Automating Supplier Communications in Dynamics 365: The Supplier Communications Agent
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A buyer’s inbox tells a familiar story.
Supplier confirmations must be monitored constantly. Delivery delays are reported via email and must be manually entered into the system. And requests for order changes get lost somewhere between three open tabs and an overflowing inbox. Ultimately, the inbox quickly consumes a significant portion of the workday and prevents skilled buyers from focusing on strategically valuable tasks. Microsoft addresses this very reality with the Supplier Communications Agent in Dynamics 365 Supply Chain Management. Going forward, it will handle the routine tasks, allowing your procurement staff to focus on making the right decisions.
What the Supplier Communications Agent in Dynamics 365 SCM Does
The agent operates on two levels simultaneously:
- It handles outgoing communications.
- It processes incoming data from suppliers.
Both tasks are largely automated and run in the background, without the need to manually initiate each step.
Outgoing communication: automated order follow-ups
Follow-ups are one of the least popular tasks in procurement, yet they still need to be done. This is where the Supplier Communications Agent comes in, automatically identifying which orders require attention. It then automatically generates appropriate email templates, such as a reminder about a pending order confirmation or a follow-up regarding a delivery delay. These emails can either be sent directly or submitted for review before they reach the supplier. Manual follow-ups and drafting standard messages are now a thing of the past.
Incoming emails: automatically process order confirmations and changes
Incoming supplier emails are rarely structured. An order confirmation arrives as plain text, a change in delivery time is buried in the third paragraph, and a change in quantity is mentioned in passing. Reading and interpreting all of this manually and then entering it into the system takes time and creates opportunities for errors.
The agent reads incoming emails and automatically recognises what type of message it is, whether it’s an order confirmation, a change request, or a delivery date postponement. It assigns the email to the correct order and extracts the relevant information, such as new delivery dates, quantity changes, and item references. This data can be transferred to the ERP by the buyer. What used to require several manual steps is now reduced to verification and confirmation.
How AI agents are changing everyday procurement
A buyer who manually reads, interprets, and enters 15 to 20 supplier emails into the system every day can easily spend one and a half to two hours on this task — every day. That’s time that could be spent on price negotiations, supplier evaluations, or securing critical supply chains.
The most noticeable effect of the agent is therefore not seen in a single function, but in the overall rhythm of the workday.
Supplier relationships can be maintained more actively because the administrative burden is reduced. Risks in the supply chain become visible earlier because information from incoming emails flows into the ERP system faster and more completely. And order data is more up to date because changes no longer sit in the inbox waiting to be processed.
Such tasks may not sound particularly complex, but they add up to a significant time investment every day. The agent closes exactly this gap.
Human-in-the-loop: approval processes for AI agents in procurement
The Supplier Communications Agent is not an autonomous system that makes decisions on its own. It creates drafts, suggests updates, and highlights relevant information. However, it does not take action until a buyer confirms or approves the action.
This is no coincidence, but a matter of principle. With the Supplier Communications Agent, Microsoft follows the same approach as with all other AI agents in Dynamics 365: the agent handles the routine tasks, while the human retains responsibility. Outgoing emails can be reviewed before being sent. Changes to order data are displayed before they are applied. Complex or unclear situations — such as conflicting information in a supplier email — are routed directly to the buyer for manual clarification.
This gives procurement teams the assurance that no uncontrolled changes will end up in the system, while also building the trust necessary for the productive use of an AI agent in day-to-day operations.
In our overview of Copilot and AI agents in Dynamics 365 Finance & Supply Chain Management, we explain the fundamental differences between Copilot and AI agents and highlight which additional features are already available.
Prerequisites and activation in Dynamics 365 Supply Chain Management
Activation and setup are performed via Feature Management and are largely configuration-driven.
The following prerequisites apply for production use:
- System version: Dynamics 365 Supply Chain Management version 10.0.44 or higher
- Feature Management: Activation of the relevant preview features in the Feature Management workspace
- Email configuration: Setup of a dedicated mailbox for supplier communication, from which the agent processes incoming emails
- Permissions: Correct role assignment for employees who review and approve change proposals from the agent
Since the agent is in production-ready preview status, a controlled rollout is recommended — starting with a dedicated mailbox and a manageable number of suppliers before gradually expanding deployment.
What is the Supplier Communications Agent not suitable for?
The Supplier Communications Agent is clearly designed for operational communication related to purchase orders: follow-ups on pending confirmations, delays, and changes to quantities or delivery dates. This is exactly what Microsoft describes as its official scope of functionality — it is not a general-purpose tool for every type of supplier interaction.
This defines the limits of its scope of application. Where communication is not clearly linked to an order or goes beyond typical PO topics in terms of content, the agent is currently less suitable. The buyer remains responsible for making the technical assessment — for example, in cases of conflicting information or decisions outside the described framework.
There are also clear technical prerequisites you should be aware of:
- Mailboxes must be synchronised with Dataverse on the server side because the agent operates on a mailbox-centric basis.
- In the Review-and-Apply scenario, the agent processes only emails from supplier domains. Anyone wishing to test the agent must temporarily register their own email address as a vendor contact.
Added to this is the current status: the agent is documented as a production-ready preview, while the documentation itself is marked as “prerelease”. A controlled rollout — with a defined mailbox and a manageable group of suppliers — therefore remains the most pragmatic way to get started.
The Supplier Communications Agent handles exactly the tasks that take up a lot of your time every day. These include, for example, follow-ups and incoming emails, which the agent reads, interprets, and prepares for transfer to the ERP system on its own. This ensures that order data remains up to date without requiring you to manually update it on a regular basis.
The agent is already available in Dynamics 365 Supply Chain Management.
So the question isn’t whether it has a place in your processes, but when you’ll start using it. This will allow your procurement team to finally focus again on the tasks that create real strategic value. Feel free to contact us via our contact form, and together we’ll explore where the agent can make the biggest impact in your company.
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