weight
• Package seal integrity
• Grind particle size
• Headspace oxygen level
• Label accuracy and compliance

Each time this product is received, all five tests are automatically performed as part of the inspection process.

Defining Pass and Grading Criteria

The package weight test demonstrates how acceptance criteria are configured. A minimum and maximum acceptable weight range is established, creating a pass/fail threshold for the product.

In addition to pass criteria, quality tests can include grading criteria. This allows products to not only pass inspection but also receive a quality classification based on performance.

Configuring Inspection Generation Rules

Inspection generation rules automate the creation of inspections based on specific business events.

In this example, the rule is configured to create inspections whenever products in the “Whole Beans” item category are received through a purchase order.

Because the coffee product is lot-controlled, inspections are generated at the lot level, allowing quality results to be tracked and managed for individual lots.

Creating Individual Quality Tests

Quality tests define the measurements and evaluation criteria used during inspections.

Grind Size Test

The grind size test uses microns as the unit of measure. Acceptable values range from 0 to 2,000 microns, and specific ranges determine whether the test passes.

The test also includes grading criteria. For example, if the grind size falls between 200 and 300 microns, the coffee receives an espresso grind classification and a premium grade.

This allows organizations to evaluate both compliance and quality level within a single test.

Lookup-Based Quality Tests

Not all tests rely on numerical measurements.

Business Central also supports lookup-based tests, allowing organizations to evaluate characteristics such as:

• Color
• Appearance
• Product classifications
• Subjective quality attributes

For example, coffee color could be classified as light, medium, or dark, with grading applied accordingly.

Label Accuracy and Compliance Test

Some quality checks are more subjective.

The label accuracy and compliance test counts the number of labeling defects found during inspection.

The test allows values between 0 and 10 defects. Products pass when defects fall within the acceptable range, while premium grades can be assigned when no defects are found.

Receiving Inventory and Generating Inspections

To demonstrate the process, a purchase order has been created for 400 packages of coffee.

The shipment contains three separate lots. When the receipt is posted, Business Central automatically generates quality inspections for each lot based on the inspection generation rules.

This automation eliminates manual inspection creation and ensures quality procedures are consistently applied.

Using the Quality Manager Role

Business Central includes a dedicated Quality Manager role center.

After switching to the Quality Manager role, users can view:

• Unassigned inspections
• Open inspections
• Inspection statuses
• Quality-related activities

The newly generated inspections appear automatically and are ready for review.

Performing a Quality Inspection

Let’s walk through the inspection process for a lot containing 150 bags of coffee.

Because a 5% sample size has been configured, the inspector must test eight packages.

Test 1: Package Weight

The average package weight is measured at 346 grams.

Because the result falls within the acceptable range, the test passes.

Test 2: Package Seal Integrity

The inspector examines the sample packages and finds zero seal defects.

The test passes and earns a premium grade.

Test 3: Grind Size

The measured grind size is 250 microns.

This result passes inspection and qualifies for premium grading.

Test 4: Headspace Oxygen

The oxygen level is measured at 0.9%.

The result passes and qualifies for premium grading.

Test 5: Label Accuracy

The inspector finds one labeling defect.

Although the result does not qualify for a premium grade, it remains within acceptable limits and passes the inspection.

Completing a Successful Inspection

Since all quality requirements have been met, the inspection is completed and the lot is accepted.

The inventory can continue through normal business processes.

Managing Failed Inspections

The next lot produces different results.

Failed Weight Test

The average package weight is measured at 332 grams.

This falls outside the acceptable tolerance range and causes the test to fail.

Failed Label Inspection

During label inspection, five defects are identified.

This exceeds the acceptable threshold and results in another failed test.

Options for Failed Lots

When an inspection fails, several options are available:

• Recreate the inspection
• Reassign the inspection
• Perform additional testing
• Move inventory to a quality control area

In this example, the failed lot is transferred to a QC Holding location.

Transferring Inventory to QC Holding

Using the inspection actions menu, a transfer order is created.

The transfer moves inventory from the receiving area to a designated QC Holding location.

Because the item is lot-controlled, the lot number is specified during transfer processing.

Once the transfer is posted, the inventory is segregated from normal stock and can be evaluated further.

Possible next steps include:

• Returning inventory to the supplier
• Reworking the product
• Repackaging inventory
• Performing additional quality reviews

Separating failed inventory prevents nonconforming products from entering normal operations.

Reviewing Quality Management Reports

Quality Management includes several standard reports that provide visibility into inspection activities and quality results.

Certificate of Analysis Report

The Certificate of Analysis report provides:

• Lot information
• Test measurements
• Quality results
• Product-specific inspection details

This report is often used to document product quality for customers and regulatory requirements.

Inspection Report

The Inspection Report focuses on inspection execution.

It shows:

• Inspection dates
• Inspector information
• Test results
• Pass/fail outcomes

Organizations can use this report to review historical inspection activity and maintain audit records.

Nonconformance Report

The Nonconformance Report highlights failed inspections and nonconforming inventory.

The report documents:

• Failed test results
• Quality issues
• Inspection details
• Corrective action information

Like other Business Central reports, it can be customized to meet organizational requirements.

Key Benefits of Quality Management in Business Central

The new Quality Management functionality offers several advantages:

• Standardized quality inspection processes
• Reusable quality test templates
• Automated inspection generation
• Lot-level quality tracking
• Product grading capabilities
• Integrated inventory segregation for failed products
• Built-in quality reporting

By combining automated inspections, configurable testing, and integrated inventory management, organizations can improve product quality while reducing manual effort.

Final Thoughts

The new Quality Management functionality in Dynamics 365 Business Central provides a comprehensive framework for managing quality control activities across receiving, production, and shipping processes.

Through quality inspection templates, configurable tests, automated inspection rules, and integrated reporting, organizations can establish consistent quality standards and quickly identify nonconforming products before they impact customers.

While there are opportunities for Microsoft to expand the feature set in future releases, the current functionality is already robust and provides a strong foundation for organizations looking to formalize and automate their quality management processes.