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

Quovera Confidential 4
 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 5
Managing Customer Consignment

Benefits of
Consignment Program

Quovera Confidential 6
 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 7
 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 8
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.

Quovera Confidential 10
 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 11
Managing Customer Consignment

Consignment
Agreements

Quovera Confidential 12
 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 13
Managing Customer Consignment

Internal controls
For Consignment

Quovera Confidential 14
 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 15
Managing Customer Consignment

Oracle setups for

Customer
Consigned Inventory

Quovera Confidential 16
 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

Quovera Confidential 17
Inventory and Item Setups

Define Location

Quovera Confidential 18
 Inventory and Item Setups

Define Consignment Organization and Assign

Location

Quovera Confidential 19
 Inventory and Item Setups

Define Consignment Sub-Inventory

Quovera Confidential 20
 Inventory and Item Setups

Enable Item in Consignment Org

Quovera Confidential 21
 Inventory and Item Setups

Set Min/Max value for consigned Item

Quovera Confidential 22
 Inventory and Item Setups

Move Inventory into Consignment Sub-

Inventory

Quovera Confidential 23
 Price List Setups

Define Consign Customer Price List and

Assign Items

Quovera Confidential 24
Order Management Setups

Define Order Type

Quovera Confidential 25
 Order Management Setups

Assign Line Flow - Bill Only with Inventory

Interface (Generic)

Quovera Confidential 26
Order Management Setups

Workflow Diagram (Generic)

Quovera Confidential 27
 Order Management Setups

Assign Document Sequence to Order Type

Quovera Confidential 28
 Order Management Setups

Enable Valid Ship Method to Consignment

Org

Quovera Confidential 29
 Customer Master Setups

Assign Order Type, Price List, Consignment

Org and Valid Ship Method

Quovera Confidential 30
 Managing Customer Consignment
Order Process

Order process
for
Customer Consigned Inventory

Quovera Confidential 31
 Order Process

Enter Order Header Details

Quovera Confidential 32
 Order Process

Verify Consignment Warehouse Defaults

Quovera Confidential 33
 Order Process

Enter Line Details

Quovera Confidential 34
 Order Process

Enter Consignment Sub-Inventory on Line

Quovera Confidential 35
Order Process

Schedule Line

Quovera Confidential 36
Order Process

Book Order

Quovera Confidential 37
 Order Process

Line Status Goes to Fulfilled

Quovera Confidential 38
 Order Process

Workflow Proceeds to Invoice Interface

Quovera Confidential 39
 Order Process

Line Status Goes to Closed

Quovera Confidential 40
 Managing Customer Consignment
Invoice Process

Invoice process
for
Customer Consigned Inventory

Quovera Confidential 41
Invoice Process

Run Autoinvoice

Quovera Confidential 42
Invoice Process

View Invoice

Quovera Confidential 43
Verify Inventory Decrement

View Material Transaction

Quovera Confidential 44
 Managing Customer Consignment

Replenishment process
for
Customer Consigned Inventory

Quovera Confidential 45
 Replenishment Process

Run Min-Max planning report

Quovera Confidential 46
 Replenishment Process

Create and approve internal requisition

Quovera Confidential 47
 Replenishment Process

Create internal sales orders

Quovera Confidential 48
Replenishment Process

Order import

Quovera Confidential 49
 Replenishment Process

Pick and Ship Confirm Replenishment

Inventory

Quovera Confidential 50
Verify Inventory Increment

View Material Transaction

Quovera Confidential 51
 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

Quovera Confidential 57
 Process Errors/Issues
If you have No for Allow Negative,
Inventory Transaction will get stuck in
Transaction Interface

Quovera Confidential 58
 Process Errors/Issues
Reconcile Inventory and Resubmit

Quovera Confidential 59
 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

Quovera Confidential 60
 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

Quovera Confidential 61
 Possible Customizations
Bill Only with Inventory Interface
Workflow Customization

Quovera Confidential 62
 Possible Customizations
Flow Stops if No Qty On Hand

Quovera Confidential 63
 Possible Customizations
Status on Line Remains Booked until
Inventory is Reconciled

Quovera Confidential 64
 Possible Customization
Sales Order Workflow Report – Order
lines Booked but not Fulfilled

Quovera Confidential 65
 Possible Customization
Table to Store Customer and Sub-
Inventory Details for Automatic
Processing of EDI/Imported Orders

Quovera Confidential 66
 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

Quovera Confidential 67
Conclusion
Q&A

Quovera Confidential 68