Microsoft has just closed a critical gap in Dynamics 365 Project Operations with the release of “Manage Stocked Products for Integrated ERP Deployments.” For leaders overseeing material-intensive projects in construction, engineering, field services, this is the missing link that finally aligns inventory control with project delivery in a unified ERP architecture.
With this feature, organizations can now:
- Gain real-time visibility into on-hand inventory via Dynamics 365 Finance & Supply Chain Management
- Track material usage across the full project lifecycle—from estimation to invoicing
- Automate cost and revenue recognition tied to stocked product consumption
- Eliminate reliance on Project Management and Accounting module in F&O and start thinking about migrating to the modern architecture of Project Operations
For project executives and operations leaders, this capability is more than a feature, it’s a strategic lever. It streamlines material tracking, strengthens cost control, and enables real-time inventory visibility, driving smarter decisions and faster execution across complex, resource and material intensive projects.
I was finally able to get my hands on this preview feature, and I am excited to share some insights. I am not going to discuss the step by step of how to enable the new feature. You need to make sure you are on the latest versions of D365 Project Operations (4.1.142.0 or later) and F&O (10.0.44 or later) and work your way through the necessary dual-write setups.
Let’s get to the crux of what this new feature offers.
Viewing Inventory Products in Project Operations:
Dynamics 365 F&SCM serves as the main source for managing inventory. Both stocked and non-stocked products are created and managed in D365 F&SCM. New products are immediately visible in Dynamics 365 Project Operations for project managers and stakeholders.
When this new feature is enabled, you will see the new Products menu/site map where you can view all products that came in from D365 F&O SCM automatically. This leverages the “unified products management/integration” between F&O ERP and Microsoft Dataverse.
Product Cost and Sales Prices:
D365 F&SCM offers comprehensive pricing engine for products and is the source of truth for the cost and sales price data for products. The standard cost and sales prices specified for the product in D365 F&SCM automatically sync over to Project operations again using the “unified product integration architecture”, where they sync the prices into the cost and sales price lists within D365 Project Operations.
For now, this feature uses the defaults prices for the products, however I am fully expecting this to mature into leveraging the “On demand D365 SCM pricing engine” at some point in the future.
Viewing available on-hand for stocked inventory products:
On the Products page within Project Operations, Project managers/stakeholders can view on-hand inventory products if required. This comes in handy where they get visibility into real time inventory without having to navigate to D365 F&O.
Include stocked products in project estimates, quotes/contracts:
Project Managers and stakeholders who are working on project quotations, estimations or project contracts can now include stocked inventory products.
Buying stocked inventory for projects:
Project managers or Procurement managers can now include stocked inventory materials on purchase orders they created for a project in the integrated ERP deployment.
Important Note: Project Operations in the Integrated ERP deployment already supports non-stocked items/procurement category-based purchase orders, however with the introduction of the support for stocked inventory products, there is a difference in when the costs of the stocked materials are posted to the project and general ledger. As soon as the PO is confirmed, the necessary accounting distributions are created using the ledger posting profile for Items for projects. This accounting distribution is used to post the cost to the project and GL as soon as the vendor invoice associated with the PO for the stocked product is posted in F&O. This behavior is different than how it posts in case of a PO that has non-stocked products or procurement categories where the costs are posted to a temporary procurement integration account and synced later from Project Ops Dataverse using the actuals integration journal. Little technical details, but important for consultants!
Posting vendor invoices for stocked products on projects:
When vendor invoice for the purchase order for stocked products is recorded and posted, the project costs are posted in D365 F&O into the project sub-ledger. The vendor invoice information automatically syncs over to Dataverse to generate cost and unbilled sales actuals and unbilled sales actual details comes back into F&O using the actuals integration journal.
Note: As products are received at the warehouse, the product receipt transactions are not recorded in the Project actuals in Dataverse and don’t post to project sub-ledger in F&O. As this feature matures and adds more capability, I am hoping we will see capability where we can consume the cost of stocked products immediately upon product receipt. It is not supported at this in this release at least.
Viewing on-hand and Consuming stocked inventory into projects:
For existing inventory in stock, project managers can not only view real time available on-hand information for stocked products but also consume them into projects using the materials usage log of Project Operations.
Dynamics 365 Project Operations validates the available on-hand inventory in real time here. If a material usage request was submitted for a quantity that is more than the available quantity for the Site and Warehouse, then the system throws error message there by blocking the submission. Similar validation is done upon approvals of material usage logs.
Note: You can also consume stocked materials using the journal entry option if required.
Inventory Costing, Project Costing & Adjustments:
When materials are consumed using the material usage log in project operations, it uses the default cost price available for the product/material that was last synced from F&O.
However, for stocked products, the consumption of inventory always happens at the weighted average cost of the item regardless of the costing method for the material.
If the costs of the material transactions that came in the integration actuals journals differs from the weighted average cost of the material, the difference is synchronized back to Dataverse. This value is stored in a distinct data field named “Adjustment value” and it updates the Extended amount accordingly. There is a new batch job as part of this new feature that needs to setup and run which will basically sync these adjustments if any after the “Inventory Closing and adjustments” have been run in D365 F&O.
That’s it for this post!!
Best,
Sandeep
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