The buyer group in Microsoft Dynamics AX/365: How to use it?

April 24 2017

Editor's Note: All test results described in this article are based on Dynamics 365 for Operations, product version 1611.

The business context of defining buyer groups to manage a supply chain is quite clear.  

In companies that implement Microsoft Dynamics AX or 365 for Operations, purchasing activities are never done by just one person, so the work has to be divided.  How? Different approaches exist. I often see a split by commodity, so certain buyers buy certain materials. We also have seen buyers only dealing with certain suppliers and split their work that way. It depends on the industry.  

In engineer-to-order industries, buyers are narrowly involved in engineering design and a close relationship with the supplier is crucial.  Buyers are more likely organized by supplier. In make-to-stock industries, like consumer goods, many commodity items are bought from large distributors where a supplier relationship is not as close and it makes more sense to organize buyers by commodity so each buyer is responsible for a range of items.  

When we say "divide the work", what "work" are we talking about?  

  • The firming of planned purchase orders has to be divided between buyers 

  • The mailing and confirming of purchase orders has to be divided between buyers 

How does AX deal with these different situations? The system has a buyer group on the supplier and it has a buyer group on the item. Do I have to choose, or do I populate both? It is not immediately clear. We have to go through a few scenarios and see the behavior before we can decide how to populate items and suppliers. 

Scenario 1: Creation of manual Purchase orders 

The buyer group on the supplier copies to the Purchase order header. The buyer group on the item does not go anywhere in the Purchase order line. But if we have a purchase agreement that we link to the Purchase order, the buyer group from the Agreement terms will copy to the Purchase header. This should be the same buyer group as the one on the vendor. The agreement will copy the buyer group from the vendor to the agreement terms. 

Scenario 2 Firming of planned Purchase orders 

The same behavior here. The planned order gets its buyer group from the vendor master. If an Agreement exists during firming and the Master planning parameter allows to link the Purchase order to the Agreement, the system will take the buyer group from the Agreement.  

Scenario 3 Purchase requisitions 

The buyer group is not visible in the Purchase requisition. The behavior is more complicated than in previous scenarios. If I have a buyer group on the vendor, it will copy to the purchase order header. If I do not have a buyer group on the vendor (the field is not mandatory) but there is a buyer group on the item, and my requisition has only one line, this item buyer group will go to the Purchase order header. If I have more than one requisition line for items with different buyer groups, the system will not copy a buyer group to the purchase order header. 

Scenario 4  Purchase requisitions when there is a Purchase agreement 

If I have a Purchase agreement, the purchase requisition will automatically link the requisition line of the corresponding agreement line. If for some reason the buyer group on that agreement is not the same as on the vendor, the generated purchase order will get that buyer group, and not the buyer group from the vendor.  

Scenario 5 Direct delivery Purchase orders 

In this case the buyer group of the vendor will copy to the purchase order header of the generated direct delivery purchase order.  

Where do we find the field buyer group? 

AX table or transaction  Where is it?  Where does it go?

Released product 

Purchasing fast tab 

 

Vendors 

Misc. fast tab 

 

Purchase order 

Header set up fast tab 

Copies from vendor or item or from Agreement terms

Planned purchase order 

On the grid and in general tab 

Copies from vendor 

Purchase Agreement 

Header, terms fast tab 

Copies from vendor 

Request for quotation 

Header, set up fast tab 

Copies from the worker*. Because there is a selection of vendors going on in the RFQ, the system cannot copy the buyer group from a vendor when the RFQ header is created. Because the RFQ header does not know what items will be in the RFQ, it cannot copy the buyer group from the lines either. 

*A buyer group can be assigned to a worker in the "General" area of the action bar. 

Conclusion 

Despite the exceptional scenario #3 where the buyer group of the item is ending up in the Purchase order header, AX supports a distribution of purchasing work via the buyer group on the vendor.  

This means that to each buyer will be assigned a list of vendors. Then what do we do with the buyer group on the item? Each purchasing department has typically many buyers, often called purchasing agents or purchasing coordinators. These people are directly responsible for the purchase orders. But there are also people with more strategic buyer roles who do not deal with purchase orders but negotiate purchasing contracts and search for new suppliers. They are more involved with the long term. It would make sense to make them the buyer group on the item so they can "own" a number of items. If we make sure all vendors have a buyer group, these strategic buyers/purchasing managers will not end up on a PO header but we should realize this risk exists when we use Purchase requisitions. 

Note 

What about production? AX does not have a field "planner" on the item, but one can certainly use the buyer group field to indicate which planner is responsible for which item. The Planned production orders can be filtered by buyer group just like planned purchase orders. In this case there is no competition with a vendor so the buyer group comes solely from the released product. When planned production orders are firmed, the buyer group does not travel to the production order. 

This Scott Hamilton article has more information about the buyer group. It is recommended reading to see the bigger supply chain perspective. It is a section from his book "Master Planning" that is dedicated to the Master Planning module in MS Dynamics 365 for Operations. 

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About Evert Bos

I am Evert J Bos, ERP consultant since 1986. I started in Europe with IMS7 (A Honeywell Bull Mainframe ERP system) and the BaaN ERP system. Since 1995 I have worked in the USA and since 2004 I have been working with Dynamics AX.  I work for Sikich and focus mostly on manufacturing companies that make complex, engineered products.

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