CONSIGNMENT INVENTORY

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CONSIGNMENT INVENTORY

• Carol Rogers
• Paxar Corporation

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SETUPS
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Create the Subinventory
The subinventory is not an Asset Subinventory and
not Depreciable.
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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.
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ITEM DEFINITION
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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

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SUPPLIER AND SITE
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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.

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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 non-consigned
  material.
• Optionally, you can select a different pay site
  than the supplier site, as in the example here

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• 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.

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CREATE BLANKET PURCHASE AGREEMENTS
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CREATE BLANKET PURCHASE AGREEMENTS

• Blanket purchase agreements are required for
  consigned inventory.
• 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.

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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.
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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.
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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
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CREATING APPROVED SUPPLIERS
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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.

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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.

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DEFINE CONSUMPTION TRANSACTION RULES
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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.

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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

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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.
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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.

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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.

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PURCHASING CONSIGNED MATERIAL

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

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PURCHASING CONSIGNED MATERIAL
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PURCHASING CONSIGNED MATERIAL
Consigned checkbox is enabled.
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PURCHASING CONSIGNED MATERIAL
Status value is Close for Invoicing.
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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.

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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.

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RECEIVING CONSIGNED INVENTORY
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RECEIVING CONSIGNED INVENTORY
You can see in the example the owning party is
TSC America, the planning parts, source type, and
source
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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
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Query Material Status
You can query and review consigned inventory and
material transaction in Oracle Inventorygt
Reportsgt 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.
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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

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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.
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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.
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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.

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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.
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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.
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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.
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GENERATING THE CONSUMPTION ADVICE
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GENERATING THE CONSUMPTION ADVICE
Run the Pay on Receipt Auto Invoice Report in
Payables with the transaction source as Use.
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GENERATING THE CONSUMPTION ADVICE
The Pay on Receipt Auto Invoice Report will
automatically run the Payable Open Interface.
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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.
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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.
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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

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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.
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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.
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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
  advice-self 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.

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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.

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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.
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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.
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MATERIAL TRANSACTIONS
Click on the Consumption Advice Tab to view
information.
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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.
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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.
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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).

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QUESTIONS

• Thank you!