Managing customer furnished material in Microsoft Dynamics AX

By - November 3, 2015

While Dynamics AX is a very comprehensive ERP solution, there is really no completely tailored solution for managing customer furnished material in a standard cost environment. Customer furnished material is defined to mean when the customer furnished you a component at no charge to incorporate into your product. The assumption is that the furnished item exists in your design, and that it has both a supplier and a standard cost associated with it.

The RSM Solution

Assign a different item number to the product being supplied by your customer. To use the richness of Microsoft Dynamics AX 2012 in this situation, the ideal solution would be to create a product master for the required product, and then have two variants – one purchased from a supplier, and a second one (different variant) obtained from your customer.

Step One – Create product master and variants

The process of creating a variant means that one of the three predefined dimensions must be utilized. For this article, I have limited the defined dimension to style. (Please note – you can rename this dimension to something that may be more compatible with your company’s terminology.)

Navigate to Product Information Management > Setup > Product Dimension Groups

Customer Furnished Material 1

  1. Product Dimension Group
    1. Enter an identification and description for your Product Dimension Group
    2. Select the Style option for Active, Purchase and Sales.

Navigate to Product Information Management > Common > Released Products… on the action pane, select New.

Customer Furnished Material 2

  1. Create Product
    1. For the Product sub-type, select Product Master
    2. Enter your standard identification numbers and names
    3. For the Product Dimension Group enter the dimension group you just created in step one.
    4. Enter the information in the reference group for your item.
  2. Released Product Details – From the Released Products list page, Highlight the item you created in step 2, and click on the Edit icon on the action pane
    Customer Furnished Material 3
    a. Click on the Product Dimensions icon in the Product Master portion of the Action PaneCustomer Furnished Material 4
  3. Product Dimensions
    1. Click the new icon
    2. Enter at least two styles – one standard and a second style denoting the customer who is furnishing the material (Note – the style ID is just text, although it uses the same format as the customer account number. This is a RSM recommended practice)Customer Furnished Material 5
  4. Back on the Released Product form
    1. Select the Released Product Variant icon
      Customer Furnished Material 6
  5. On the Released Product Variant form
    1. Select the Variant suggestions option at the top of the form
      Customer Furnished Material 7
  6. On the Variant Suggestions form
    1. Choose the ‘Select All’ menu
    2. Close the form. This returns you to the Released Product Details page. Fill out all the elements as you would for your standard item, with a couple of exceptions.On the Manage Cost Fast Tab
      Customer Furnished Material 8
  7. On the Manage Cost fast tab
    1. Select the ‘Use Cost Price by Variant’ check boxBack at the top of the Release Products form,Customer Furnished Material 9
  8. Select the Manage Cost tab on the Action Pane
    1. Select the Item Price Icon, this brings us the Item Price form
      Customer Furnished Material 10
  9. From the Item Price form
    1. Enter a standard cost for the item (by style) when purchased normally, and for the item when it is customer furnished.
    2. Activate the new costYou now have two product variants, one for the standard use, and a second when the item is supplied by the customer.

Step Two – Add the Product to the Bill of Materials

There are two possible structures for this. The first structure is to add both items to the lines on the bill of materials (BOM) version, one line (with the style standard dimension) would have a quantity assigned. A second line would show the same product master, but this time with the style dimension indicating customer furnished. This would not cause a BOM calculation problem, because our customer furnished variant carries a standard cost of $0.00.

Customer Furnished Material 11

The figure above illustrates this structure. Note to avoid confusion, the production planner would probably want to delete the unnecessary line and reschedule the item, prior to starting the job.

The second process would be to create an expiration date on the BOM version for the BOM version with the standard variant, and create a second version which included the dates when the customer furnished item would be used.

Customer Furnished Material 12

In conclusion, this solution provides a smooth solution to managing a customer furnished item in a standard cost environment in Dynamics AX.  If you have other questions, we offer a full range of service for Dynamics AX with certified professionals across the United States. Learn more about our Rapid Assessment® for Microsoft Dynamics, contact our professionals at or by phone at 855.437.7202.

By: Mac McHenry – Illinois Microsoft Dynamics AX partner

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