How is Dynamics 365 for manufacturing solving modern business challenges?

The manufacturing industry is evolving rapidly, with growing supply chain disruptions, labor shortages, and increasing production complexity. Legacy ERP systems can no longer keep pace with the demands of modern operations – resulting in poor visibility, inaccurate planning, and increased costs.

That’s why more manufacturers are turning to Microsoft Dynamics 365 for manufacturing – a connected ERP platform that streamlines operations, improves decision-making, and drives scalability. In fact, when it comes to the best ERP for manufacturers looking to scale operations, Dynamics 365 consistently emerges as a leader.

In this blog, we’ll explore:

• The key business challenges in the manufacturing industry
• How Dynamics 365 implementation in manufacturing helps overcome them
• The ROI manufacturers achieve by adopting Microsoft Dynamics 365

The top business challenges manufacturers face in the present times

Manufacturers today encounter multiple operational bottlenecks that prevent efficiency and growth. These include:

1. Supply chain disruptions

Supply chain disruption remains one of the top concerns for manufacturers in 2024–25, alongside challenges related to supplier and transportation costs.

(Source: Manufacturing Dive 2024)

2. Labor and machine scheduling issues

Labor accounts for up to 70% of variable manufacturing costs, so scheduling inefficiencies can quickly lead to overspending. Studies show improved scheduling can reduce changeovers by ~25% and lift throughput by 20–25%.

(Source: IndustryWeek / Manufacturing.net case analyses)

3. Rigid production strategies

Many manufacturers still rely on static, one-size-fits-all production plans that struggle to adapt to changing demand or resource constraints, resulting in higher downtime and lower OEE.

(Source: Deloitte Manufacturing 2024 Outlook)

4. Manual quality checks

Human error remains a major factor in performance loss—research estimates that roughly 23% of unplanned downtime is attributable to it. Digital work instructions and automated inspections significantly reduce these risks.

(Source: McKinsey & Company / World Economic Forum Advanced Manufacturing Report)

5. Poor reporting and data visibility

A Hexagon–Forrester global survey found 98% of manufacturers face at least one data-related issue—such as poor visibility, accuracy gaps, or lack of accessibility—hindering analytics and innovation.

(Source: Hexagon & Forrester, 2024)

6. Shipping delays and hidden landed costs

Payment and documentation delays alone add around $3 billion per year in logistics costs – about $25 per container on 50% of all loaded boxes worldwide.

(Source: Seatrade Maritime News 2024)

These challenges underscore the need for a flexible and intelligent solution, such as Dynamics 365 ERP, in manufacturing.

How is Dynamics 365 solving core manufacturing challenges?

D365 empowers manufacturers to overcome today’s toughest operational challenges, from supply chain disruptions and production inefficiencies to data silos and visibility gaps. By unifying ERP, supply chain, and analytics capabilities into a single platform, it delivers real-time insights and automation across the entire manufacturing cycle. The result: smarter decisions, streamlined operations, and accelerated growth.

1. Smarter material planning and demand forecasting

One of the biggest pain points in manufacturing is the lack of material planning and the use of inaccurate supply-and-demand strategies. This often leads to stockouts, excess inventory, or production delays.

With the Material Requirements Planning (MRP) module, Dynamics 365 for Manufacturing leverages historical sales and demand data to more accurately predict future requirements. This helps manufacturers align inventory with actual needs.

Key MRP capabilities:

• Calculates material requirements in advance
• Suggests optimal reorder points
• Generates purchase and production schedules
• Considers lead times, capacity, and safety stock

Result: Predictable supply chains, reduced shortages, and fewer overstocking issues.

2. Overcoming production planning challenges

Poor labor and machine scheduling often lead to increased costs and reduced throughput. Dynamics 365 transforms this with capacity planning, resource scheduling, and Gantt chart visualization inside the Production Control module.

What manufacturers gain:

• Assign jobs to specific workers or machines
• Monitor available hours per machine or labor group
• Use Gantt charts for real-time visibility into operations

Instead of bottlenecks, scheduling becomes a strength – allowing manufacturers to maximize utilization and control costs.

3. Flexible production strategies

Too many manufacturers adhere to a single approach, such as make-to-stock, even when it doesn’t align with their business model. Dynamics 365 supports multiple production strategies, giving companies the flexibility to choose what works best:

• Make-to-stock: For high-volume, fast-moving products (e.g., packaged food).
• Make-to-order: For customized, demand-driven items (e.g., furniture).
• Engineer-to-order: Project-based production requiring controlled BOMs (e.g., industrial machinery).
• Configure-to-order: Customer-defined variations with preassembled options (e.g., laptops).
• Lean manufacturing: Kanban-driven systems focused on reducing waste and improving flow.

By integrating these strategies into the production control module, manufacturers can scale with agility rather than being locked into rigid models.

4. Automated quality management

Manual quality checks are prone to human error, responsible for nearly 80% of defects. Dynamics 365 addresses this with automated quality control checkpoints across the production lifecycle:

• Inbound inspections during raw material receipt
• In-process checks during production
• Post-production checks for finished goods
• Inventory transfers and returns quality validations

The result: Standardized, traceable, and error-free quality management that improves compliance and customer satisfaction.

Read more: How to streamline production with Dynamics 365 Manufacturing

5. Data-driven insights with Power BI

Weak reporting structures often leave manufacturers unsure, rather than enabling them to make informed decisions. By integrating Power BI with Dynamics 365 Finance & Operations, manufacturers get powerful, real-time business intelligence.

Power BI advantages:

• Centralized data across finance, operations, and supply chain
• Role-based dashboards for executives and teams
• Real-time KPI monitoring
• Automated reports with fewer errors

Further readings: How to use Microsoft Power BI for business intelligence

For CIOs and CTOs in manufacturing, this integration provides a single source of truth, enabling faster and smarter decisions.

6. Tracking landed costs and shipping

Untracked freight charges, customs fees, and documentation delays often erode profit margins. Dynamics 365 addresses this with the Landed Cost module, which provides full visibility and financial accuracy.

Capabilities include:

• Tracking all cost components in shipments
• Allocating costs accurately to inventory
• Real-time financial impact on margins
• Improved visibility into delivery timelines

Example: If freight costs rise due to port congestion, Dynamics 365 automatically logs the increase in landed cost journals, updating inventory valuation and profit margins in real time.

Manufacturers avoid undervalued inventory, missed costs, and surprise profit drops.

Conclusion: Future-proofing manufacturing with Dynamics 365

Operational inefficiencies, supply chain disruptions, and poor visibility can result in manufacturers losing millions in revenue and missing opportunities. With Microsoft Dynamics 365 for manufacturing, you’re already taking the right step toward streamlining production, strengthening supply chain resilience, and driving smarter, faster decision-making.

Now is the ideal time to evaluate your current ERP setup, identify gaps, and adopt a connected, intelligent platform that prepares your business for long-term success. At Confiz, we help manufacturers overcome Dynamics 365 implementation challenges in manufacturing and unlock measurable ROI through tailored solutions.

For expert guidance on Dynamics 365 ERP and CRM for manufacturing, supply chain optimization, or digital transformation, contact us at marketing@confiz.com.