Under-Delivery and Over-Delivery in D365 F&O: Explained with Setup and Example

 In real-world procurement and supply chain scenarios, vendors often deliver quantities that don’t exactly match what’s ordered. To accommodate such practical variances, Microsoft Dynamics 365 Finance and Operations (D365 F&O) provides powerful flexibility through under-delivery and over-delivery tolerances.

Understanding how these tolerances work can streamline your receiving process, reduce manual corrections, and ensure smoother vendor relationships.

 What Are Under-Delivery and Over-Delivery?

Under-Delivery

When a vendor delivers less than the ordered quantity, within an acceptable tolerance

Over-Delivery

When a vendor delivers more than the ordered quantity, within an allowed margin

These tolerances define how much deviation from the ordered quantity is permitted during product receipt or invoice posting in D365.

How to Set Up Under-/Over-Delivery in D365

D365 lets you define tolerances either globally per item or specifically per purchase order line.

Default Setup at Product Level

Procurement and sourcing > Setup > Procurement and sourcing parameters > Delivery tab

Available Fields on the Delivery tab:

• Accept overdelivery – If checked, D365 allows over-delivery based on the percentage provided.
• Overdelivery tolerance (%): Default overdelivery allowed for all items
• Accept underdelivery – If checked, D365 allows under-delivery within the defined range.
• Underdelivery tolerance (%): Default underdelivery allowed for all items

These values serve as fallbacks if no specific tolerances are set at the item or PO line level.

Example:

If you set:

• Overdelivery tolerance = 10%
• Underdelivery tolerance = 5%

And no other tolerance is set on the item or PO line; these values will be used by default.

Product Information Management > Released Products > Select Item > Manage Inventory > Purchase tab

• Overdelivery (%): Max percentage over the ordered quantity
• Underdelivery (%): Max percentage under the ordered quantity

Example:

• Overdelivery = 10%
• Underdelivery = 5%

This setting will apply to all POs for that product unless overridden.

 Override at Purchase Order Line Level

Procurement and Sourcing > All Purchase Orders > Select PO > PO Lines > Click Delivery tab

Here, you can override the default percentages for a specific PO line based on vendor agreements or item criticality.

Example in Action

Let’s say:

• You create a PO for Item A
• Quantity = 100 units
• Overdelivery = 10%
• Underdelivery = 5%

Case 1: Vendor Delivers 108 Units

• Allowed Overdelivery = 100 × 10% = 10 units
• 108 units < 110 ⇒ Accepted

Case 2: Vendor Delivers 94 Units

• Allowed Underdelivery = 100 × 5% = 5 units
• 94 units < 95 ⇒ Not accepted unless the PO is updated

 Case 3: Vendor Delivers 105 Units

• Within the allowed range ⇒ Accepted

 System Behavior in D365

• If the received quantity is within the defined tolerance, D365 allows the product receipt and invoice posting without errors.
• If the received quantity exceeds or falls short of the tolerance, you will get a system warning or error, depending on your configuration.
• You can either adjust the PO or the tolerance levels to continue.

 Why This Matters

• Reduces friction in procurement and receiving
• Avoids unnecessary PO amendments for small variances
• Improves vendor collaboration
• Adds flexibility to inbound processes

 Analaysis

The under-delivery and over-delivery tolerances in D365 are more than just configuration—they’re a bridge between real-world variability and system precision. By configuring them wisely, organizations can make their supply chain operations smarter, faster, and more resilient.