Understanding Oracle Consigned Inventory
- 1. Consigned Inventory An Implementation guide Sandeep Gandhi Supply Chain Consultant Omkar Technologies Inc sandeep.gandhi@omkarinc.com
- 2. What is Consigned Inventory • Consigned inventory is a practice where inventory is in the physical possession of one party but remains the property of another party.
- 3. What is it not • It is not Lean • It does not make supply chain more efficient • It is not a free ride for customers
- 4. Swimlane Diagram Consigned Inventory Process Accounts Payable Planning Supplier System Warehouse Purchasing START Create Requisitio ns Covert requisitions into Consigned PO Ship Consigned PO Receive Issue to floor as requested Tag material as Supplier owned. Change ownership to WMS. Invoice Customer Pay Invoice End Create Blanket PO Release
- 5. Implementation Steps • Negotiations with supplier • Physical set-ups • System setups – one-time • System setups – recurring • Training and Execution • Monitoring
- 6. Supplier Negotiations • What constitutes usage – Movement out of warehouse to floor / shipping area? – Actual usage in product? – Completion of wip job / shipping transaction? • Terms – Maximum duration the inventory can be held on consignment – Changes to Invoicing terms (if any) – Return terms • Auditing – Need separate storage area? – Supplier inspections (Scheduled / Unscheduled) • Liability
- 7. Physical Setups • A separate physical location • Cages – by items / suppliers? • New access procedures – Lock-n-key? – Restricted badges
- 9. New Subinventory Inventory Setup > Setup > Organizations > Subinventories > New
- 10. Consumption Transactions Inventory Setup > Setup > Organizations > Subinventories > New
- 11. Create Consumption Advice Inventory > Reports > Transactions > Single Request > Create Consumption Advice
- 12. Recurring Setups
- 13. Update Flag on Org Item Master Inventory > Items > Organization Items > General Planning
- 14. Create ASL Relationship Purchasing > Supply Base > Approved Supplier List
- 16. Swimlane Diagram Consigned Inventory Process Accounts Payable Planning Supplier System Warehouse Purchasing START Create Requisitio ns Covert requisitions into Consigned PO Ship Consigned PO Receive Issue to floor as requested Tag material as Supplier owned. Change ownership to WMS. Invoice Customer Pay Invoice End Create Blanket PO Release
- 17. Training & Execution • Get all stakeholders involved • Get them to understand the process end-to-end • Start with just one supplier and a few items • Checklist for each item going on consignment – Warehouse cage setup – Blanket PO Created – Item Master Updated – ASL updated – Old PO’s fully received
- 18. Monitor – onhand quantity
- 20. Monitor Invoices • Make sure supplier does not invoice against the consigned PO • AP can not do 3 way match on releases submitted for payments
- 21. Gotchyas • Clean up old purchase orders • ASL setup needs to be local if turning consignment on for just one org • KANBAN items • Picking order • Multi-sourced items • Consume in lots
- 22. Summary • Benefits – Reduced lead times because material is held on-site – Deferring payment (you pay when you use; not when you receive) – Better looking balance sheet • Drawbacks – A little more complicated process – Needs more setups on the floor / warehouse – Short term financial gains may be negated if supplier starts passing off holding costs
- 23. Food for Thought • RFID integration • iSupplier Integration • VMI Integration • Consigned Inventory From Supplier Process Guide Part No. B10483-03
- 24. Q&A
Editor's Notes
- #16: The consigned po is 2 way and is closed for invoicing. The BPO release is 2 way too and is closed for receiving.