PRODUCT DESIGN PROPOSAL

Dynamic Output Manufacturing Architecture for Microsoft Dynamics 365 Supply Chain Management

Executive Summary

Microsoft Dynamics 365 Supply Chain Management provides a mature and scalable manufacturing platform supporting both discrete and process manufacturing scenarios. Its production architecture performs exceptionally well in industries where finished products and production outputs are known before production begins.

However, a significant group of manufacturing industries operates under a fundamentally different production model.

Industries such as poultry processing, meat processing, seafood processing, dairy cutting and packaging, fruit and vegetable processing, and other agricultural processing environments execute a fixed production process while the final commercial products are determined dynamically during production execution.

The current production architecture assumes that all potential output items must be predefined before production starts. This assumption creates unnecessary complexity, large production structures, increased master data maintenance, and significant implementation costs for industries with dynamic product realization.

This proposal introduces a new optional manufacturing capability named Dynamic Output Manufacturing, enabling production orders to support dynamically determined outputs while remaining fully compatible with the existing Dynamics 365 production framework.

Background

Modern food processing industries operate differently from traditional manufacturing.

The production routing is stable.

The production equipment is stable.

The production operations are stable.

The incoming raw material is known.

However, the commercial products produced during each production run vary according to actual production conditions, customer demand, grading decisions, weight distribution, packaging requirements, export orders, and market conditions.

Consequently, production outputs cannot always be completely determined during production planning.

Current production architecture requires every possible commercial SKU to be included within the production definition although only a subset of those products will actually be produced.

This creates unnecessary complexity without providing additional business value.

Current Architectural Limitation

The current production model assumes that production outputs are predetermined.

Therefore, production structures must explicitly define:

• Every possible finished product
• Every co-product
• Every by-product
• Every costing relationship

This design is highly effective for deterministic manufacturing but becomes increasingly inefficient for industries with dynamic product realization.

Large food processing organizations may maintain production structures containing hundreds of potential output items although only a small number are produced during each manufacturing run.

Real Manufacturing Scenario

A poultry processing facility provides a representative example.

A single carcass may ultimately become one of hundreds of commercial products depending on customer demand and operational decisions made during production.

Examples include different retail pack sizes, export products, frozen products, fresh products, promotional packaging, customer-specific packaging, and branded variations.

Although the physical production process remains unchanged, the commercial output changes continuously.

Current production structures require all possible products to be maintained within a single production definition regardless of whether they are produced.

Proposed Enhancement

Introduce a new optional manufacturing capability called Dynamic Output Manufacturing.

Instead of defining every commercial SKU within the production structure, production orders would define:

• Production Process
• Production Route
• Material Consumption
• Allowed Output Families

During production execution, Dynamics 365 would determine the actual products produced.

Only those products would participate in production reporting, inventory creation, and production costing.

Dynamic Output Definition

Introduce the concept of Output Families.

Instead of maintaining hundreds of commercial SKUs within production formulas, production definitions would maintain logical product families.

During production execution, actual commercial products would be selected or generated dynamically based on production results.

This significantly reduces production structure complexity while preserving complete product traceability.

Dynamic Cost Allocation

Production cost allocation should operate only on products physically produced during production execution.

Supported allocation drivers could include:

• Actual Weight
• Yield
• Estimated Sales Value
• Net Realizable Value
• Quantity
• Configurable Business Rules

This approach more accurately represents actual manufacturing economics while reducing unnecessary production complexity.

Continuous Manufacturing Support

Many food processing industries operate continuous production lines.

Material flows continuously from cutting through packaging into finished inventory without intermediate warehouses or intermediate inventory transactions.

Dynamic Output Manufacturing would extend the current production architecture to better support continuous manufacturing environments while maintaining compatibility with existing production functionality.

Expected Business Benefits

The proposed architecture would provide significant advantages.

For customers:

• Reduced production master data
• Smaller production structures
• Easier maintenance
• Improved costing accuracy
• Reduced implementation complexity
• Lower total cost of ownership

For Microsoft:

• Reduced partner customizations
• Improved competitiveness within food processing industries
• Increased Dynamics 365 adoption
• Stronger positioning against industry-specific ERP platforms
• Better scalability for modern manufacturing environments

Industries Benefiting

The proposed architecture applies broadly across industries including:

• Poultry Processing
• Meat Processing
• Seafood Processing
• Dairy Processing
• Fruit Processing
• Vegetable Processing
• Agricultural Processing
• Recycling

The proposal therefore addresses a common manufacturing architecture challenge rather than a single industry-specific requirement.

Conclusion

Dynamic Output Manufacturing represents an opportunity to extend the Dynamics 365 manufacturing platform for industries where commercial products are determined during production execution rather than production planning.

The proposed enhancement preserves complete backward compatibility while significantly reducing implementation complexity, master data maintenance, and customization requirements.

This capability would strengthen Dynamics 365 as a strategic ERP platform for modern food processing industries and other manufacturing environments characterized by dynamic product realization