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Managing
Customer
Consignment
I nventory
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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
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Consignment Scenario
Managing Customer Consignment
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Consignment Scenarios
Customer consigned inventory at customer
warehouse
Customer consigned inventory at 3
rd
party
warehouse
Consignment Scenarios
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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
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Benefits of
Consignment Program
Managing Customer Consignment
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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
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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
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Consignment
Products

Managing Customer Consignment
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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
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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
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Consignment
Agreements

Managing Customer Consignment
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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
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Internal controls
For Consignment


Managing Customer Consignment
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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
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Oracle setups for
Customer
Consigned Inventory
Managing Customer Consignment
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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
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Define Location

I nventory and I tem Setups
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Define Consignment Organization and Assign
Location
I nventory and I tem Setups
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Define Consignment Sub-Inventory

I nventory and I tem Setups
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Enable Item in Consignment Org
I nventory and I tem Setups
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Set Min/Max value for consigned Item
I nventory and I tem Setups
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Move Inventory into Consignment Sub-
Inventory
I nventory and I tem Setups
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Define Consign Customer Price List and
Assign Items
Price List Setups
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Define Order Type
Order Management Setups
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Assign Line Flow - Bill Only with Inventory
Interface (Generic)
Order Management Setups
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Workflow Diagram (Generic)
Order Management Setups
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Assign Document Sequence to Order Type
Order Management Setups
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Enable Valid Ship Method to Consignment
Org
Order Management Setups
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Assign Order Type, Price List, Consignment
Org and Valid Ship Method
Customer Master Setups
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Order process
for
Customer Consigned Inventory
Managing Customer Consignment
Order Process
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Enter Order Header Details
Order Process
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Verify Consignment Warehouse Defaults
Order Process
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Enter Line Details
Order Process
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Enter Consignment Sub-Inventory on Line
Order Process
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Schedule Line
Order Process
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Book Order
Order Process
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Line Status Goes to Fulfilled
Order Process
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Workflow Proceeds to Invoice Interface
Order Process
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Line Status Goes to Closed
Order Process
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Invoice process
for
Customer Consigned Inventory

Managing Customer Consignment
I nvoice Process
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Run Autoinvoice
I nvoice Process
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View Invoice
I nvoice Process
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View Material Transaction
Verify I nventory Decrement
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Replenishment process
for
Customer Consigned Inventory
Managing Customer Consignment
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Run Min-Max planning report
Replenishment Process
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Create and approve internal requisition
Replenishment Process
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Create internal sales orders
Replenishment Process
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Order import
Replenishment Process
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Pick and Ship Confirm Replenishment
Inventory
Replenishment Process
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View Material Transaction
Verify I nventory I ncrement
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Process Errors/I ssues
Booking Order with No Sub-Inventory


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Process Errors/I ssues
Line Will Go to Booked without Sub-
Inventory Workflow Stops


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Process Errors/I ssues
Order Status Remains Booked-must re-
enter


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Process Errors/I ssues
Workflow Error No Sub-inventory or
Inventory with Custom WF

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Process Errors/I ssues
Booking Order with Not Enough Inventory
Line Status will Proceed to Fulfilled

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Process Errors/I ssues
Line Status will Proceed to Closed and
Order is Eligible for Invoice

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Process Errors/I ssues
If you have No for Allow Negative,
Inventory Transaction will get stuck in
Transaction Interface

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Process Errors/I ssues
Reconcile Inventory and Resubmit

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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

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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
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Possible Customizations
Bill Only with Inventory Interface
Workflow Customization
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Possible Customizations
Flow Stops if No Qty On Hand


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Possible Customizations
Status on Line Remains Booked until
Inventory is Reconciled

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Possible Customization
Sales Order Workflow Report Order
lines Booked but not Fulfilled


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Possible Customization
Table to Store Customer and Sub-
Inventory Details for Automatic
Processing of EDI/Imported Orders

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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

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Conclusion
Q & A

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