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Managing Customer Consignment Inventory. Managing Customer Consignment. Agenda Consignment scenarios Benefits of consignment programs Determine products for consignment and agreements Internal controls for consignment
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Managing Customer Consignment Inventory Quovera Confidential
Managing Customer Consignment • 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 Quovera Confidential
Managing Customer Consignment Consignment Scenario Quovera Confidential
Consignment Scenarios • Consignment Scenarios • Customer consigned inventory at customer warehouse • Customer consigned inventory at 3rd party warehouse Quovera Confidential
Consignment Definition 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). Quovera Confidential
Managing Customer Consignment Benefits of Consignment Program Quovera Confidential
Benefits of Consignment Program • 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 Quovera Confidential
Benefits of Consignment Program • Downside of Consignment • Inventory management ( scraps, cycle counts, replenishment) • Managing of obsolete parts • Timely Pull notifications • Shipment notice (3rd Party Warehouse) • Customer forecast and supplier production schedule conflicts • Invoice and payment Quovera Confidential
Managing Customer Consignment Consignment Products Quovera Confidential
Consignment Products • 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. Quovera Confidential
Consignment Products • 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 Quovera Confidential
Managing Customer Consignment Consignment Agreements Quovera Confidential
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) Quovera Confidential
Managing Customer Consignment Internal controls For Consignment Quovera Confidential
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 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 Quovera Confidential
Managing Customer Consignment Oracle setups for Customer Consigned Inventory Quovera Confidential
Consignment Workflow Billing workflow Send consumption advice to supplier Create consignment sales order for consignment customer Generate invoice for billings Replenishment workflow Run min/max planning for consignment subinventory with restock = ‘Yes’ Import and create internal requisition Create internal sales order via order import Pick release and ship goods to consignment location Customer Supplier Quovera Confidential
Inventory and Item Setups Define Location Quovera Confidential
Inventory and Item Setups Define Consignment Organization and Assign Location Quovera Confidential
Inventory and Item Setups Define Consignment Sub-Inventory Quovera Confidential
Inventory and Item Setups Enable Item in Consignment Org Quovera Confidential
Inventory and Item Setups Set Min/Max value for consigned Item Quovera Confidential
Inventory and Item Setups Move Inventory into Consignment Sub-Inventory Quovera Confidential
Price List Setups Define Consign Customer Price List and Assign Items Quovera Confidential
Order Management Setups Define Order Type Quovera Confidential
Order Management Setups Assign Line Flow - Bill Only with Inventory Interface (Generic) Quovera Confidential
Order Management Setups Workflow Diagram (Generic) Quovera Confidential
Order Management Setups Assign Document Sequence to Order Type Quovera Confidential
Order Management Setups Enable Valid Ship Method to Consignment Org Quovera Confidential
Customer Master Setups Assign Order Type, Price List, Consignment Org and Valid Ship Method Quovera Confidential
Managing Customer Consignment Order Process Order process for Customer Consigned Inventory Quovera Confidential
Order Process Enter Order Header Details Quovera Confidential
Order Process Verify Consignment Warehouse Defaults Quovera Confidential
Order Process Enter Line Details Quovera Confidential
Order Process Enter Consignment Sub-Inventory on Line Quovera Confidential
Order Process Schedule Line Quovera Confidential
Order Process Book Order Quovera Confidential
Order Process Line Status Goes to Fulfilled Quovera Confidential
Order Process Workflow Proceeds to Invoice Interface Quovera Confidential
Order Process Line Status Goes to Closed Quovera Confidential
Managing Customer Consignment Invoice Process Invoice process for Customer Consigned Inventory Quovera Confidential
Invoice Process Run Autoinvoice Quovera Confidential
Invoice Process View Invoice Quovera Confidential
Verify Inventory Decrement View Material Transaction Quovera Confidential
Managing Customer Consignment Replenishment process for Customer Consigned Inventory Quovera Confidential
Replenishment Process Run Min-Max planning report Quovera Confidential
Replenishment Process Create and approve internal requisition Quovera Confidential
Replenishment Process Create internal sales orders Quovera Confidential
Replenishment Process Order import Quovera Confidential
Replenishment Process Pick and Ship Confirm Replenishment Inventory Quovera Confidential