Managing
Customer
Consignment
Inventory
Quovera Confidential 1
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 2
Managing Customer Consignment
Consignment Scenario
Quovera Confidential 3
Consignment Scenarios
• Consignment Scenarios
Customer consigned inventory at customer
warehouse
Customer consigned inventory at 3rd party warehouse
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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).
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Managing Customer Consignment
Benefits of
Consignment Program
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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
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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
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Managing Customer Consignment
Consignment
Products
Quovera Confidential 9
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.
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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
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Managing Customer Consignment
Consignment
Agreements
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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)
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Managing Customer Consignment
Internal controls
For Consignment
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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
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Managing Customer Consignment
Oracle setups for
Customer
Consigned Inventory
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Consignment Workflow
Billing workflow
Send Create consignment Generate invoice
consumption sales order for for billings
advice consignment
to supplier customer
Replenishment workflow
Run min/max Import and Create Pick release
planning for create internal internal sales and ship goods
consignment requisition order via to consignment
subinventory with order import location
restock = ‘Yes’
Customer Supplier
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Inventory and Item Setups
Define Location
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Inventory and Item Setups
Define Consignment Organization and Assign
Location
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Inventory and Item Setups
Define Consignment Sub-Inventory
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Inventory and Item Setups
Enable Item in Consignment Org
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Inventory and Item Setups
Set Min/Max value for consigned Item
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Inventory and Item Setups
Move Inventory into Consignment Sub-
Inventory
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Price List Setups
Define Consign Customer Price List and
Assign Items
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Order Management Setups
Define Order Type
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Order Management Setups
Assign Line Flow - Bill Only with Inventory
Interface (Generic)
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Order Management Setups
Workflow Diagram (Generic)
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Order Management Setups
Assign Document Sequence to Order Type
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Order Management Setups
Enable Valid Ship Method to Consignment
Org
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Customer Master Setups
Assign Order Type, Price List, Consignment
Org and Valid Ship Method
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Managing Customer Consignment
Order Process
Order process
for
Customer Consigned Inventory
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Order Process
Enter Order Header Details
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Order Process
Verify Consignment Warehouse Defaults
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Order Process
Enter Line Details
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Order Process
Enter Consignment Sub-Inventory on Line
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Order Process
Schedule Line
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Order Process
Book Order
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Order Process
Line Status Goes to Fulfilled
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Order Process
Workflow Proceeds to Invoice Interface
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Order Process
Line Status Goes to Closed
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Managing Customer Consignment
Invoice Process
Invoice process
for
Customer Consigned Inventory
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Invoice Process
Run Autoinvoice
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Invoice Process
View Invoice
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Verify Inventory Decrement
View Material Transaction
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Managing Customer Consignment
Replenishment process
for
Customer Consigned Inventory
Quovera Confidential 45
Replenishment Process
Run Min-Max planning report
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Replenishment Process
Create and approve internal requisition
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Replenishment Process
Create internal sales orders
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Replenishment Process
Order import
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Replenishment Process
Pick and Ship Confirm Replenishment
Inventory
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Verify Inventory Increment
View Material Transaction
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Process Errors/Issues
Booking Order with No Sub-Inventory
Quovera Confidential 52
Process Errors/Issues
Line Will Go to Booked without Sub-
Inventory – Workflow Stops
Quovera Confidential 53
Process Errors/Issues
Order Status Remains Booked-must re-
enter
Quovera Confidential 54
Process Errors/Issues
Workflow Error – No Sub-inventory or
Inventory with Custom WF
Quovera Confidential 55
Process Errors/Issues
Booking Order with Not Enough
Inventory – Line Status will Proceed to
Fulfilled
Quovera Confidential 56
Process Errors/Issues
Line Status will Proceed to Closed and
Order is Eligible for Invoice
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Process Errors/Issues
If you have No for Allow Negative,
Inventory Transaction will get stuck in
Transaction Interface
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Process Errors/Issues
Reconcile Inventory and Resubmit
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Process Errors/Issues
• 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
Quovera Confidential 68
