Understanding Product Information Management - Product/Released Product vs. Product master/variant

In order to procure and sell items as well as track inventory, a product record is required. Dynamics 365 for Finance and Operations allows to maintain product information in product/released product records and/or in product master/variant records.

  • Product and released product:

The product record maintains general product information globally across all legal entities. As soon as the product is ready to be released, a user is able to release the global product record to one or many legal entities. At the legal entity level, the released product record maintains company specific information such as pricing that could vary amongst legal entities.

  • Product master and variant:

Similar than the product record above, a product master record stores essential product information globally across all legal entities. A product master is assigned a product dimension group. (This is not assigned for the above Product/Released product an dis unique for product masters) A user is now able to create product variants by specifying product master dimensions by style, size, colour and configuration. As soon as the product master and its variants are ready to be released, a user is able to release the global product master record and its variants to one or many legal entities. An example for a product master with variants is for example a T shirt (product master) with multiple different variants by size (S, M, L) and colour (Red, Blue, Yellow). An advantage of product masters and variants is less data entry and maintenance as one product master and its variant could potentially replace multiple product/released products. However, product masters also have its restrictions as for example taxation differences amongst different size and colour combinations for the same product master are not configurable out-of-the box.


Depending on the needs and requirements of an organization, it is essential to determine the approach on how to maintain product information. In this article, we will focus on the product and released product records approach.

Products are created and released to legal entities under Product Information Management/Products/Products. When creating a new product record, the following fields are required to be populated in order to be able to transact with the item:

- Storage dimension

- Tracking dimension

- Item group

- Item model group

- Unit of measure

Note: If AWM is enabled in storage dimension group, we also need to specify the unit sequence group on the released products form. For now, we focus on non-AWM enabled products.


Storage dimension

Navigation path: Product Information Management/Setup/Dimension and variant groups/Storage dimension groups


The Storage dimension is a required field when creating a new product and determines at which granularity inventory is tracked in Dynamics 365 for Finance and Operations. In most implementations, inventory is tracked at site, warehouse and location level. In more warehouse process orientated implementations, inventory is additionally tracked by license plate and inventory status. In this article, we will focus on site, warehouse and location dimensions. A site can be a geographical grouping of one or many warehouses. A warehouse is a physical location where products are stored. One warehouse can have one or many inventory locations. An inventory location is a specific physical location in a warehouse identified by a unique aisle, rack, shelf and bin name/number combination.


See below explanations to the essential configuration options for storage dimensions.

  • Active: The active field enabled indicates which dimensions are applicable/in use.

  • Blank receipt/Blank issue: The blank receipt/issue field enabled indicates if this dimension is required for inventory receipts/inventory issues. For example, an organization tracks their inventory by location at the receipt but for the issue/sales side it does not require to specify which location the inventory is deducted from.

  • Physical and financial inventory: In Microsoft Dynamics 365 for Finance and Operations, Products and its transactions can be physically updated (E.g. purchase order receipt or sales order packing slip) as well as financially updated (E.g. purchase order invoice or sales order invoice). For example, if physical is unchecked for warehouse, inventory will just be maintained at site level – that said in case there is a sales order for warehouse A for 3 items and you have 2 warehouses A and B with inventory of 2 each, Dynamics 365 for Finance and Operations will take a look at warehouse B, too as inventory is maintained at the site level. Ideally, this is flagged for site/warehouse and location. Another example is if financial is unchecked for warehouses, in case you receive 2 items at 10 USD and 20 USD in warehouse A and B, Dynamics 365 for Finance and Operations will consider both warehouses together as one/the same for financial/cost calculations. Ideally, this is flagged for site and warehouse.

  • For purchase price/sales price: Select this check box if you want to include the dimension as a criterion to determine the sales/purchase price for an item through trade agreement journals.

Tracking Dimension

Navigation path: Product Information Management/Setup/Dimension and variant groups/Tracking dimension groups


The Tracking dimension is a required field when creating a new product and determines how inventory is tracked from an ownership (Consignment), serial number and batch number perspective. In this article, we won’t work with inventory tracked by batch, ownership and serial numbers.


Item group

Navigation path: Inventory Management/Setup/Inventory/Item groups


Item group is a required field for creating released product records and item groups are used to differentiate products into groups. Item groups also drive to which main accounts products are posting for sales order, purchase order, inventory and production order transactions.


For example, an product is assigned to the audio item group. All products associated to the item group is posting its revenue to the 40100 revenue main account. Those configurations are handled via inventory posting profile. You can set up the posting profiles for each of the item groups under Inventory management/Setup/Posting/Posting.


Item model group

Navigation path: Inventory Management/Setup/Inventory/Item model groups


Item model group is a required field for creating released product records and it dictates how the products behaves from a costing (FIFO, LIFO, Standard costing, etc.) as well as inventory handling (quarantine order?, Receiving requirements?) standpoint.


See below explanations to the essential configuration options for item model groups:

  • Stocked product: This field indicates if the item will be physically tracked in inventory or if it is a nonstocked service items.

  • Inventory Model: This field indicates which costing method the product will follow. Dynamics 365 for Finance and Operations allows inventory costing by LIFO, FIFO, LIFO date, Weighted average, Weighted average date, Standard cost and Moving average. By design, Dynamics 365 for Finance and Operations calculates its inventory costing with moving average cost. If another costing method such as FIFO is chosen on the item model group, an inventory close is required. When running the inventory close Dynamics 365 for Finance and Operations matches past receipts and issues depending on the method chosen (Here: FIFO) and recalculates the correct inventory cost price. After running the inventory close you can’t post inventory transactions in the closed period. (Backdating is not possible) However, you can reopen the inventory close at a later point in time what will allow you to post and correct transactions for the prior closed period. In that case however, the inventory close needs to be reran afterwards. The inventory close is usually run prior the financial month end close as a month end closing task.

  • Example for Moving average:

  • Formula: Total cost after purchase order/Total quantity after purchase order = Cost

  • An organization has 1,000 products XYZ in stock as of the beginning of April, at a cost per unit of $5. Thus, the beginning inventory balance of XYZ in April is $5,000. The organization then purchases 250 additional XYZ products on April 10 for $6 each (total purchase of $1,500), and another 750 XYZ products on April 20 for $7 each (total purchase of $5,250). In the absence of any sales, this means that the moving average cost per unit at the end of April would be $5.88, which is calculated as a total cost of $11,750 ($5,000 beginning balance + $1,500 purchase + $5,250 purchase), divided by the total on-hand unit count of 2,000 XYZ products (1,000 beginning balance + 250 units purchased + 750 units purchased).

  • Example for FIFO:

  • FIFO stands for “First-In, First-Out”. This costing method assumes that the oldest products in a company’s inventory have been sold first. The costs paid for those oldest products are the ones used in the cost of goods sold calculation.

  • For example, if 100 items were purchased for $10 and 100 more items were purchased next for $15, FIFO would assign the cost of the first item resold of $10. After 100 items were sold, the new cost of the item would become $15, regardless of any additional inventory purchases made.

  • Fixed receipt price: When this field is enabled, then receipts and issues are valued and posted at the cost price set at the released product record. The difference between purchase price and cost price will be posted to Fixed receipt loss/Profit main account.

  • Post physical inventory: "Post physical inventory" is supposed to control posting in the ledger for physical updates i.e. purchase order receipts, sales order packing slips and production order reported as finished.

  • Post financial inventory: "Post financial inventory" controls all financial transactions related to stock or inventory to be posted to the general ledger.

  • Post to deferred revenue on Sales Delivery: Deferred revenue refers to payments received in advance for services which have not yet been performed or goods which have not yet been delivered. These revenues are classified on the company's balance sheet as a liability and not as an asset. This posting would occur on a shipment that has been packing slip updated but not invoiced. When "post to deferred revenue account on sales delivery" is enabled, the deferred revenue is posted when posting packing slip is updated. This configuration requires the item model group to be stocked.

  • Physical negative inventory: This configuration determines if you allow the system tracked physical inventory to go negative. Ideally, you would not allow the business to operate with negative inventory. However, in some cases, for instance when the goods receipt clerks are slow to update the system, goods may be physically shipped before they are updated on the receiving side.

  • Financial negative inventory: This configuration determines if you allow the system tracked financial inventory to go negative. If checked, the system will allow you to raise a Sales Order and directly Invoice while bypassing packing Slip. If unchecked, system will not allow you to do the invoice upon posting of receipt/packing slip.

  • Quarantine management: This configuration determines if a product needs to go through a quarantine order and quality management process in a quarantine warehouse prior being officially received in the default warehouse.

  • Registration requirements: This configuration determines what inventory status is required on your products before they can move on to further processing. Here, this means you need to register the products before you can physically update/receive them for example.

  • Item sales reservation: This configuration determines how items are reserved for sales orders. Dynamics 365 for Finance and Operations allows either manual, automatic or explosion reservation. If automatic reservation is enabled, inventory is reserved when order lines are created.

  • Approved vendor check method: This configuration determines if you require a product to go through an approved vendor list check prior processing a purchase order. This configuration is often used to enforce a product being purchased from only an active and approved vendor. In the drop-down, you can select no check; warning only, which will allow you to still create the purchase order but will give you a warning upon adding the item to the purchase order; and the last option is not allowed, which will be a hard stop if the item vendor combination is not active.

Unit of measure

Navigation path: Organization administration/Setup/Units/Units


The unit of measure is a specific and concrete magnitude of physical quantity used to define a standard of measurement for the same physical quantity. Dynamics 365 Financial and Operations leverages the unit of measure to specify the amount of product that its purchased, sold, or stored in inventory. In Dynamics 365 for Finance and Operations, the unit of measure for sales, purchases, inventory as well as production is specified on the released product record. One released product can have different unit of measure for sales, purchases, inventory as well as production. In that case, a unit of measure conversion needs to be specified.

Recent Posts

See All

Agenda: 1. Overview 2. Internal Educational Assistance Approvals via Teams 3. D365FO PO approval via Teams Approval Application 1. Overview Approvals in Microsoft Teams is an simple way to streamline