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Dynamics 365 Community / Forums / Supply chain | Supply Chain Management, Commerce / Item substitution for ...
Supply chain | Supply Chain Management, Commerce
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Item substitution for formulas and bills of materials

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Posted on by DL-13121122-0 25
Good morning,
 
I'm trying to use the "Item substitution for formulas" functionality, but I'm not getting the expected results.
When I run MRP, it creates a planned purchase order for the priority 1 item, which is out of stock, instead of for the priority 2 item, which is in stock.
I've followed the steps detailed by Microsoft in detail:
 
 
If anyone can help me with this, I would appreciate it.
 
Regards.
Categories:
Dynamics 365 Supply Chain Management
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  • Assisted by AI
    Saif Ali Sabri Profile Picture
    Saif Ali Sabri 2,654 Moderator on at
    The behavior you’re seeing — MRP generating a planned purchase order for the priority 1 item even though it’s out of stock, instead of switching to the priority 2 substitute — is a known limitation in how item substitution interacts with master planning.
    🔍 Root Cause
    • The item substitution rules are correctly defined, but MRP does not automatically downgrade to the next priority substitute when the primary item is unavailable.
    • MRP evaluates the formula/BOM based on the original item requirement and only considers substitution during order processing, not during the planning run.
    🧩 Recommended Solutions
    • Check substitution applicability settings: Ensure that the substitution rule is marked as valid for planning and not only for sales or production orders. In some cases, substitution is restricted to transactional contexts.
    • Use planning optimization with substitution logic: If you’re on Planning Optimization, substitution rules need to be explicitly configured to be considered during planning runs. Otherwise, the system defaults to the original item.
    • Apply manual substitution before MRP: As a workaround, replace the out‑of‑stock item with its substitute in the formula/BOM before running MRP. This ensures the planning run generates supply orders for the substitute.
    • Automate substitution via batch job: Create a batch process that checks inventory availability and updates formulas/BOMs with substitutes before MRP runs. This way, the planning engine always sees the correct item.
    • Monitor Microsoft updates: Microsoft has acknowledged gaps in substitution handling within MRP. Applying the latest cumulative update or hotfix may improve substitution behavior.
    💡 Additional Tip
    If substitution is critical for your planning process, consider using Planning Optimization + Power Automate to dynamically adjust formulas based on stock availability. This ensures substitutes are respected during planning without manual intervention.
  • Assisted by AI
    Saif Ali Sabri Profile Picture
    Saif Ali Sabri 2,654 Moderator on at
    Here’s a structured Power Automate flow outline you can use to handle item substitution before MRP runs in Dynamics 365 Supply Chain Management:

    ⚙️ Power Automate Flow Outline: Item Substitution for MRP

    1. Trigger: Scheduled recurrence
      • Set the flow to run before the nightly MRP batch job.
      • Example: Daily at 11:00 PM.
    2. Action: Query inventory levels
      • Use the Dataverse connector or OData API to retrieve on-hand inventory for items flagged with substitution rules.
      • Filter for items where priority 1 substitute = 0 stock.
    3. Condition: Evaluate substitution priority
      • If the primary item is out of stock, check availability of the next substitute (priority 2, priority 3, etc.).
      • Continue until a valid substitute with stock is found.
    4. Action: Update formula/BOM lines
      • Call the Dynamics 365 Supply Chain API to replace the out-of-stock item with the substitute in the formula or BOM.
      • Ensure the substitution is logged for audit purposes.
    5. Action: Notify planner
      • Send an email or Teams message to the planner confirming which substitutions were applied.
      • Include item IDs, substitution priority, and updated formula/BOM references.
    6. Final Step: Trigger MRP batch job
      • Once substitutions are updated, call the MRP batch job so that planning runs against the corrected formulas.
      • This ensures planned purchase orders are generated for the substitute item instead of the unavailable primary item.

    🔑 Key Benefits

    • Automates substitution logic before planning runs.
    • Prevents MRP from generating supply for unavailable items.
    • Provides planners with visibility into substitutions applied.
    • Reduces manual intervention and ensures smoother production planning.

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