quovera confidential 1 managingcustomerconsignmentinventory

Quovera Confidential 1

Managing Managing

CustomerCustomer

ConsignmentConsignment

InventoryInventory


• AgendaConsignment scenariosBenefits of consignment programsDetermine products for consignment and agreements Internal controls for consignmentManaging customer consigned inventory in Oracle –

Bill Only, Inventory Interface WorkflowOracle Set UpsManual Consignment Pull Order ProcessProcessing ErrorsCustomizations to Improve Process

Questions and Answers

Managing Customer Consignment


Consignment Scenario



• Consignment ScenariosCustomer consigned inventory at customer

warehouseCustomer consigned inventory at 3rd party warehouse

Consignment Scenarios


Customer Consigned Inventory is a practice where you place and maintain goods belonging to you at your customer locations. Customer does not take ownership of product until used (pulled).

Consignment Definition


Benefits of

Consignment Program



• Benefits of Consignment ProgramCustomer

Customer Satisfaction Reduced time to Market for new productShorter lead times Competitor edgeService parts for critical equipmentSave expedite freight costs

Benefits of Consignment Program


• Downside of Consignment Inventory management ( scraps, cycle counts,

replenishment)Managing of obsolete partsTimely Pull notificationsShipment notice (3rd Party Warehouse)Customer forecast and supplier production

schedule conflictsInvoice and payment

Benefits of Consignment Program


Consignment

Products



• Determine products for Consignment Customer

Products with high-degree of demand uncertainty

SupplierProducts with high-degree of sales potential but demand is

not reasonably known or stableNew unproven productsThe introduction of existing product lines into new sales

channels.Very expensive products where sales are questionable.

Consignment Products


• Consignment product characteristic Transparent to the userRequires no special handling in

Shipping and ReceivingViewable as available in inventoryNon-nettable and not available for

planningCan be cycle counted

Consignment Products


Consignment

Agreements



• Consignment Agreements Establish min/max inventory levels with a periodic review Determine criteria for consigned item Establish point of transfer of ownership Frequency and means of communication for consumption advice Consumption policy (eg. FIFO) Modified payment terms and agreed payment process Address stolen, lost, damaged, removal or destroyed consigned

material Means to share and review customer forecast and schedule Determine who’s responsible for consignment material overhead

cost (taxes, insurance…) Consigned item return policy Determine responsibility for the physical security of the consigned

item storage location. Inspection and cycle counting Delivery performance measurements (Based on stock outs)

Consignment Agreements


Internal controls

For Consignment



• Internal control for consignment Establish procedure to account for

consigned goods movement Establish billing, shipping and receiving

procedure with necessary approval Record adjustment for shrinkage and lostSegregate consigned and non-consigned

goodsSupplier agreement must be approved by

company lawyers and does not violate any government regulations

Reconciliation and confirmation of consigned goods by consignee

Internal Controls for Consignment


Oracle setups forCustomer

Consigned Inventory



Consignment Workflow

Run min/max planning for consignment subinventory with restock = ‘Yes’

Create internal sales order via order import

Generate invoice for billings

Send consumption adviceto supplier

Pick release and ship goods to consignment location

Customer Supplier

Create consignment sales order for consignment customer

Billing workflow

Replenishment workflow

Import and create internal requisition


Define Location

Inventory and Item Setups


Define Consignment Organization and Assign Location



Define Consignment Sub-Inventory



Enable Item in Consignment Org



Set Min/Max value for consigned Item



Move Inventory into Consignment Sub-Inventory



Define Consign Customer Price List and Assign Items

Price List Setups


Define Order Type

Order Management Setups


Assign Line Flow - Bill Only with Inventory Interface (Generic)



Workflow Diagram (Generic)



Assign Document Sequence to Order Type



Enable Valid Ship Method to Consignment Org



Assign Order Type, Price List, Consignment Org and Valid Ship Method

Customer Master Setups


Order process

forCustomer Consigned Inventory

Managing Customer Consignment Order Process


Enter Order Header Details

Order Process


Verify Consignment Warehouse Defaults

Order Process


Enter Line Details

Order Process


Enter Consignment Sub-Inventory on Line

Order Process


Schedule Line

Order Process


Book Order

Order Process


Line Status Goes to Fulfilled

Order Process


Workflow Proceeds to Invoice Interface

Order Process


Line Status Goes to Closed

Order Process


Invoice process


Managing Customer Consignment Invoice Process


Run Autoinvoice

Invoice Process


View Invoice

Invoice Process


View Material Transaction

Verify Inventory Decrement


Replenishment process




Run Min-Max planning report

Replenishment Process


Create and approve internal requisition



Create internal sales orders



Order import



Pick and Ship Confirm Replenishment Inventory



View Material Transaction

Verify Inventory Increment


Process Errors/Issues

Booking Order with No Sub-Inventory



Line Will Go to Booked without Sub-Inventory – Workflow Stops



Order Status Remains Booked-must re-enter



Workflow Error – No Sub-inventory or Inventory with Custom WF



Booking Order with Not Enough Inventory – Line Status will Proceed to Fulfilled



Line Status will Proceed to Closed and Order is Eligible for Invoice



If you have No for Allow Negative, Inventory Transaction will get stuck in

Transaction Interface



Reconcile Inventory and Resubmit



• Other Standard Types of Error Messages– Invalid Item

– Invalid Shipment Method (OK for Manual Generic WF, errors in Order Import)

– Item not found on Price List

– Item not found on Secondary Price List


Possible Customizations

• Add quantity check in WF

• Added a second check in WF to flag over consumption of consignment inventory levels

• Customize Sales Order Workflow Report

• Create Custom WF Error Report

• Create Table to Store Customer and Sub-Inventory Details for Automatic Processing

• Create Order Import Error Messages for EDI



Bill Only with Inventory Interface Workflow Customization



Flow Stops if No Qty On Hand



Status on Line Remains Booked until Inventory is Reconciled


Possible Customization

Sales Order Workflow Report – Order lines Booked but not Fulfilled


Possible Customization

Table to Store Customer and Sub-Inventory Details for Automatic

Processing of EDI/Imported Orders


Conclusion

• Standard Bill Only with Inventory Interface Workflow will work for Manual Order Entry without customization. Must understand:

– Flow will fulfill and go to Invoice Interface and Closed with or without enough inventory

– Need to manage Negative Inventory conditions

– If user fails to enter Sub-inventory at time of booking – Order is stuck in Booked

– Will not work for imported Orders – need to custom


Conclusion

Q & A

quovera confidential 1 managingcustomerconsignmentinventory

Documents

consignment customerproducts

customer locations

consigned materialmeans

review customer forecast

consigned goods movement

expensive products

new sales channels

cycle counts