Enforcing Item and State Regulations in Dynamics 365 Finance & Operations

ENFORCING ITEM AND STATE REGULATIONS IN DYNAMICS 365 FINANCE AND OPERATIONS

CONTENT Introduction Restricted Products Regional Lists – Enforcing Sales Restrictions Example: Restricting Motorcycle Sales in California Regulated Products Regional Lists – Tracking Compliance Requirements Example: Licensing Requirements for Agricultural Chemicals Product Safety Data Sheet Validity – Managing Hazardous Material Compliance Example: Auto SDS Creation When Packing Slip is Posted Conclusion

INTRODUCTION 

Many organizations operate in industries where product distribution is tightly regulated by geography. These rules may originate from international trade restrictions, environmental standards, safety requirements, or state-level laws. Examples include:

• Blocking exports of controlled chemicals to certain countries
• Restricting motorcycle sales in specific U.S. states
• Requiring a valid safety data sheet before selling hazardous materials

Managing these rules manually is inefficient and risky. To ensure compliance, enforcement needs to be embedded into the ERP system, where controls are consistently applied without relying solely on user awareness.

In Microsoft Dynamics 365 Finance & Operations (D365FO), the Product compliance framework provides several built-in tools to manage these requirements, located under:

Product information management > Setup > Product compliance

The key compliance features include:

• Restricted products regional lists – Blocks or allows sales of certain products in defined regions
• Regulated products regional lists – Tracks regulatory requirements for specific products in specific regions
• Product safety data sheet validity – Manages the validity of safety data sheets to ensure compliance before sale

This article focuses on how these features work together to help organizations enforce jurisdiction-based sales rules, illustrated with real-world scenarios.

RESTRICTED PRODUCTS REGIONAL LISTS - ENFORCING SALES RESTRICTIONS

The Restricted products regional lists feature is used to prevent or permit sales of certain items in specific jurisdictions. These restrictions are validated during sales order entry, based on the shipping address in the order header.

Key Configuration Elements:

• Jurisdiction type: Country/region, State/province, County, or City
• List type
• Inclusive: Only listed items can be sold in the jurisdiction
• Exclusive: All items except those listed can be sold
• Product association: Items explicitly linked to the list

Product information management > Setup > Product compliance > Restricted products regional lists

EXAMPLE: RESTRICTING MOTORCYCLE SALES IN CALIFORNIA

Scenario: A company sells motorcycles nationwide but is prohibited from selling them in California due to regulatory requirements.

Configuration Steps:

Create an exclusive restricted product list for California:

Let's now make sure that related parameter is active. 

Note that compliance check can be done packing slip stage as well.

Expected behavior: Sales orders with California shipping address cannot include the restricted motorcycles. 

Let's create a sales order that includes motorcycle with California address.

Insert restricted product.

Note that system throws an error when the sales line is saved.

Product 'XYZ' is restricted for sale to the delivery address on the sales line. Change the address or the product.

REGULATED PRODUCTS REGIONAL LISTS - TRACKING COMPLIANCE REQUIREMENTS

While restricted product lists block or allow sales, the Regulated products regional lists feature manages regulatory requirements that must be met before a product can be sold in a specific region.

This is essential when:

• A product is legal to sell but requires specific permits or licenses in certain regions
• Compliance documentation must be recorded before shipment
• Different regions impose different regulatory conditions on the same product

Product information management > Setup > Product compliance > Regulated products regional lists

EXAMPLE: LICENSING REQUIREMENTS FOR AGRICULTURAL CHEMICALS

Scenario: A company sells agricultural chemicals across multiple states, but some states/countries require a pesticide applicator license before purchase.

Configuration Steps:

Create a regulated product regional list for each state requiring a license and associate the relevant agricultural chemical items.

This setup can also been seen from the item itself.

Last check, let's now make sure that related parameter is active. 

Expected behavior: Sales orders with Canada shipping address must have an active product safety data sheet when weed killer is sold. If not, system throws a warning.

Let's create a sales order that contains weed killer with Canada address.

Note that system throws an error when the sales line is saved.

Please deliver the latest active product safety data sheet to the customer.

Let's try to post the packing slip.

Note that system throws an error:

No valid product safety data sheet exists for the item on the sales order

PRODUCT SAFETY DATA SHEET VALIDITY - MANAGING HAZARDOUS MATERIAL COMPLIANCE

Some products, especially chemicals, require a Safety Data Sheet (SDS) that must be current and valid at the time of sale. The Product safety data sheet validity functionality ensures that a product cannot be sold if its SDS is expired or missing.

Product information management > Setup > Product compliance > Product safety data sheet validity

EXAMPLE: AUTO SDS CREATION WHEN PACKING SLIP IS POSTED

Scenario: A hazardous chemical (weed killer) sales automatically generates an SDS when packing slip is posted.

Configuration steps:

Create a regulated product regional list for each state requiring a license and associate the relevant agricultural chemical items. (Already done in the previous step).

Define SDS validity rules for the chemical product.

Define a safety data sheet (SDS) for the chemical product.

Attach the actual SDS document. 

The last step is the parameter configuration. Navigate to

Inventory management > Setup > Inventory and warehouse management parameters > Product compliance

Remember that system throws an error shown as below when there is no active SDS.

After configurating product safety data sheet validity, attaching a safety data sheet to the product, and configuring compliance parameters properly, system allows user to generate packing slip and safety data sheet simultaneously.

CONCLUSION

This article explains how Microsoft Dynamics 365 Finance & Operations (D365FO) enforces jurisdiction-based product regulations using its Product compliance framework. It covers three key features:

• Restricted products regional lists: Prevents sales of certain items in specified regions (e.g., blocking motorcycle sales in California).

• Regulated products regional lists: Tracks and enforces regional regulatory requirements before sale (e.g., pesticide license requirements for agricultural chemicals).

• Product safety data sheet (SDS) validity: Ensures hazardous materials have a current SDS before shipping, with the option to auto-generate SDS documents during packing slip posting.

Through step-by-step configuration examples, the article demonstrates how these tools work together to automate compliance, reduce manual oversight, and ensure that regional sales restrictions, licensing obligations, and hazardous material documentation requirements are met directly within D365FO.