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CONSIGNMENT INVENTORY

Carol Rogers
Paxar Corporation
SETUPS
Create the Subinventory

The subinventory is
not an Asset
Subinventory and not
Depreciable.
Create the Subinventory

Set the account numbers for the


subinventory. The items we are
discussing today are finished
goods so they are in the finished
goods account.
ITEM DEFINITION
ITEM DEFINITION
• The item must be assigned to the Organization
where it will be stored.
• Items are Transactable, Stockable, and Reservable
on the Inventory attributes tab.
• The item must be a consigned item, check the the
Consigned box on the General attributes tab.
• Consigned Inventory from Supplier does not use
Outside Processing, EAM items, Configure to
Order and Assemble to Order items
SUPPLIER AND SITE
SUPPLIER AND SITE
• If the supplier is also used to source product that is
not consigned, you may want to add another site
for the supplier for consignment.
• The supplier site must be a purchasing site. You
enable paying your supplier by selecting a method
on the Purchasing tab of the Supplier Sites
window in Oracle Payables.
• When self-billing for the supplier site is enabled,
you will create invoices automatically rather than
wait for the supplier to bill you.
SELF BILLING
• Pay On
– Select a payment method. Use is selected for
consigned material. Receipt is used for
material that is not consigned. Receipt and Use
is for material that can be consigned or non-
consigned material.
– Optionally, you can select a different pay site
than the supplier site, as in the example here
Invoice Summary Level
•Enter the level you want to use for consolidating
invoices for this supplier site when submitting the Pay
Auto Invoice Program.
•The invoice summary levels are dependent on the
Pay On method selected:
•Use has been selected and the invoice summary
options are Consumption Advice, and Pay Site.
•Pay Site summary level groups invoices together based
on the Currency and Payment terms criteria.
CREATE BLANKET PURCHASE
AGREEMENTS
CREATE BLANKET PURCHASE
AGREEMENTS
• Blanket purchase agreements are required for consigned
inventory.
– They provide the details of the goods you plan to buy from a
specific supplier in a period, but you do not yet know the detail of
our delivery schedules.
– Blanket purchase agreements specify negotiated prices for your
items before actually purchasing them.
– Oracle recommends that you do not use the header level amount
agreed for your blanket purchase agreement. Using this option
Creating Approved Suppliers limits your ability to consume
material above the agreed levels.
• The Blanket Purchase agreement is used to create releases
when the product is consumed according to the
Consumption Rules you will define.
CREATING APPROVED SUPPLIERS

Your purchasing suppliers are created


in the Supplies window and they are
associated to the items your are buying
using the Approved Supplier List and
Supplier-Item Attributes windows.
Create the consigned item here and
enter the Key Attributes, Business,
Supplier, Site and Approval Status.
CREATING APPROVED SUPPLIERS

Use the Record detail tab to


indicate if your approved
supplier can be a local or
global supplier.
A local ASL is used only in the
organization in which it was
defined. A global ASL may be
used in all organizations you
specify.
CREATING APPROVED SUPPLIERS

The source documents region is used to


associate specific quotations or blanket
purchase agreements with the supplier and
item combinations.

This enables Purchasing to default source


documents automatically. All consigned
enable suppliers must have a referenced
blanket purchase agreement.

Only blanket purchase agreements may be


used as source documents for consigned
inventory
CREATING APPROVED SUPPLIERS
CREATING APPROVED SUPPLIERS
•Inventory Tabbed region
•This region is used to enable consigned inventory, indicate Billing
Cycle Days and define the Aging parameters.
•The Billing Cycle Days is used by the concurrent batch program,
Create Consumption Advice, to generate consumption advice
documents for billing records.
•The Last Billing Cycle Date field is set to the system date when you
set up Consigned Inventory from the supplier. It is updated each
time the program runs. In the example, the Billing Cycle Date is not
used but the Consumption Advice report is scheduled to run at the
end of each month.
CREATING APPROVED SUPPLIERS
•The default is null. If the value is null, a consumption advice is
created every time consigned material is consumed. The Billing
Date is defaulted to the current system date, and subsequently
updated every time the Create Consumption Advice concurrent
program is executed.
•In the example today, we are not required to consume the consigned
material in a specified period of time. If you are required to
consume in stipulated time then enable the check box and indicate
the maximum number of days material may be kept using the Aging
Period Days.
DEFINE CONSUMPTION
TRANSACTION RULES
DEFINE CONSUMPTION
TRANSACTION RULES
• The Consumption Setup window, located in Inventory Set Up, is used
to enlist additional transaction types for consigned inventory
consumption.
– These transactions include Subinventory Transfer, Move Orders, and others.
– In the example, whenever a Sales Order Pick or Internal Order Picks, the From
Subinventory is TSC and it is transferred to FSV Stage.
• Consumption transactions are performed either explicitly of
implicitly.
– This is an Implicit consumption which refers to any type of consumption in
which the system automatically determines that consumption is necessary and
selects the owning parties whose stock will be used up to complete the required
transaction. The system automatically generates a Transfer to Regular
transaction whenever consumption takes place.
DEFINE CONSUMPTION
TRANSACTION RULES

Some transactions always


consume consigned materials.
These transactions include the
following:
•Sales Order issue
•WIP issues
•Inter-Organization transfers
•Miscellaneous issues
DEFINE CONSUMPTION
TRANSACTION RULES

Explicit consumption is performed


by using the consigned transactions
window and performing a transfer
to regular transaction. Transfer to
Regular transfers ownership from
the supplier. Transfer to
Consigned transfers the ownership
to the supplier.

When goods are consumed, they


are valued and accounted at the
price that is in effect at
consumption time. Sourcing rules
determine the appropriate
purchasing agreement.
PURCHASING CONSIGNED
MATERIAL
• Purchase orders for consigned material can be entered using
the Purchase Orders window.The relevant purchase order
shipment lines are automatically marked as consigned.
Orders for consigned material are created as standard
purchase orders.

• The destination type for all consigned shipment


distributions is always set to Inventory.
PURCHASING CONSIGNED
MATERIAL
The example is creating the PO for the consigned item. You
can view the shipment line details in the shipment window.
Shipment lines for consigned material have the following
attributes:
•Invoice Close Tolerance is 100 percent because the consigned
shipment is not invoiced.
•Match Approval Level value is 2 Way Matching, regardless
of value entered on the Supplier window, because the
shipment is not matched against as accounts payable invoice.
PURCHASING CONSIGNED
MATERIAL

•Accrue on Receipt is disable because financial liability is


deferred until ownership is transferred to your organization.
PURCHASING CONSIGNED
MATERIAL
PURCHASING CONSIGNED
MATERIAL

Consigned
checkbox is
enabled.
PURCHASING CONSIGNED
MATERIAL
Status value is
Close for
Invoicing.
RECEIVING CONSIGNED
INVENTORY
• You receive consigned material is the same way in which
you receive regular material, except that there is no
accounting event that might increase financial liability.
When receiving consigned material, you never match a
payables invoice to a consigned receipt. The goods ordered
are received into consigned inventory at the receiving
organization.
• When a consumption transaction is executed, the system
performs the accounting and costing processes that are
normally executed at receipt and delivery. Document
sourcing is used to determine the relevant prices of goods
during consumption.
RECEIVING CONSIGNED
INVENTORY
• In this example, the items are destination Inventory
and the Subinventory is TSC. The items are now in
the consigned subinventory and a subinventory
transfer or miscellaneous transaction is not required.
RECEIVING CONSIGNED
INVENTORY
RECEIVING CONSIGNED
INVENTORY

You can see in the example


the owning party is TSC
America, the planning parts,
source type, and source
RECEIVING CONSIGNED
INVENTORY

Click on the
Distribution button on
the Material
Transaction window
and you will see that
there is not accounting
from the PO Receipt
processed
Query Material Status

You can query and review consigned inventory and


material transaction in Oracle Inventory> Reports>
Consigned Inventory.
The Material Workbench window enables you to
query on hand balances for inventory items by
location, cost group, ownership, supplier, and other
inventory characteristics.
In the Query Material Window, you select values
to limit your search criteria. Select the
Consigned/VMI tabbed region to enter search
criteria for inventory designated for consigned.
Query Material Status

The following inquiry windows are


available for consigned inventory:
•Consigned On Hand
•Consigned Item
•Consigned Shipments
•Consumption Advices
•Consigned Receipts
•Consigned Returns
•Material Transactions
Query Material Status
Consigned On-Hand Quantity
Inquiry Window
The On-Hand Items window
provides a description of the
consigned item and quantity. You
can also use this window to view
the subinventory in which the
consigned item is stocked and
also the aging details of the
consigned on hand stock.
Query Material Status
Consigned Shipments Inquiry
Window

Using the Consigned Shipments


window, you can view information
about the shipment status of
consigned purchase orders.

You can view the PO number, the


quantity ordered vs the quantity
received, status of a particular
shipment, and the ship-to location.
Query Material Status

Consumption Advice Inquiry Window

In the Consumption Advice window, you


can review the consumption advices for a
particular consigned PO. You can view
the PO number, order date, buyer, status
of PO, and the amount of the order.
Query Material Status

Material Transaction Inquiry


Window

In the Material Transaction inquiry


window, you can view detailed
information about the transaction
status of any consigned item. This
window includes the Organization,
location name for the consigned
item, consigned transaction type,
inbound and outbound quantities, the
documentation type, and the
document source.
GENERATING THE CONSUMPTION
ADVICE
Run Create Consumption Advice Report to generate
consumption advices.

The consumption transactions, over a period of time, are


grouped together for the creation of consumption advice.

The specific duration in days, over which the consumption


transactions are combined for billing by the Create
Consumption Advice program, is called the billing cycle.
GENERATING THE CONSUMPTION
ADVICE

You can set up the billing cycle value and the other
consigned attributes in the ASL. The value in the Last
Billing Date field specifies the date on which the last Create
Consumption Advice program was run.
GENERATING THE CONSUMPTION
ADVICE
GENERATING THE CONSUMPTION
ADVICE

Run the Pay on


Receipt Auto Invoice
Report in Payables
with the transaction
source as Use.
GENERATING THE CONSUMPTION
ADVICE
The Pay on Receipt
Auto Invoice Report
will automatically run
the Payable Open
Interface.
GENERATING THE CONSUMPTION
ADVICE

Notice the Last Billing Date, it


has changed to May 15, 2007,
indicating the date on which the
last Create Consumption Advice
program was run.
GENERATING THE CONSUMPTION
ADVICE

We created a custom report


to show the items sold on
consignment. You can run it
by Supplier Name of Period
Name.
GENERATING THE CONSUMPTION
ADVICE
•The standard Oracle process creates a report listing item consumed and
quantity.

•The Pay on Receipt Auto Invoice process generates an entry in the


Payables module listing consumed quantity and vendor.

•The two are not tied together for auditing purposes.

•We created a custom report tying the two together, allowing our
Accounting group to identify and connect payments to vendors with
items and quantities
GENERATING THE CONSUMPTION
ADVICE
The report lists each item,
quantity, price, and total
amount for a particular
item. The supplier will
know what he is being
paid and the Payable
employees can answer
invoice questions.
INVOICING
An accounts payable invoice is
created after consumption advice
records are generated. When the
concurrent program is submitted, it
first identifies all eligible change of
ownership transactions. Invoice
records are created in accounts
payables for the line matched with
the corresponding purchase order or
blanket release.
PAY ON AUTO INVOICE
CONCURRENT PROGRAM
• The Pay on Receipt Autoinvoice concurrent
program automatically creates invoices from
eligible consumption advice. The following rules
govern this program:
– In order to create invoices from consumption advice-
self billing must be enabled and the receipt type must
be either Pay on Use, or Pay on Use and Receipt.
– Invoices are created for consumption advice in the
same operating unit selected for the concurrent
program.
PAY ON AUTO INVOICE
CONCURRENT PROGRAM
• If an alternate pay site is specified in the
Supplier site, the invoice is created for the
alternate pay site.

• For consumption advice to be invoiced, the


status must not be Finally Closed.
PURCHASE ORDER
INFORMATION
The Purchase Order
Summary window allows
you to search for purchase
orders Select the
Consumption Advice
check box and view
releases check box , the
system returns purchase
orders with consumption
advice data.
MATERIAL TRANSACTION

The find Material


Transactions window
includes additional search
criteria.
The Consumption Advice
Field is enabled only when
the Transaction Type is
Transfer To Regular or the
Transaction Action is
Ownership Transfer. You
can also enter the Supplier
name to search.
MATERIAL TRANSACTIONS

Click on the
Consumption
Advice Tab to view
information.
PENDING TRANSACTIONS

You can search in the


Pending Transactions
window for errors by
entering Ownership transfer
error in the Error Code field.
This code limits the search to
transactions in Pending
status due to failure during
consumption of consigned
material.
MISCELLANEOUS TRANSACTION

When using Miscellaneous Issue/Receipt, if the


item is under consigned control , you can select
Owning Party and Planning party from the
folder tool, show field.
ADDITIONAL RESOURCES

• Oracle Online Help Documentation.


• Metalink Notes
– 312724.1
– 304826.1
– 336778.1
– 295378.1
– 175935.1
– 285492.1
• Patch 4224005 is also required (note 304826.1).
QUESTIONS

Thank you!