D365 Supply Chain Management Quality processes - WMS and Non-WMS | X++

In this article, we will explore various quality management functions that can be utilized both with and without the Warehouse Management System (WMS) functionality in Microsoft Dynamics 365 Supply Chain Management.

It is essential to recognize that the Quality management for warehouse processes feature serves as the key enabler for integrating WMS capabilities with quality processes. This feature enhances flexibility by incorporating work creation into the quality process, supporting Quality item sampling and Quality order work.

While we will not delve deeply into the configuration details, by the end of this article, you will gain a solid foundational understanding of the various options available within the quality management process, as well as how they can be applied alongside WMS functionality.

A warehouse is considered WMS-enabled when the Use warehouse management processes flag is set to Yes.

Quality Orders

A Quality order defines a set of one or more tests that must be performed on a specified item to verify that its quality meets or exceeds the organization’s standards. These tests ensure that inventory complies with business, regulatory, or customer requirements.

Quality orders can be created either automatically—triggered by specific business events—or manually, as needed. They can be used at multiple stages throughout the inventory lifecycle, including:

• At receipt (for purchased or transferred goods)

• During the production process (in-process or post-production)

• Ad hoc testing (as part of routine quality assurance)

This functionality provides significant flexibility in defining test types, which can be configured with various data types such as pass/fail options, numeric ranges, or integer-based thresholds. Based on the results of these tests, the system can automatically update the inventory status of the items, ensuring that only conforming products are available for further processing. In cases of failure, blocking records can be generated to prevent the use or consumption of non-compliant inventory.

The core behavior of a Quality order is controlled through Quality associations. These associations link together other configurations such as Test groups (collections of related tests) and Item sampling (rules for determining how much inventory to test). A Quality association can apply to:

• A specific item

• A group of items

• All items, depending on configuration

These settings also dictate what business event will trigger the creation of a Quality order—for example, product receipt, production reporting, or manual initiation. Additionally, they define which business processes are restricted until the Quality order is successfully completed, such as:

• Posting of product receipts

• Posting of production orders

• Invoicing

• Other downstream inventory or financial transactions

By leveraging Quality orders effectively, organizations can build robust quality control processes directly within Dynamics 365 Supply Chain Management, ensuring regulatory compliance, maintaining customer satisfaction, and reducing the risk of defective goods moving downstream.

A key configuration in relation to both Quality associations and WMS is the Applicable warehouse type setting. This parameter determines how the Quality association can be applied across different warehouse types and directly influences whether Quality item sampling work is generated from the association. In WMS-enabled warehouses, this configuration is critical for ensuring that the quality process is properly integrated with advanced warehouse processes such as work creation and task execution. Selecting the appropriate warehouse type ensures alignment between the quality control strategy and the warehouse management processes in use.

Quality orders can be utilized in both WMS-enabled and non-WMS warehouses. However, when working with WMS-enabled warehouses, it is mandatory to enable the Enable quality order for warehouse processes feature in order to leverage warehouse work creation within the quality process.

When this feature is activated, you can use the Work order type of Quality item sampling to generate warehouse work that moves inventory to a designated quality location—typically executed via a mobile device or scanner by warehouse personnel. This ensures that sampled inventory is properly isolated for inspection and testing.

Additionally, the system allows the use of the Work order type of Quality order to move inventory from the quality location back to an appropriate stock location once the quality process is completed. The target location for this movement can either be defined explicitly or driven dynamically through location directives, providing flexibility in inventory handling and warehouse layout.

By configuring these processes correctly, organizations can seamlessly integrate quality management with warehouse operations, ensuring accurate tracking, control, and traceability of inventory throughout the quality lifecycle.

Quarantine orders

Quarantine orders are part of the Quarantine management functionality, which is largely not supported by WMS. Only the return sales process allows for a WMS-enabled warehouse and Quarantine functions.

The core purpose of a Quarantine order is to prevent inventory from being consumed or sold by transferring it to a designated Quarantine warehouse. This effectively isolates the inventory until it can be inspected, tested, or otherwise cleared for further processing (example shown in the screenshot below).

However, with the introduction of the Quality management for warehouse processes feature in Dynamics 365 Supply Chain Management, many of the traditional functions of a Quarantine order can now be achieved through the use of Quality orders—without requiring the inventory to be physically moved to a separate warehouse.

By leveraging Quality orders and WMS-enabled processes, organizations can:

• Block inventory from being picked, shipped, or consumed while it is under quality review.

• Move inventory to designated quality locations within the same warehouse, using warehouse work created from the Quality item sampling or Quality order work order types.

• Control release of inventory based on test results and status updates—without requiring manual transfers to and from a quarantine warehouse.

This modernized approach provides greater flexibility, reduces unnecessary handling, and streamlines the integration of quality management with warehouse operations. It also enables more dynamic responses to quality requirements while maintaining full traceability and control over inventory status.

Quality Check

Quality checks are a WMS-specific function that enables users to evaluate and record the quality of inventory in real time during the receiving process, typically through a mobile device or scanner. This process allows warehouse workers to quickly perform pass/fail checks on incoming inventory before it is moved further into the warehouse or made available for downstream operations.

When properly configured, a Quality check template can automatically trigger the creation of a Quality order if any portion of the inspected inventory fails the check. This ensures that failed items are routed through the full Quality order process, allowing for more detailed inspection, testing, and resolution.

This capability provides a streamlined mechanism for integrating immediate quality validation into warehouse receiving processes, helping to:

• Prevent defective items from entering general stock

• Maintain accurate inventory status

• Ensure compliance with quality standards at the earliest point of receipt

By combining Quality checks with Quality orders, organizations can implement a robust, tiered quality control framework that blends efficiency with thorough oversight.

The Quality check template can be associated to various Work order types, such as Purchase orders where the logic will be initiated by a Work type of Quality check on the work template lines. However, there is also a specific Work order type of Quality in quality check. For more details on that setup see the Microsoft documentation at the end of this article.

Nonconformance

Nonconformances are used to document and manage instances where defective material or process deviations are identified. They provide a formal mechanism for recording the issue and tracking the actions required to resolve it.

When a nonconformance is created, correction tasks and corrective actions can be assigned, providing a structured approach to:

• Identify the root cause of the defect

• Define what corrective steps must be taken

• Monitor when and how those steps are completed

• Document the resolution for traceability and compliance

A nonconformance can be created directly from a Quality order, offering a seamless link between quality testing and issue resolution. Nonconformances are supported in both WMS-enabled and non-WMS warehouse environments, giving organizations flexibility in how they apply corrective quality processes.

Nonconformances can also be used ad-hoc, independent of a specific Quality order, allowing quality teams to initiate investigations and corrective measures in response to:

• Customer complaints

• Internal audit findings

• Supplier issues

• Production variances

• Any other identified quality concerns

By leveraging nonconformances—either as a stand-alone function or in conjunction with Quality orders—organizations can implement a comprehensive quality management system that promotes continuous improvement and ensures accountability across their operations.

Conclusion

In summary, there are a variety of quality management functions within Dynamics 365 Supply Chain Management that can be utilized with or without WMS functionality. Understanding how these features—such as Quality orders, Quality checks, Nonconformances, and Quarantine orders—interact with warehouse processes is key to designing an effective quality strategy that meets your business needs.

Happy Learning !!

Usama Mehmood