CONSIGNMENT INVENTORY

Carol Rogers Paxar Corporation

SETUPS

Create the Subinventory

The subinventory is not an Asset Subinventory and not Depreciable.

Create the Subinventory

Set the account numbers for the subinventory. The items we are discussing today are finished goods so they are in the finished goods account.

ITEM DEFINITION

ITEM DEFINITION
The item must be assigned to the Organization where it will be stored. Items are Transactable, Stockable, and Reservable on the Inventory attributes tab. The item must be a consigned item, check the the Consigned box on the General attributes tab. Consigned Inventory from Supplier does not use Outside Processing, EAM items, Configure to Order and Assemble to Order items

SUPPLIER AND SITE

SUPPLIER AND SITE

If the supplier is also used to source product that is not consigned, you may want to add another site for the supplier for consignment. The supplier site must be a purchasing site. You enable paying your supplier by selecting a method on the Purchasing tab of the Supplier Sites window in Oracle Payables. When self-billing for the supplier site is enabled, you will create invoices automatically rather than wait for the supplier to bill you.

SELF BILLING
Pay On
Select a payment method. Use is selected for consigned material. Receipt is used for material that is not consigned. Receipt and Use is for material that can be consigned or nonconsigned material. Optionally, you can select a different pay site than the supplier site, as in the example here

Invoice Summary Level Enter the level you want to use for consolidating invoices for this supplier site when submitting the Pay Auto Invoice Program. The invoice summary levels are dependent on the Pay On method selected: Use has been selected and the invoice summary options are Consumption Advice, and Pay Site. Pay Site summary level groups invoices together based on the Currency and Payment terms criteria.

CREATE BLANKET PURCHASE AGREEMENTS

 Blanket purchase agreements are required for consigned inventory.

CREATE BLANKET PURCHASE AGREEMENTS

They provide the details of the goods you plan to buy from a specific supplier in a period, but you do not yet know the detail of our delivery schedules. Blanket purchase agreements specify negotiated prices for your items before actually purchasing them. Oracle recommends that you do not use the header level amount agreed for your blanket purchase agreement. Using this option Creating Approved Suppliers limits your ability to consume material above the agreed levels.

The Blanket Purchase agreement is used to create releases when the product is consumed according to the Consumption Rules you will define.

CREATING APPROVED SUPPLIERS

Your purchasing suppliers are created in the Supplies window and they are associated to the items your are buying using the Approved Supplier List and Supplier-Item Attributes windows. Create the consigned item here and enter the Key Attributes, Business, Supplier, Site and Approval Status.

CREATING APPROVED SUPPLIERS

Use the Record detail tab to indicate if your approved supplier can be a local or global supplier. A local ASL is used only in the organization in which it was defined. A global ASL may be used in all organizations you specify.

CREATING APPROVED SUPPLIERS

The source documents region is used to associate specific quotations or blanket purchase agreements with the supplier and item combinations. This enables Purchasing to default source documents automatically. All consigned enable suppliers must have a referenced blanket purchase agreement. Only blanket purchase agreements may be used as source documents for consigned inventory

CREATING APPROVED SUPPLIERS

CREATING APPROVED SUPPLIERS

Inventory Tabbed region This region is used to enable consigned inventory, indicate Billing Cycle Days and define the Aging parameters. The Billing Cycle Days is used by the concurrent batch program, Create Consumption Advice, to generate consumption advice documents for billing records. The Last Billing Cycle Date field is set to the system date when you set up Consigned Inventory from the supplier. It is updated each time the program runs. In the example, the Billing Cycle Date is not used but the Consumption Advice report is scheduled to run at the end of each month.

CREATING APPROVED SUPPLIERS

The default is null. If the value is null, a consumption advice is created every time consigned material is consumed. The Billing Date is defaulted to the current system date, and subsequently updated every time the Create Consumption Advice concurrent program is executed.
In the example today, we are not required to consume the consigned material in a specified period of time. If you are required to consume in stipulated time then enable the check box and indicate the maximum number of days material may be kept using the Aging Period Days.

DEFINE CONSUMPTION TRANSACTION RULES

DEFINE CONSUMPTION TRANSACTION RULES

The Consumption Setup window, located in Inventory Set Up, is used to enlist additional transaction types for consigned inventory consumption.
These transactions include Subinventory Transfer, Move Orders, and others. In the example, whenever a Sales Order Pick or Internal Order Picks, the From Subinventory is TSC and it is transferred to FSV Stage.

Consumption transactions are performed either explicitly of implicitly.

This is an Implicit consumption which refers to any type of consumption in which the system automatically determines that consumption is necessary and selects the owning parties whose stock will be used up to complete the required transaction. The system automatically generates a Transfer to Regular transaction whenever consumption takes place.

DEFINE CONSUMPTION TRANSACTION RULES

Some transactions always consume consigned materials. These transactions include the following: Sales Order issue WIP issues Inter-Organization transfers Miscellaneous issues

DEFINE CONSUMPTION TRANSACTION RULES

Explicit consumption is performed by using the consigned transactions window and performing a transfer to regular transaction. Transfer to Regular transfers ownership from the supplier. Transfer to Consigned transfers the ownership to the supplier. When goods are consumed, they are valued and accounted at the price that is in effect at consumption time. Sourcing rules determine the appropriate purchasing agreement.

PURCHASING CONSIGNED MATERIAL

Purchase orders for consigned material can be entered using the Purchase Orders window.The relevant purchase order shipment lines are automatically marked as consigned. Orders for consigned material are created as standard purchase orders.

The destination type for all consigned shipment distributions is always set to Inventory.

PURCHASING CONSIGNED MATERIAL

The example is creating the PO for the consigned item. You can view the shipment line details in the shipment window. Shipment lines for consigned material have the following attributes:
Invoice Close Tolerance is 100 percent because the consigned shipment is not invoiced.

Match Approval Level value is 2 Way Matching, regardless of value entered on the Supplier window, because the shipment is not matched against as accounts payable invoice.

PURCHASING CONSIGNED MATERIAL

Accrue on Receipt is disable because financial liability is deferred until ownership is transferred to your organization.

PURCHASING CONSIGNED MATERIAL

PURCHASING CONSIGNED MATERIAL

Consigned checkbox is enabled.

PURCHASING CONSIGNED MATERIAL

Status value is Close for Invoicing.

RECEIVING CONSIGNED INVENTORY

You receive consigned material is the same way in which you receive regular material, except that there is no accounting event that might increase financial liability. When receiving consigned material, you never match a payables invoice to a consigned receipt. The goods ordered are received into consigned inventory at the receiving organization. When a consumption transaction is executed, the system performs the accounting and costing processes that are normally executed at receipt and delivery. Document sourcing is used to determine the relevant prices of goods during consumption.

RECEIVING CONSIGNED INVENTORY

In this example, the items are destination Inventory and the Subinventory is TSC. The items are now in the consigned subinventory and a subinventory transfer or miscellaneous transaction is not required.

RECEIVING CONSIGNED INVENTORY

RECEIVING CONSIGNED INVENTORY

You can see in the example the owning party is TSC America, the planning parts, source type, and source

RECEIVING CONSIGNED INVENTORY

Click on the Distribution button on the Material Transaction window and you will see that there is not accounting from the PO Receipt processed

Query Material Status

You can query and review consigned inventory and material transaction in Oracle Inventory> Reports> Consigned Inventory. The Material Workbench window enables you to query on hand balances for inventory items by location, cost group, ownership, supplier, and other inventory characteristics.

In the Query Material Window, you select values to limit your search criteria. Select the Consigned/VMI tabbed region to enter search criteria for inventory designated for consigned.

Query Material Status

The following inquiry windows are available for consigned inventory: Consigned On Hand Consigned Item Consigned Shipments Consumption Advices Consigned Receipts Consigned Returns

Material Transactions

Query Material Status

Consigned On-Hand Quantity Inquiry Window

The On-Hand Items window provides a description of the consigned item and quantity. You can also use this window to view the subinventory in which the consigned item is stocked and also the aging details of the consigned on hand stock.

Query Material Status

Consigned Shipments Inquiry Window Using the Consigned Shipments window, you can view information about the shipment status of consigned purchase orders. You can view the PO number, the quantity ordered vs the quantity received, status of a particular shipment, and the ship-to location.

Query Material Status

Consumption Advice Inquiry Window

In the Consumption Advice window, you can review the consumption advices for a particular consigned PO. You can view the PO number, order date, buyer, status of PO, and the amount of the order.

Query Material Status

Material Transaction Inquiry Window In the Material Transaction inquiry window, you can view detailed information about the transaction status of any consigned item. This window includes the Organization, location name for the consigned item, consigned transaction type, inbound and outbound quantities, the documentation type, and the document source.

GENERATING THE CONSUMPTION ADVICE

Run Create Consumption Advice Report to generate consumption advices.

The consumption transactions, over a period of time, are grouped together for the creation of consumption advice.
The specific duration in days, over which the consumption transactions are combined for billing by the Create Consumption Advice program, is called the billing cycle.

GENERATING THE CONSUMPTION ADVICE

You can set up the billing cycle value and the other consigned attributes in the ASL. The value in the Last Billing Date field specifies the date on which the last Create Consumption Advice program was run.

GENERATING THE CONSUMPTION ADVICE

GENERATING THE CONSUMPTION ADVICE

Run the Pay on Receipt Auto Invoice Report in Payables with the transaction source as Use.

GENERATING THE CONSUMPTION ADVICE

The Pay on Receipt Auto Invoice Report will automatically run the Payable Open Interface.

GENERATING THE CONSUMPTION ADVICE

Notice the Last Billing Date, it has changed to May 15, 2007, indicating the date on which the last Create Consumption Advice program was run.

GENERATING THE CONSUMPTION ADVICE

We created a custom report to show the items sold on consignment. You can run it by Supplier Name of Period Name.

GENERATING THE CONSUMPTION ADVICE

The standard Oracle process creates a report listing item consumed and quantity. The Pay on Receipt Auto Invoice process generates an entry in the Payables module listing consumed quantity and vendor. The two are not tied together for auditing purposes. We created a custom report tying the two together, allowing our Accounting group to identify and connect payments to vendors with items and quantities

GENERATING THE CONSUMPTION ADVICE

The report lists each item, quantity, price, and total amount for a particular item. The supplier will know what he is being paid and the Payable employees can answer invoice questions.

INVOICING
An accounts payable invoice is created after consumption advice records are generated. When the concurrent program is submitted, it first identifies all eligible change of ownership transactions. Invoice records are created in accounts payables for the line matched with the corresponding purchase order or blanket release.

PAY ON AUTO INVOICE CONCURRENT PROGRAM

The Pay on Receipt Autoinvoice concurrent program automatically creates invoices from eligible consumption advice. The following rules govern this program:
In order to create invoices from consumption adviceself billing must be enabled and the receipt type must be either Pay on Use, or Pay on Use and Receipt. Invoices are created for consumption advice in the same operating unit selected for the concurrent program.

PAY ON AUTO INVOICE CONCURRENT PROGRAM

If an alternate pay site is specified in the Supplier site, the invoice is created for the alternate pay site. For consumption advice to be invoiced, the status must not be Finally Closed.

PURCHASE ORDER INFORMATION

The Purchase Order Summary window allows you to search for purchase orders Select the Consumption Advice check box and view releases check box , the system returns purchase orders with consumption advice data.

MATERIAL TRANSACTION

The find Material Transactions window includes additional search criteria. The Consumption Advice Field is enabled only when the Transaction Type is Transfer To Regular or the Transaction Action is Ownership Transfer. You can also enter the Supplier name to search.

MATERIAL TRANSACTIONS

Click on the Consumption Advice Tab to view information.

PENDING TRANSACTIONS

You can search in the Pending Transactions window for errors by entering Ownership transfer error in the Error Code field. This code limits the search to transactions in Pending status due to failure during consumption of consigned material.

MISCELLANEOUS TRANSACTION

When using Miscellaneous Issue/Receipt, if the item is under consigned control , you can select Owning Party and Planning party from the folder tool, show field.

ADDITIONAL RESOURCES
Oracle Online Help Documentation. Metalink Notes
312724.1 304826.1 336778.1 295378.1 175935.1 285492.1

Patch 4224005 is also required (note 304826.1).

QUESTIONS

Thank you!