CONSIGNED INVENTORY

CONSIGNED INVENTORY
1) Create an item “Cons 1” in Inventory Master with the following attributes.
a) Apply template purchased item for enabling it in the functional area inventory and
purchasing to facilitate stockable, transactable and purchasable.
b) Enable “use approved supplier” and give a list price of 1.
c) Go to the “General Planning” tabbed region and scroll down to “Vendor Managed” Block
and enable the attribute “Consigned” and save.
2) Assign the item to your organization, say “M1”.
3) Define consumption transaction rules ([N]=> Setup=> transactions=> Consigned/VMI Consumption) Enable Consigned and SI transfer as transaction type. The weight value allows you to set the processing order. For example, if three transactions satisfy the transaction criteria, the system processes the transaction with the highest weight. Give a value of 1. “From S1” must be an expense Sub Inv. Materials from vendor will be received into this S1. “To S1” must be asset S1. [A S1 can be made as expense sub inv. By unchecking the “Asset Sub Inventory” check box in the SI definition form].
4) Go to PO Resp. and create a supplier “sup_con1” with Supplier as type in the classification tabbed region.
5) Create a site “S1” with all address filled (necessary for sending the cheques to the supplier) and contact person details in the contacts tabbed region. Ensure Pay and Purchasing are only enabled in the general tabbed region.
6) Go to “Purchasing” tabbed region, “self billing” block in the site. Select “Use” for pay on and “Consumption Advise” for Invoice Summary Level fields.
7) Create an ASL for item “cons1” with sup_con1 as a direct approved supplier under Record details. Ensure Global is selected as yes.
8) Create a BPA for Cons1 with the approved supplier sup_con1. Do not mention anything in “Pay on” in terms button. Adapt the best practices for this powerful document BPA even though we use it as a mere setup for consigned inventory [i.e. Effective dates in terms button, cumulative pricing in agreement tabbed region, (pur officer’s efficiency) and allow price override in price reference tabbed region to meet Indian scenario.
9) Under the attributes button of the ASL for our item cons1, mention the BPA number under source documents and enable “consigned from supplier” and zero days as billing cycle.
10) The setups are complete which can be tested by making a release for this BPA. When you fill the line number, the system will pop up a message indicating that you cannot create releases for the consigned material. This “Successful failure” to create a release indicates that you have made the setups properly.
11) Create a SPO for 100 quantities with our approved supplier for our consigned item. Receipt routing must be “Direct Delivery” and Std. and Ins. Routings are not applicable as the material will be received at the supplier’s consigned sub inventory and it will be his property till we transfer the items to regular.
12) Receive it at the expense SI mentioned in step 3. The location field is not mandatory (normally for a direct receipt) as it a consigned material.
13) Check the qty under On-Hand availability and ensure that the owning party is Cons_sup1 site s1.
14) Make a consigned transaction for say 45 [Nav: Transactions- Consigned transactions] with a transaction type as “Transfer to Regular” from the owning party (sup_con1-S1). This will automatically trigger the S1 transfer from his expense S1 to our asset S1 as mentioned in the consigned setups. I could not check this functionality in our Oracle instance as the profile option “INV: Allow Expense to Asset Transfer” is set to “NO” and it is un-updatable under all levels – site, application, responsibility and user. Please check. This profile setup requires Audit clearance at your client’s location as this transaction increases the asset value of your org.
15) Check again the on hand quantity under on hand availability. The line would have got split into two indicating both our material and the party’s material.
16) Run the concurrent “create consumption advice” (if this not available under your resp. add it under your request group in sys admin.) for our supplier sup_con1 site S1 for our item con1 in org M1.
17) Run the concurrent Pay on Receipt Auto Invoice (again add it your request group) with a transaction source of “ERS_AND_USE” for our inventory receipt number. This will take the data from the “Consumption Advice” and populate the interface tables of payables. Pay on receipt will also automatically spawn the child concurrent “Payables Open Interface Import” for pulling the data from the interface table to the Base table of Payables.
18) Switch resp to Payables and enquire the creation of unvalidated, distributed Invoice [Nav: Invioces=> Inquiry=> Invoices] for our supplier. Check the balance owed to him also [a button in the bottom of the inquiry form].
19) Validate the Invoice and create accounting [creation of liability owed to the supplier]. Check for funds available in the bank and make a full payment from our internal bank in our payment document and make final accounting. This will facilitate passing of the accounting entries to Cash Management for re-conciliation and manual adjustments, if necessary before posting to General Ledger.