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1
Managing
Customer
Consignment
I nventory
Quovera Confidential
2
Agenda
Consignment scenarios
Benefits of consignment programs
Determine products for consignment and agreements
Internal controls for consignment
Managing customer consigned inventory in Oracle
Bill Only, Inventory Interface Workflow
Oracle Set Ups
Manual Consignment Pull Order Process
Processing Errors
Customizations to Improve Process
Questions and Answers
Managing Customer Consignment
Quovera Confidential
3
Consignment Scenario
Managing Customer Consignment
Quovera Confidential
4
Consignment Scenarios
Customer consigned inventory at customer
warehouse
Customer consigned inventory at 3
rd
party
warehouse
Consignment Scenarios
Quovera Confidential
5
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
Quovera Confidential
6
Benefits of
Consignment Program
Managing Customer Consignment
Quovera Confidential
7
Benefits of Consignment Program
Customer
Customer Satisfaction
Reduced time to Market for new product
Shorter lead times
Competitor edge
Service parts for critical equipment
Save expedite freight costs
Benefits of Consignment Program
Quovera Confidential
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Downside of Consignment
Inventory management ( scraps, cycle counts,
replenishment)
Managing of obsolete parts
Timely Pull notifications
Shipment notice (3
rd
Party Warehouse)
Customer forecast and supplier production
schedule conflicts
Invoice and payment
Benefits of Consignment Program
Quovera Confidential
9
Consignment
Products
Managing Customer Consignment
Quovera Confidential
10
Determine products for Consignment
Customer
Products with high-degree of demand uncertainty
Supplier
Products with high-degree of sales potential but demand is
not reasonably known or stable
New unproven products
The introduction of existing product lines into new sales
channels.
Very expensive products where sales are questionable.
Consignment Products
Quovera Confidential
11
Consignment product characteristic
Transparent to the user
Requires no special handling in Shipping
and Receiving
Viewable as available in inventory
Non-nettable and not available for planning
Can be cycle counted
Consignment Products
Quovera Confidential
12
Consignment
Agreements
Managing Customer Consignment
Quovera Confidential
13
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 whos 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
Quovera Confidential
14
Internal controls
For Consignment
Managing Customer Consignment
Quovera Confidential
15
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 lost
Segregate consigned and non-consigned goods
Supplier agreement must be approved by
company lawyers and does not violate any
government regulations
Reconciliation and confirmation of consigned
goods by consignee
I nternal Controls for Consignment
Quovera Confidential
16
Oracle setups for
Customer
Consigned Inventory
Managing Customer Consignment
Quovera Confidential
17
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
advice
to 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
Quovera Confidential
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Define Location
I nventory and I tem Setups
Quovera Confidential
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Define Consignment Organization and Assign
Location
I nventory and I tem Setups
Quovera Confidential
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Define Consignment Sub-Inventory
I nventory and I tem Setups
Quovera Confidential
21
Enable Item in Consignment Org
I nventory and I tem Setups
Quovera Confidential
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Set Min/Max value for consigned Item
I nventory and I tem Setups
Quovera Confidential
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Move Inventory into Consignment Sub-
Inventory
I nventory and I tem Setups
Quovera Confidential
24
Define Consign Customer Price List and
Assign Items
Price List Setups
Quovera Confidential
25
Define Order Type
Order Management Setups
Quovera Confidential
26
Assign Line Flow - Bill Only with Inventory
Interface (Generic)
Order Management Setups
Quovera Confidential
27
Workflow Diagram (Generic)
Order Management Setups
Quovera Confidential
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Assign Document Sequence to Order Type
Order Management Setups
Quovera Confidential
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Enable Valid Ship Method to Consignment
Org
Order Management Setups
Quovera Confidential
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Assign Order Type, Price List, Consignment
Org and Valid Ship Method
Customer Master Setups
Quovera Confidential
31
Order process
for
Customer Consigned Inventory
Managing Customer Consignment
Order Process
Quovera Confidential
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Enter Order Header Details
Order Process
Quovera Confidential
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Verify Consignment Warehouse Defaults
Order Process
Quovera Confidential
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Enter Line Details
Order Process
Quovera Confidential
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Enter Consignment Sub-Inventory on Line
Order Process
Quovera Confidential
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Schedule Line
Order Process
Quovera Confidential
37
Book Order
Order Process
Quovera Confidential
38
Line Status Goes to Fulfilled
Order Process
Quovera Confidential
39
Workflow Proceeds to Invoice Interface
Order Process
Quovera Confidential
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Line Status Goes to Closed
Order Process
Quovera Confidential
41
Invoice process
for
Customer Consigned Inventory
Managing Customer Consignment
I nvoice Process
Quovera Confidential
42
Run Autoinvoice
I nvoice Process
Quovera Confidential
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View Invoice
I nvoice Process
Quovera Confidential
44
View Material Transaction
Verify I nventory Decrement
Quovera Confidential
45
Replenishment process
for
Customer Consigned Inventory
Managing Customer Consignment
Quovera Confidential
46
Run Min-Max planning report
Replenishment Process
Quovera Confidential
47
Create and approve internal requisition
Replenishment Process
Quovera Confidential
48
Create internal sales orders
Replenishment Process
Quovera Confidential
49
Order import
Replenishment Process
Quovera Confidential
50
Pick and Ship Confirm Replenishment
Inventory
Replenishment Process
Quovera Confidential
51
View Material Transaction
Verify I nventory I ncrement
Quovera Confidential
52
Process Errors/I ssues
Booking Order with No Sub-Inventory
Quovera Confidential
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Process Errors/I ssues
Line Will Go to Booked without Sub-
Inventory Workflow Stops
Quovera Confidential
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Process Errors/I ssues
Order Status Remains Booked-must re-
enter
Quovera Confidential
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Process Errors/I ssues
Workflow Error No Sub-inventory or
Inventory with Custom WF
Quovera Confidential
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Process Errors/I ssues
Booking Order with Not Enough Inventory
Line Status will Proceed to Fulfilled
Quovera Confidential
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Process Errors/I ssues
Line Status will Proceed to Closed and
Order is Eligible for Invoice
Quovera Confidential
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Process Errors/I ssues
If you have No for Allow Negative,
Inventory Transaction will get stuck in
Transaction Interface
Quovera Confidential
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Process Errors/I ssues
Reconcile Inventory and Resubmit
Quovera Confidential
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Process Errors/I ssues
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
Quovera Confidential
61
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
Quovera Confidential
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Possible Customizations
Bill Only with Inventory Interface
Workflow Customization
Quovera Confidential
63
Possible Customizations
Flow Stops if No Qty On Hand
Quovera Confidential
64
Possible Customizations
Status on Line Remains Booked until
Inventory is Reconciled
Quovera Confidential
65
Possible Customization
Sales Order Workflow Report Order
lines Booked but not Fulfilled
Quovera Confidential
66
Possible Customization
Table to Store Customer and Sub-
Inventory Details for Automatic
Processing of EDI/Imported Orders
Quovera Confidential
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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
Quovera Confidential
68
Conclusion
Q & A