For manufacturers operating in highly regulated industries, quality is about much more than passing inspections. A single defect can trigger product recalls, regulatory scrutiny, customer dissatisfaction, and significant financial losses. That is why many organizations are moving beyond basic quality management processes and adopting a more structured approach through corrective and preventative action (CAPA) programs. CAPA enables manufacturers to not only address quality issues when they occur, but also identify and eliminate the root causes that could lead to future problems.
CAPA Fundamentals
At its core, CAPA is a framework designed to help organizations respond to quality events in a disciplined and traceable manner. The first step (when a product fails to meet specifications) in this framework is to typically document nonconformance. For example, a medical device manufacturer may receive a product return after discovering that a component falls outside required tolerances. A nonconformance record captures the issue and initiates an investigation.
CAPA links immediate correction or containment with root cause-based corrective and preventive action for an organization. Corrective action addresses the cause of a detected nonconformity to prevent recurrence, while preventive action addresses the cause of a potential nonconformity to prevent it from occurring.
This distinction is particularly important in industries where product quality directly impacts safety, compliance, and public trust. Medical device manufacturers, pharmaceutical companies, food and beverage producers, and defense contractors face stringent regulatory requirements and significant liability risks.
In these environments, simply replacing a defective part is not enough. Organizations must demonstrate what happened, why it happened, what action was taken, and how the issue will be prevented in the future. A documented CAPA process provides the transparency and accountability needed to satisfy auditors, regulators, and customers alike.
How D365 SCM Can Boost CAPA Efforts
Microsoft Dynamics 365 Supply Chain Management (D365 SCM) supports this process through Advanced Quality Management (AQM). These capabilities require D365 SCM version 10.0.44 or later and AQM enabled; this feature is enabled by default beginning with version 10.0.47.
Historically, many organizations tracked quality events in one system while managing investigations, spreadsheets, and corrective actions in separate tools. This fragmented approach often made it difficult to maintain visibility and traceability throughout the investigation process.
With AQM, manufacturers can link returns, nonconformances, CAPA cases and activities, root-cause analyses, supporting documentation, and resolution steps within a single system. CAPA cases can be created from and linked to source records such as nonconformances, quality orders, and return orders.
Case creation is user initiated; after a CAPA process is selected, the system can generate staged activities, assign workers or groups, and send notifications. Teams can manage investigation activities and findings in the CAPA case, while related quality-management controls can block or quarantine affected inventory based on configuration. The result is a more streamlined and auditable process that can reduce administrative effort while improving visibility across the organization.
Another important enhancement within D365 SCM is the introduction of flexible sampling plans. Traditional quality processes often require static inspection rules, such as testing the same number of samples from every incoming shipment regardless of supplier performance. In supply chain management, a configured flexible sampling plan can change the sample size or test group, and can use skip-lot inspection, according to defined rounds and pass/fail thresholds.
New suppliers can be assigned more stringent initial testing levels, while suppliers with a proven track record can move to reduced sampling or skip-lot levels when configured pass criteria are met. This risk-based approach helps quality teams focus their efforts where they matter while improving operational efficiency.
More Use Cases for D365 & CAPA Initiatives
For organizations operating multiple manufacturing facilities, Dynamics 365 also provides flexibility in how quality policies are applied. Quality associations can be scoped by legal entity or site and targeted by item or item group, vendor or customer, resource, and triggering event; test groups and sampling plans provide the inspection details. To support enterprisewide standards, organizations should harmonize CAPA processes and related quality setup across legal entities while retaining site-specific rules where needed.
Another valuable advancement for regulated industries is enhancing traceability through electronic batch records and electronic signatures. When enabled and configured, electronic signatures can be required for specified events, including quality-order validation and closing, canceling, or reopening CAPA cases; signature information is logged for audit review. Electronic batch records and related case documentation can provide additional manufacturing and investigation context. These capabilities support compliance and audit-readiness efforts, but manufacturers remain responsible for appropriate configuration, procedural controls, and validation for intended use. For a deeper look at item and batch traceability, see our FORsights™ article, “Complexity to Clarity: Modern Traceability for Manufacturers.”
How Forvis Mazars Can Help
As manufacturers face increasing demands for quality, compliance, and operational efficiency, CAPA is becoming a critical part of a modern quality strategy. By bringing corrective actions, preventive actions, investigations, traceability, and documentation into a unified platform, Dynamics 365 helps organizations move from simply reacting to quality problems to proactively preventing them, protecting both customers and the business in the process.
Forvis Mazars helps manufacturers strengthen product quality, improve compliance, and streamline operations with D365 SCM. Our team works alongside organizations to design and implement AQM capabilities in D365 SCM, including CAPA, nonconformance management, traceability, electronic batch records, and inspection strategies that can reduce risk and improve visibility across the manufacturing lifecycle.
Whether you’re operating in a highly regulated industry or simply looking to improve quality and reduce defects, we help you leverage technology to create more consistent, efficient operations that support audit readiness. For more information, please reach out to a professional at Forvis Mazars.