Consignment Order Process

Quovera Confidential

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Managing CustomerConsignmentInventory



*AgendaConsignment scenariosBenefits of consignment programsDetermine products for consignment and agreementsInternal controls for consignmentManaging customer consigned inventory in Oracle Bill Only, Inventory Interface WorkflowOracle Set UpsManual Consignment Pull Order ProcessProcessing ErrorsCustomizations to Improve ProcessQuestions and Answers

Managing Customer Consignment



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Consignment ScenarioManaging Customer Consignment



*Consignment ScenariosCustomer consigned inventory at customer warehouseCustomer consigned inventory at 3rd party warehouseConsignment 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 ProgramManaging Customer Consignment



*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



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ConsignmentProducts




*Determine products for Consignment CustomerProducts with high-degree of demand uncertaintySupplierProducts 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 countedConsignment Products



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ConsignmentAgreements




*Consignment AgreementsEstablish min/max inventory levels with a periodic reviewDetermine criteria for consigned itemEstablish point of transfer of ownershipFrequency and means of communication for consumption adviceConsumption policy (eg. FIFO)Modified payment terms and agreed payment processAddress stolen, lost, damaged, removal or destroyed consigned materialMeans to share and review customer forecast and scheduleDetermine whos responsible for consignment material overhead cost (taxes, insurance)Consigned item return policyDetermine responsibility for the physical security of the consigned item storage location.Inspection and cycle countingDelivery performance measurements (Based on stock outs)Consignment Agreements



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Internal controlsFor 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 regulationsReconciliation and confirmation of consigned goods by consigneeInternal Controls for Consignment



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Oracle setups forCustomerConsigned Inventory Managing Customer Consignment



* Consignment Workflow

Run min/max planning for consignment subinventory with restock = YesCreate internal sales order via order importGenerate invoice for billingsSend consumption adviceto supplierPick release and ship goods to consignment locationCustomerSupplierCreate consignment sales order for consignment customerBilling workflowReplenishment workflowImport and create internal requisition



*Define Location

Inventory and Item Setups



*Define Consignment Organization and Assign LocationInventory and Item Setups



*Define Consignment Sub-Inventory

Inventory and Item Setups



*Enable Item in Consignment OrgInventory and Item Setups



*Set Min/Max value for consigned ItemInventory and Item Setups



*Move Inventory into Consignment Sub-InventoryInventory and Item Setups



*Define Consign Customer Price List and Assign ItemsPrice List Setups



*Define Order TypeOrder Management Setups



*Assign Line Flow - Bill Only with Inventory Interface (Generic)Order Management Setups



*Workflow Diagram (Generic)Order Management Setups



*Assign Document Sequence to Order TypeOrder Management Setups



*Enable Valid Ship Method to Consignment OrgOrder Management Setups



*Assign Order Type, Price List, Consignment Org and Valid Ship MethodCustomer Master Setups



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Order processforCustomer Consigned InventoryManaging Customer Consignment Order Process



*Enter Order Header DetailsOrder Process



*Verify Consignment Warehouse DefaultsOrder Process



*Enter Line DetailsOrder Process



*Enter Consignment Sub-Inventory on LineOrder Process



*Schedule LineOrder Process



*Book OrderOrder Process



*Line Status Goes to FulfilledOrder Process



*Workflow Proceeds to Invoice InterfaceOrder Process



*Line Status Goes to ClosedOrder Process



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Invoice processforCustomer Consigned Inventory

Managing Customer Consignment Invoice Process



*Run AutoinvoiceInvoice Process



*View InvoiceInvoice Process



*View Material TransactionVerify Inventory Decrement



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Replenishment processforCustomer Consigned InventoryManaging Customer Consignment



*Run Min-Max planning reportReplenishment Process



*Create and approve internal requisitionReplenishment Process



*Create internal sales ordersReplenishment Process



*Order importReplenishment Process



*Pick and Ship Confirm Replenishment InventoryReplenishment Process



*View Material TransactionVerify Inventory Increment



*Process Errors/IssuesBooking Order with No Sub-Inventory



*Process Errors/IssuesLine Will Go to Booked without Sub-Inventory Workflow Stops



*Process Errors/IssuesOrder Status Remains Booked-must re-enter



*Process Errors/IssuesWorkflow Error No Sub-inventory or Inventory with Custom WF



*Process Errors/IssuesBooking Order with Not Enough Inventory Line Status will Proceed to Fulfilled



*Process Errors/IssuesLine Status will Proceed to Closed and Order is Eligible for Invoice



*Process Errors/IssuesIf you have No for Allow Negative, Inventory Transaction will get stuck in Transaction Interface



*Process Errors/IssuesReconcile Inventory and Resubmit



*Process Errors/IssuesOther Standard Types of Error MessagesInvalid 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 CustomizationsAdd 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



*Possible CustomizationsBill Only with Inventory Interface Workflow Customization



*Possible CustomizationsFlow Stops if No Qty On Hand



*Possible CustomizationsStatus on Line Remains Booked until Inventory is Reconciled



*Possible CustomizationSales Order Workflow Report Order lines Booked but not Fulfilled



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



*ConclusionStandard 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



*ConclusionQ & A


Documents

Consignment Order Process