When I talk with food and beverage manufacturers, processors, and distributors, the conversation almost always turns to the same concerns: quality, traceability, and compliance.

These are not abstract ideas. They affect daily operations, customer trust, and in many cases, the survival of the business.

The Food Safety Modernization Act (FSMA) raised the bar, and rightly so. But meeting those requirements does not have to mean adding layers of complexity or spreadsheets that only one person understands.

At Liberty Grove Software, we believe quality management should be practical, visible, and built into how people already work.

Microsoft Dynamics 365 Business Central (BC) provides companies with a strong foundation for managing QA workflows, batch tracking, nonconformances, and recall processes that support both compliance and operational efficiency.

My goal in this article is to explain how these pieces fit together in real-world terms, without jargon, and from the perspective of someone who has spent years working alongside operations and quality teams.

Quality Management is a System, Not a Department

One of the biggest misconceptions I see is treating quality as something that lives only in the QA department.

In reality, quality management spans purchasing, production, warehousing, and shipping. FSMA reinforces this by requiring documented controls, traceability, and corrective actions across the entire supply chain.

Business Central supports this systems-based approach by centralizing data and workflows. When quality processes are embedded into purchasing receipts, production orders, and sales shipments, quality becomes part of daily operations rather than an afterthought.

This is critical for both compliance and consistency.

For example, when raw materials are received, BC can trigger quality checks tied to specific vendors, items, or risk profiles. Results are recorded against the lot or batch, creating an immediate audit trail.

This data then flows forward into production and finished goods, ensuring downstream decisions are based on verified information.

Batch and Lot Traceability is the Backbone of FSMA

Traceability is the cornerstone of FSMA compliance. The ability to track one step forward and one step back is no longer optional. Companies must know where ingredients came from, how they were used, and where finished products were shipped.

Business Central’s lot and serial tracking capabilities provide the backbone for this requirement.

When properly configured, BC allows you to track batches from supplier receipt through production, storage, and customer shipment.

What matters most is not just that tracking exists, but that it is easy and reliable enough for people actually to use.

In practice, this means associating lot numbers with purchase receipts, consumption in production orders, and output of finished goods. It also means ensuring warehouse transactions, such as transfers or repack operations, maintain lot integrity.

When traceability is built into these workflows, you can generate a complete lot genealogy in seconds rather than hours.

From a leadership perspective, this changes the conversation. Instead of worrying whether you could handle a trace request or recall, you know you can. That confidence matters.

Managing QA Workflows Without Slowing the Business Down

QA workflows often get a bad reputation for being slow or disruptive. In my experience, that usually means the process is disconnected from the system people use every day. When QA steps are managed through emails, paper forms, or spreadsheets, delays are inevitable.

Business Central allows QA workflows to be defined and automated. This includes inspection plans, test results, approvals, and holds.

For example, a received lot can be automatically placed on quality hold until inspection results are entered and approved. Production can be prevented from consuming that lot until it is released, protecting both compliance and product quality.

The key is flexibility. Not every item requires the same level of scrutiny.

BC supports rule-based workflows so high-risk materials receive more rigorous checks, while lower-risk items move more quickly. This risk-based approach aligns well with FSMA expectations and helps QA teams focus where it matters most.

Nonconformances as Learning Opportunities

No operation is perfect. Deviations happen. What separates strong organizations from struggling ones is how they handle nonconformances.

A nonconformance should not just be a record of something going wrong. It should be a tool for learning and improvement.

Business Central supports this by allowing nonconformances to be logged, categorized, and linked to specific lots, vendors, production orders, or customers.

When a nonconformance is recorded, corrective and preventive actions can be assigned and tracked. This creates accountability and visibility.

Over time, patterns emerge. You may see recurring issues with a specific supplier, process step, or piece of equipment.

That insight allows leadership to make informed decisions rather than reacting to symptoms.

From an FSMA standpoint, documented corrective actions are essential. Regulators want to see not only that issues were identified, but that meaningful steps were taken to prevent recurrence. Having this information in BC makes audits far less stressful.

Recall Readiness Without Panic

No one likes to talk about recalls, but every responsible organization plans for them. The worst time to figure out your recall process is during an actual event.

Business Central supports recall readiness by combining traceability, inventory visibility, and customer shipment data. If a lot is identified as potentially unsafe, BC can quickly show which finished goods contain that lot and which customers received them. This dramatically reduces response time and limits exposure.

Equally important is documentation. FSMA requires timely communication and the maintenance of records during a recall. When all transactions are in BC, reports can be generated to support notifications, regulatory reporting, and internal review.

I often tell clients that recall capability is not just about compliance. It is about protecting your brand. A fast, precise response can preserve customer trust even under challenging situations.

Making Compliance Part of Daily Operations

One of the most encouraging trends I see is companies moving away from viewing FSMA compliance as a separate project. Instead, they are integrating compliance into their ERP workflows.

Business Central supports this shift by serving as a single source of truth for quality, inventory, and operations.

When QA data lives alongside purchasing, production, and sales data, teams can collaborate more effectively. Decisions are made with full context. Audits become confirmations rather than fire drills.

This integration also supports growth. As companies add new products, facilities, or markets, having standardized quality and traceability processes in BC allows them to scale without losing control.

A Practical Path Forward

Quality management, traceability, and FSMA compliance can feel overwhelming, especially for growing organizations.

My advice is to start with fundamentals. Ensure lot tracking is accurate and consistently used. Define clear QA workflows that match your risk profile. Treat nonconformances as opportunities to improve. And test your recall process before you need it.

Business Central provides the tools, but success comes from thoughtful configuration and alignment with how people actually work.

At Liberty Grove Software, we focus on bridging that gap. We help clients design solutions that support compliance while making day-to-day operations smoother, not harder.

At the end of the day, quality is about trust. Trust from regulators, customers, and your own team. When quality processes are transparent, reliable, and integrated into BC, that trust becomes a natural outcome rather than a constant concern.

That is what modern quality management should look like, and it is absolutely achievable.

Ready to Simplify FSMA Compliance and Strengthen Traceability?
Let’s talk. Schedule a conversation with Liberty Grove Software today to see how Business Central can support practical, audit-ready quality management across your operations.

About Andrew Good

Andrew Good, CEO, Liberty Grove Software

Andrew Good, CEO of Liberty Grove Software, a leader in digital transformation, directs the company with strategic insights that deliver impactful results. With over two decades of expertise in Microsoft technologies, Andrew has guided businesses through digital transformation across manufacturing, finance, and healthcare.

Andrew’s extensive knowledge comes from personal experiences with various companies. His hands-on operational knowledge comes from Engineering, Maintenance, and operational roles at Unilever and Sony Music. Fourteen years of working with Microsoft Dynamics BC/NAV follows successful projects in ERP, Computerized Maintenance Management Systems (EAM), and quality systems.

His passion for technology is matched by his love for sailing, which inspires his leadership. Andrew parallels the precision of navigating the seas and the challenges of steering a successful company. Under his leadership, Liberty Grove Software thrives, offering tailored solutions to empower clients and optimize operations with innovative Microsoft-based systems.

Connect with Andrew on LinkedIn

Subscribe to Andrew’s Newsletter on LinkedIn

One of the most exciting developments in the manufacturing world today is the integration of Lean Manufacturing principles into software systems such as Business Central. Lean concepts, such as Kanban, Just-in-Time (JIT) inventory, and waste reduction, have revolutionized the way manufacturers operate.

Still, there’s an even more significant opportunity when these concepts are applied directly in your Enterprise Resource Planning (ERP) system.

At Liberty Grove Software, we’ve always been passionate about helping businesses optimize their processes and run more efficiently.

As the CEO of a company that has spent years building custom solutions on Microsoft Dynamics 365 Business Central, I’ve seen firsthand how important it is for manufacturers to embrace modern, streamlined practices that enable Lean Manufacturing.

Today, I want to explore how Lean Manufacturing practices can be implemented in Business Central and why this approach is a game-changer for manufacturers looking to stay competitive in today’s fast-paced market.

What is Lean Manufacturing?

Before we dive into how Lean Manufacturing and Business Central can work together, let’s take a moment to define what Lean Manufacturing is and why it’s so crucial.

At its core, Lean is about eliminating waste, improving efficiency, and maximizing customer value.

The goal is to do more with less: fewer resources, less time, and reduced costs, while still delivering high-quality products to customers.

Some key concepts within Lean Manufacturing include:

• Waste Reduction: Identifying and eliminating processes that don’t add value.
• Just-in-Time (JIT) Inventory: Minimizing inventory by ordering only what is needed, when it is required.
• Kanban: A visual tool used to signal the need for materials or inventory, helping to maintain the flow of production and avoid overstocking.
• Continuous Improvement (Kaizen): The idea that minor, incremental improvements can lead to significant long-term results.
• Standardized Work: Developing precise and efficient processes for every task to reduce variability and errors.

Lean Manufacturing has been around since the mid-20th century. Still, with the rise of sophisticated ERP systems like Business Central, there’s a growing opportunity to leverage these concepts directly within your business operations.

The Benefits of Lean Manufacturing in Business Central

Business Central is a powerful ERP system that offers robust tools for financial management, supply chain optimization, sales, purchasing, inventory, and more. It’s designed to be flexible and customizable to meet your business’s specific needs.

But what makes Business Central truly special for manufacturers is how easily it can integrate Lean Manufacturing practices into your daily operations.

By doing so, manufacturers can reduce waste, increase production flow, and improve profitability.

Let’s explore some specific Lean concepts that can be applied within Business Central:

1. Kanban and Visual Production Management

Kanban is one of the most popular Lean tools, and it’s all about creating a visual system that helps manage inventory and production schedules.

The idea is simple: use visual signals (such as cards or boards) to indicate when parts or materials are needed at various stages of production.

Business Central can integrate Kanban systems to help manage inventory and production workflows. For example, using Business Central’s built-in Kanban functionality, manufacturers can track inventory levels in real time.

When stock runs low, or demand for a particular component increases, Business Central can automatically generate a replenishment order or signal the production team to act.

What’s especially powerful about this is that Business Central’s Kanban integration doesn’t just help manage materials; it also allows for cross-department collaboration.

The visual boards can be accessed by everyone, from purchasing to manufacturing to shipping, ensuring that each department is aligned and aware of the current inventory status.

2. Just-in-Time (JIT) Inventory

JIT inventory is a central pillar of Lean Manufacturing. It’s about ordering and receiving materials only when they are needed, thereby reducing the need for excess inventory and the associated carrying costs.

Business Central makes it easier than ever to implement JIT inventory practices. Through the software’s demand forecasting and supply chain management tools, manufacturers can gain a more accurate picture of future inventory needs based on customer orders, production schedules, and historical data.

By leveraging Business Central’s intelligent inventory management features, manufacturers can implement automated reorder points to ensure they never order more than needed.

This reduces both the financial burden of carrying excess inventory and the risk of stockouts that can disrupt production.

3. Waste Reduction and Continuous Improvement

Waste reduction is the heart of Lean Manufacturing, and Business Central can help manufacturers identify inefficiencies across the entire value stream.

For example, Business Central allows manufacturers to track each step of the production process, from raw material procurement to the final shipment.

By closely monitoring production data, businesses can identify bottlenecks, redundant processes, or areas where materials are being wasted.

Additionally, Business Central’s reporting and analytics tools can provide insights into production performance, enabling teams to conduct regular reviews of key metrics (such as cycle times, production volumes, and downtime).

This information is invaluable for implementing the Kaizen approach to continuous improvement.

By encouraging a culture of ongoing process evaluation and using Business Central as a data hub, manufacturers can continually refine their operations, minimize waste, and increase overall productivity.

4. Demand Forecasting and Production Planning

Lean Manufacturing isn’t just about cutting costs; it’s also about being more responsive to customer demand.

By utilizing Business Central’s advanced forecasting and production planning capabilities, manufacturers can more accurately predict when demand will rise and adjust production schedules accordingly.

Using AI-powered demand forecasting tools, Business Central can help manufacturers understand which products will be in high demand and when, allowing them to better align production schedules and material procurement with market needs.

Incorporating Lean principles into production planning helps manufacturers meet customer demand without overcommitting resources.

By keeping production schedules flexible and responsive, businesses can maintain high customer satisfaction while optimizing inventory levels.

5. Production and Capacity Scheduling

Scheduling is another critical area where Lean Manufacturing principles intersect with Business Central.

Lean aims to reduce production downtime and improve the overall flow of goods through the system.

By using Business Central’s capacity planning features, manufacturers can ensure they use resources effectively and avoid production bottlenecks.

Business Central enables businesses to schedule production runs based on available resources and capacity, ensuring that the right products are being made at the right time. It also allows manufacturers to prioritize production runs based on customer orders, delivery deadlines, and inventory levels.

This ability to closely monitor capacity and production scheduling leads to reduced lead times, fewer delays, and a smoother production flow, all key tenets of Lean Manufacturing.

Why Lean Manufacturing in Business Central Matters

Now that we’ve explored how Lean concepts like Kanban, JIT, and waste reduction can be applied directly within Business Central, it’s time to address the big question: why does it matter?

For manufacturers, staying competitive in today’s market requires more than just making high-quality products; it requires making them efficiently and cost-effectively.

By embracing Lean principles and integrating them with Business Central, manufacturers can:

• Increase profitability by reducing waste and improving operational efficiency.
• Enhance customer satisfaction by delivering faster responses and improved product availability.
• Strengthen their supply chain by aligning production schedules with customer demand.
• Streamline decision-making with real-time data and analytics from Business Central’s reporting tools.

Ultimately, the combination of Lean Manufacturing principles and Business Central creates a robust framework for continuous improvement.

It empowers manufacturers to optimize every step of the production process while remaining flexible enough to respond to fluctuating market conditions and customer demands.

The Future of Lean Manufacturing with Business Central

As a manufacturer, you’re constantly looking for ways to improve. Whether it’s reducing production costs, optimizing your inventory management, or getting products to market faster, Lean Manufacturing and Business Central can help you achieve those goals.

The integration of Lean practices into Business Central is not just a trend; it’s the future of manufacturing.

As the business landscape evolves, manufacturers will need to be more agile, more data-driven, and more focused on delivering value to their customers.

Business Central, with its powerful tools for managing everything from supply chains to financials, is the perfect ERP system to help manufacturers navigate that journey.

Ready to Take Your Manufacturing Operation to the Next Level?

Let’s talk. Schedule a conversation with Liberty Grove Software today, and let’s discuss how Lean Manufacturing and Business Central can work together to unlock new levels of efficiency, profitability, and customer satisfaction.

About Andrew Good

Andrew Good, CEO, Liberty Grove Software

Andrew Good, CEO of Liberty Grove Software, a leader in digital transformation, directs the company with strategic insights that deliver impactful results. With over two decades of expertise in Microsoft technologies, Andrew has guided businesses through digital transformation across manufacturing, finance, and healthcare.

Andrew’s extensive knowledge comes from personal experiences with various companies. His hands-on operational knowledge comes from Engineering, Maintenance, and operational roles at Unilever and Sony Music. Fourteen years of working with Microsoft Dynamics BC/NAV follows successful projects in ERP, Computerized Maintenance Management Systems (EAM), and quality systems.

His passion for technology is matched by his love for sailing, which inspires his leadership. Andrew parallels the precision of navigating the seas and the challenges of steering a successful company. Under his leadership, Liberty Grove Software thrives, offering tailored solutions to empower clients and optimize operations with innovative Microsoft-based systems.

Connect with Andrew on LinkedIn

Subscribe to Andrew’s Newsletter on LinkedIn

During my recent UST Education Series session, we walked through the highlights of the Business Central (BC) 2025 Wave 2 update, and it’s a big one. This release touches nearly every functional area of BC, from AI-powered Copilot features to improvements in financials, reporting, supply chain, and manufacturing.

Most importantly, it provides new ways to manage updates smarter, something every BC admin and partner cares deeply about.

After 24 years of helping organizations succeed with Microsoft Dynamics 365 Business Central, I’m still energized by every new release.

Microsoft’s twice-yearly updates reaffirm their commitment to continuous improvement: listening to customers, modernizing the platform, and giving us new tools to be more productive, more intelligent, and more adaptable.

Let’s take a closer look at what’s new, how updates will roll out, and the strategies I recommend for staying current without disrupting your business.

Update Rollouts: Staying Ahead Without Falling Behind

Microsoft remains consistent with its two major updates per year, typically landing in April and October, with preview features appearing earlier. But each organization controls when these updates go into production. That flexibility is powerful, and managing it well can give you confidence and peace of mind.

Here’s the approach I recommend (and use myself):

1. Establish a predictable testing window

Pick a week each cycle dedicated to reviewing preview features in your sandbox. Assign owners for finance, operations, and IT so nothing falls through the cracks.

2. Automate what you can

Business Central now offers better tools, like the Power Platform Connector for BC Environment Management, to help you spin up, refresh, and manage sandboxes more efficiently. Ensure your team has the necessary skills or resources to leverage these tools effectively so that you can maximize their benefits without delay.

3. Adopt early, but not first

Don’t wait until the last week of the update window; doing so risks rushed testing or unexpected conflicts. Aim for the middle of the rollout period to strike a balance between stability and innovation.

This strategic approach ensures you consistently benefit from Microsoft’s improvements without operational surprises.

What’s New in Business Central 2025 Wave 2

Wave 2 features enhancements that touch everyday workflows and long-term digital transformation goals, inspiring confidence that continuous innovation can drive your business forward.

Copilot: Bringing Intelligence Deeper Into BC

Payables Agent

This Copilot agent uses AI to help you manage vendor invoices. It identifies inconsistencies, recommends coding, and helps streamline the approval process. For AP teams, this is a practical, efficiency-boosting upgrade, not just AI for the sake of AI.

Auto Fill (with Bing Search)

Auto Fill can now draw from Bing Search to populate item details faster. If you’re onboarding new products, building catalogs, or managing frequently changing items, this saves real time.

Summarize

A favorite among first adopters, Copilot can now generate clear, human-readable summaries of records, helping busy users get up to speed immediately.

Agents (Preview)

This update is an exciting direction: agents that carry out tasks on your behalf. Early previews show promise in managing routine processes and in proactively suggesting actions.

Enhanced PO Line Matching

Improved intelligence means fewer mismatches and smoother purchasing workflows.

MCP (Model Context Protocol) Server

This enhancement deepens the integration between Business Central and AI models, enabling Copilot to interpret BC data with greater accuracy and context.

General Application Improvements

Wave 2 includes several updates that may not grab headlines, but they significantly improve usability and reliability.

New Accounts Payable Role Center

AP teams get a more intuitive, role-focused dashboard that puts tasks, insights, and actions front and center.

Concurrent Posting

This one’s a game changer for larger teams. You can now post more transactions simultaneously without collisions or delays.

Semantic Search

Searching in BC becomes much closer to how we naturally think. Instead of exact matches, BC now understands meaning and context.

Record Link Migration Tool

A welcome addition for implementations and upgrades; record links now migrate more reliably with the new tool.

Power Platform Connector for BC Environment Management

This feature strengthens automation opportunities for environment refreshes, notifications, approvals, and governance.

Sustainability Features

Microsoft continues to expand BC’s ability to support ESG initiatives, enabling more tracking and reporting without heavy customization.

Updated Contoso Coffee Demo App

This improved environment makes training and demonstrations much more realistic and modern.

eCommerce Enhancements (Shopify)

eCommerce continues to grow across industries, and Microsoft’s Shopify connector gets several improvements:

• Better troubleshooting tools to diagnose sync issues
• Linking salespeople to Shopify orders, improving reporting, and commissions
• Improved pricing synchronization, addressing one of the most common pain points

These updates reflect real-world customer feedback, making the integration smoother and more scalable.

Reporting Enhancements: Better Data, Better Decisions

Reporting is one of the areas where we see meaningful improvements every release, and Wave 2 continues that pattern. Develop a strategy to evaluate which new features, such as Analysis Mode or Power BI report templates, align with your business goals and prioritize their adoption for maximum impact.

Analysis Mode – Now with Related Table Data

You can now pull related data directly into your analysis mode views, reducing the need for custom queries or external tools.

Audit Trail Report

Internal controls teams will appreciate this more precise and comprehensive audit trail.

Power BI Reports Are Now Open Source

That’s huge. Microsoft has made its Power BI report templates open source, enabling partners and customers to extend them with confidence.

Improved Financial Reporting

Smarter layouts, better usability, and improved flexibility make this area more approachable for finance teams.

Source Currency Code and Amount in General Ledger Entries

A minor enhancement with a significant impact for multi-currency organizations.

New Power BI Apps

These refreshed and expanded apps give organizations faster insights right out of the box:

• Purchasing (new!)
• Finance
• Sales
• Inventory
• Inventory Valuation
• Manufacturing
• Subscription Billing
• Sustainability

Each app brings stronger visualizations, better KPIs, and more actionable dashboards.

Supply Chain Improvements

Wave 2 includes several enhancements that make purchasing, sales, and inventory management more efficient:

Quality Management (Coming December)

A structured framework for managing inspections, quality checks, and nonconformances.

Sort Sales and Purchase Lines by Line Type

A simple but highly valuable usability improvement.

More Personalization Options

Users can now add additional fields and columns, tailoring pages to their workflow.

Manufacturing Enhancements

Manufacturers get meaningful upgrades this cycle:

Improved Subcontracting

Including:

• Better logistics for component movements
• Additional pricing options
• Expanded receiving that provides for item tracking and warehouse handling
• Improved visibility into subcontracting status

Quality Management (December 2025)

Microsoft is building a long-term roadmap for integrated quality processes.

Calculate Consumption – Set Defaults

This improvement supports more accurate production consumption calculations.

Final Thoughts: Staying Current Is a Competitive Advantage

Business Central 2025 Wave 2 reminds us why cloud ERPs are so powerful: continuous innovation, constant refinement, and new capabilities that businesses can adopt immediately.

But these updates only matter if you take advantage of them.

My advice after more than two decades working with BC:

Make staying current a strategic priority, not an afterthought.

The organizations that consistently benefit from Business Central are those that treat updates as opportunities, not disruptions.

Ready to Up Your Game with Business Central?

If you’d like help evaluating Wave 2 features, optimizing your update schedule, or exploring AI capabilities like Copilot, the Liberty Grove Software team is always here to help.

Let’s connect.Together, we can turn this update into a platform for your next stage of growth.

Here’s to making the most of what’s new in BC 2025 Wave 2; your future systems (and users!) will thank you.

About Andrew Good

Andrew Good, CEO, Liberty Grove Software

Andrew Good, CEO of Liberty Grove Software, a leader in digital transformation, directs the company with strategic insights that deliver impactful results. With over two decades of expertise in Microsoft technologies, Andrew has guided businesses through digital transformation across manufacturing, finance, and healthcare.

Andrew’s extensive knowledge comes from personal experiences with various companies. His hands-on operational knowledge comes from Engineering, Maintenance, and operational roles at Unilever and Sony Music. Fourteen years of working with Microsoft Dynamics BC/NAV follows successful projects in ERP, Computerized Maintenance Management Systems (EAM), and quality systems.

His passion for technology is matched by his love for sailing, which inspires his leadership. Andrew parallels the precision of navigating the seas and the challenges of steering a successful company. Under his leadership, Liberty Grove Software thrives, offering tailored solutions to empower clients and optimize operations with innovative Microsoft-based systems.

Connect with Andrew on LinkedIn

Subscribe to Andrew’s Newsletter on LinkedIn

Explore how Dynamics 365 BC connects to shop floor systems, sensors, or MES platforms to optimize production.

When I walk into a manufacturing plant these days, I see fewer clipboards and more screens. Advanced shop-floor integrations mean that machines are talking, operators are tapping tablets instead of filling out paper forms, and managers can see what’s happening on the shop floor right now, not tomorrow morning.

That’s precisely where advanced shop-floor integrations – IoT, MES, and Microsoft Dynamics 365 Business Central (BC) – come together.

And it’s one of the areas my team at Liberty Grove Software and I are most excited about, because when you connect these worlds properly, you don’t just “go digital”; you fundamentally change how production is planned, executed, and improved.

In this article, I’ll walk through how Dynamics 365 BC connects to shop-floor systems, sensors, and MES platforms, what that actually looks like in practice, and some lessons we’ve learned helping manufacturers implement these integrations.

Why connect your shop floor to Dynamics 365 BC?

Let’s start with the “why,” because integration projects aren’t small undertakings.

When you connect BC to machines, sensors, and MES, you’re aiming for a few big wins that demonstrate clear benefits:

Real-time visibility

No more waiting for manual reporting. Production orders, consumption, scrap, and output flow in near real time from the shop floor to BC.

Better planning and scheduling

Planners work with actual machine performance, not assumptions. If a key line is running slower, BC can reflect that in capacity and delivery dates.

Accurate costing and margin control

Actual labor, material usage, and machine time are captured as they occur, feeding BC’s costing engine with reality rather than rough estimates.

Higher OEE (Overall Equipment Effectiveness)

By tying machine data (downtime, speed loss, quality) into your ERP, you can identify and prioritize the bottlenecks that impact financial results.

Less admin, more value-added work

Operators stop being data entry clerks and focus on running the process. Data flows automatically in the background.

How does Dynamics 365 BC connect to all these systems?

Involving both IT and OT teams early can make this process smoother and more successful.

The three layers: ERP, MES, and IoT

Think of your landscape in three layers:

1. ERP – Dynamics 365 Business Central

That’s your system of record: items, BOMs, routings, production orders, inventory, costing, purchasing, and finance.

• MES – Manufacturing Execution System

MES sits closer to the shop floor. It handles things like:

• Dispatching and tracking production orders by operation
  • Operator logins & labor tracking
  • Detailed machine status and downtime reasons
  • Quality checks and SPC (Statistical Process Control)
  • Work instructions and electronic batch records

In some plants, this is a commercial MES product; in others, it’s a combination of homegrown systems, HMI screens, and data collection terminals.

• IoT – Machines, sensors, PLCs, and data platforms

That’s where signals originate:

• PLCs and controllers on the machines
  • Smart sensors (temperature, vibration, pressure, etc.)
  • Data historians and IoT platforms (like Azure IoT, Kepware, OPC UA servers, etc.)

BC doesn’t talk directly to every sensor and PLC out of the box. Instead, BC typically integrates with:

• MES systems, which already aggregate shop-floor events and translate them into business-friendly data (good pieces, scrap, downtime, etc.), and/or
• IoT/Integration platforms that sit between raw machine data and ERP (for example, Azure services, middleware, or specialized connectors).

Let’s look at the practical patterns.

Common integration patterns with Dynamics 365 BC

1. MES as the “shop-floor brain”

In this pattern, BC is the planning and costing engine, and MES acts as the execution brain on the floor, coordinating operations effectively.

Typical flow:

• From BC to MES
  • Released production orders
  • BOMs and routings
  • Work centers/machine centers
  • Item masters and units of measure
• From MES to BC
  • Operation completions (quantity good, quantity scrapped)
  • Actual start/finish times
  • Labor hours and machine time
  • Material consumption (by lot/serial if needed)

BC then:

• Updates inventory, WIP, and finished goods
• Post consumption and output
• Calculates actual production costs
• Feeds that into financials, sales, and planning

In practice, this is usually done via web services/APIs (OData/REST) or an integration platform that maps fields and handles retries, error logging, and transformations.

Where this shines:

If you’re already using or planning to implement a robust MES, this pattern gives you clean separation: BC doesn’t have to worry about raw machine signals; it just consumes meaningful, validated production events.

Direct IoT-to-BC integration

In some environments, especially lighter manufacturing or when you’re just getting started, you may not have a full MES. Instead, you might connect IoT platforms directly to BC.

For example:

• A line counter on a packaging machine sends production totals to an IoT hub every minute.
• A middleware layer aggregates counts and batches them into “production output” records.
• That middleware calls BC’s APIs to update the related production order with the produced quantities and post-consumption using backflush or rules.

You might also use IoT data to:

• Trigger quality holds in BC if a sensor reading exceeds the out-of-range threshold.
• Write non-conformance or inspection records when specific alarms occur.
• Adjust maintenance work orders in a connected maintenance system based on runtime and cycles.

Key ingredients:

• An IoT platform or gateway that can speak the “machine language” (OPC UA, Modbus, etc.)
• Integration middleware that can call BC’s web services securely
• Clear business rules: how many pulses equals one good piece, what to do with partial data, etc.

Where this shines:

When you want fast wins and targeted automation on specific lines or machines without a full MES implementation.

Hybrid: BC + MES + IoT analytics

Many mature manufacturers end up with a hybrid architecture:

• MES handles execution and operator interaction.
• IoT/analytics platforms (often in the cloud) collect high-frequency sensor data for analytics, AI, and advanced monitoring.
• BC serves as the backbone for orders, inventory, costing, and finance.

In this world:

• MES and BC share master data and transactional updates (orders, completions, consumption).
• IoT platforms feed insights (predicted failures, quality risks, performance trends) either into MES, BC, or both.
• BC may consume summarized KPIs—like OEE by work center per day—for reporting and profitability analysis.

This pattern is powerful when you’re ready to embrace continuous improvement powered by data rather than just basic automation, enabling smarter decision-making.

What does a “good” integration look like?

There’s no one-size-fits-all, but successful shop-floor integrations with BC tend to share a few characteristics:

1. Clear ownership of master data

Decide where each master lives and who owns it:

• Items, BOMs, routings: almost always BC
• Work centers/machine definitions: usually BC, sometimes MES if much more detailed
• Quality specs: sometimes MES, sometimes QC modules integrated with BC

Then set up integration so that:

• Changes are propagated automatically where needed
• There’s one “system of truth” for each data type

2. Simple, robust message flows

Fancy architectures are fun on paper, but on the shop floor, reliability beats elegance.

Good practices:

• Use simple, well-defined messages: e.g., “Operation Completed” with clear fields.
• Include reference keys (order number, operation number, item, date-time, user).
• Handle exceptions gracefully:
  • What happens if BC is temporarily unavailable?
  • How do you detect and fix duplicate or missing messages?

3. Real-time where it matters, batch where it doesn’t

Not every integration needs to be millisecond real-time.

• For machine status dashboards, you want near-real-time updates.
• For costing and inventory, posting every few minutes or hourly is often sufficient.

We often design hybrid timing:

• Real-time or near-real-time for execution-critical events.
• Scheduled/batch for summarized metrics and secondary data.

Practical use cases you can target

If you’re wondering where to start, here are some concrete use cases that deliver value quickly:

1. Automated production reporting
   1. Machines or MES send good/scrap counts directly to BC.
   1. Production orders are updated without manual entry.
   1. Supervisors move from chasing paperwork to reviewing exceptions.
2. Real-time WIP visibility
   1. Operators scan or select the order they’re working on at terminals.
   1. BC (or MES) shows where every order is in the routing.
   1. Customer service can confidently answer “where’s my order?”
3. Material consumption and traceability
   1. Barcode/RFID or MES integration records which lots/serials were used on which orders.
   1. BC stores this for full forward/backward traceability.
   1. Recalls and quality investigations become much easier.
4. Downtime and OEE linked to financials
   1. Machine downtime events are captured and categorized.
   1. OEE metrics are tied to specific work centers and products.
   1. You can see which constraints are costing you money and prioritize improvements.

Key lessons from real-world projects

After many integrations, a few themes keep showing up:

Start Small, but Design for Growth

Pick one line, one product family, or one plant as your pilot. Prove the value, refine the data model, and then scale out. But at the design level, think ahead:

• Will you add more lines, shifts, or plants?
• Will you bring in a MES later if you don’t have one today?

Involve Both IT and OT Early

IT cares about BC, security, APIs, and data integrity. OT (operations/engineering) cares about PLCs, machines, shifts, and uptime.

You need both at the table. Some of the best integration ideas come from operators and maintenance technicians who live with the machines every day.

Don’t Underestimate Change Management

Technically, it might be “just an interface.” Organizationally, it’s a change in how people work:

• Operators might stop filling out paper and work with terminals instead.
• Supervisors might shift from “data collectors” to “data analysts.”
• Planners and finance get more accurate information – and will start expecting it.

Training, communication, and clear “what’s in it for me” messages are crucial.

Where Dynamics 365 BC fits in your Industry 4.0 roadmap

I like to remind manufacturers: BC is not trying to be your PLC or your MES. It’s your business backbone.

When you integrate BC with IoT and MES:

• BC gives structure, master data, and a single source of financial and operational truth.
• MES orchestrates execution and captures detailed shop-floor events.
• IoT collects and analyzes the raw heartbeat of your machines.

Together, they let you move from reactive firefighting to proactive, data-driven manufacturing.

Conclusion

If you’re looking at your plant and thinking, “We have all these machines, all this data, but it’s not connected to the business,” you’re not alone.

The good news is that Dynamics 365 Business Central is a strong foundation, and with the right approach to IoT and MES integration, you can unlock significant hidden potential.

And if you’re not sure where to start – or whether you need MES, direct IoT, or a hybrid approach – that’s precisely the sort of conversation my team and I at Liberty Grove Software have every week. The path doesn’t have to be complicated, but it does need to be yours.

Let’s talk. Schedule a conversation with Liberty Grove Software today, and let’s build a smarter, safer, and smoother ERP transition – together.

About Andrew Good

Andrew Good, CEO, Liberty Grove Software

Andrew Good, CEO of Liberty Grove Software, a leader in digital transformation, directs the company with strategic insights that deliver impactful results. With over two decades of expertise in Microsoft technologies, Andrew has guided businesses through digital transformations across various industries, including manufacturing, finance, and healthcare.

Andrew’s extensive knowledge comes from personal experiences with various companies. His hands-on operational knowledge stems from his experience in engineering and maintenance, as well as his operational roles at Unilever and Sony Music. Fourteen years of working with Microsoft Dynamics BC/NAV follows successful projects in ERP, Computerized Maintenance Management Systems (EAM), and quality systems.

His passion for technology is matched by his love for sailing, which inspires his leadership. Andrew parallels the precision required for navigating the seas with the challenges of steering a successful company. Under his leadership, Liberty Grove Software thrives, providing tailored solutions that empower clients and optimize operations with innovative, Microsoft-based systems.

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