Compiere 3.8 GA Consigned Inventory (Customer)

07/15/2012

Introduction to Consigned Inventory (Customer)

Compiere’s release 3.8 supports inventory which has been consigned to a specific

customer. It is best to begin our discussion about customer consigned inventory with

the parties involved. First, it is you whom we will call the “Seller.” The other party

involved is the one who buys from you, or the “Customer”.

The customer consigned inventory management process simply deals with the

intricacies of which party physically has the inventory, which party owns the inventory

financially regardless of physical location and at what points in time the ownership is

transferred and payments (financial transactions) are made.

Customer consigned inventory requires that you, the Seller, ship the goods to the

customer. The inventory is still owned by you, the Seller, but is not billed until such time

the customer needs the inventory.

The sales transaction is conducted via a Blanket Sales Order marked ‘Consigned’,

which we will address within this document.

Basic Business Needs

Compiere release 3.8 addresses the following:

1. Ability to ship goods to the customer organization without them taking financial

ownership of the goods, and hence without any obligation to pay the seller until a

change of ownership takes place.

2. Ability to track and report the on-hand quantities and value for goods that are

owned by the seller organization, but are located at the customer organization.

3. Ability to systematically change the financial ownership from the seller to the

customer organization when the goods are consumed. The invoice will need to

be generated once the ownership transfer has taken place.

Process Flow for Consigned Inventory (Customer) The following list outlines the basic steps within the Consigned Inventory (Customer) process. Each step will be addressed within this document.

1. Consigned Inventory Setup: Locators

2. Association of Locator / Business Partner

3. Business Partner Consignment Setup / Customer

4. Creation of Blanket Sales Orders for Consigned Inventory (Customer)

5. Shipment (Customer)

6. Consigned Inventory Transfer (Customer)

7. AR Invoice

8. Returned to Consigned (Customer)

Consigned Inventory Setup

Locators

A specific locator needs to be established within your warehouse, designated to house consigned inventory. This locator will be used exclusively for consigned transactions, namely, consigned shipments and consigned transfers. Dependent upon your needs, a locator may be established for each specific customer.

Create a new locator and check the Consigned flag.

Once you check the consigned flag, the system will automatically uncheck the “Available for allocation” flag. This prevents the system from considering this locator for order fulfillment or manufacturing needs.

The flag at locator level is to define the locator is meant for consigned inventory.

Locator / Business Partner Association

The next step is to assign a Business Partner to the newly designated Locator.

Navigate to the Business Partner Association tab within the Locator.

Search for the customer that you want to associate with this locator. A consigned locator may have multiple consigned products for that customer in a single locator.

Notice that the business partners that appear in the search results are customers who have explicitly been setup to perform consigned transactions. This is setup at the business partner level described in the next section.

Consigned locators cannot be reverted back to regular locators if either a customer has been assigned to it or if the locator has consigned quantity in it.

Add flag at the Business Partner Level within the Locator

Search for the Business Partner - Customer

Select the Business Partner / Customer, and Save the Record

Business Partner Setup / Customer

The next step is to set flags at the Business Partner level and designate Customer Locators associated to that Business Partner.

In the Business partner definition window, select the Customer tab and navigate to the record. You will notice the “Allow Blanket SO”, and the “Consigned Transaction Customer” checkboxes are checked. In addition, you will notice the tab named “Customer Locator” tab is displayed. Note that only locators defined to handle consigned inventory are displayed.

Here you associate a specific Business Partner to a Customer Locator.

Creation of Blanket Sales Orders for Consigned Inventory (Customer)

Invoke the Blanket Sales Order window.

Select document type “Consigned Blanket Sales Order.”

Select the customer to whom you want to release consigned inventory. When the product is shipped to the customer the customer is not taking financial responsibility.. This is the reason it is “Consigned”. At this point you are agreeing to store the goods at the customer site.

Notice the “Consigned” checkbox is checked. Note this should hide the Release Interval section which includes “Frequency Type” and “Frequency” fields.

Select a future date in the “Order Valid To” field to indicate how long you want this Blanket Sales Order to be valid.

Select the appropriate delivery and invoicing options (or accept customer defaults).

Add Blanket Sales Order lines to the Blanket Sales Order with the desired product and quantity as you would when creating a regular Sales Order line.

Complete the Blanket Sales Order.

The “SO Releases” tab should not have any records. The SO Release for Consigned Inventory (Customer) will occur only after the financial ownership has been transferred to the customer (discussed in a later section titled “Consigned Inventory Transfer (Customer)”).

Shipment (Customer)

A shipment to the customer needs to be completed to facilitate the physical shipment of

goods to the customer as well as a transactional shipment to the Consigned Locator

within the system. Shipments of consigned goods are created in the Shipment

(Customer) window. Select a document type of Consigned MM Shipment (or similar

document type that you have defined). With this document type a Create Lines from

button will display that allows for the selection of lines from a specific Consigned

Blanket Sales Order.

When the line(s) are selected for this shipment, you can modify the Quantity to allow for

partial shipments. You also defined the consigned locator for this shipment.

When the lines are created, note the display of the Blanket Order Line.

The Shipment (Customer) transaction is then ‘Completed’. For lines which have the

consigned flag checked, the system will automatically increase the on-hand inventory in

the Consigned Locator assigned to the customer. Consigned Shipment lines have no

accounting implications (like non-consigned customer shipments) since financial

ownership has not changed hands.

Consigned Inventory Transfer (Customer)

Once the customer sells consigned goods (or otherwise consumes the goods), it is time

to transfer ownership and bill the customer. Transfer of financial ownership is

accomplished using “Consigned Transfer (Customer)” screen. When this document is

completed it will generate a SO release. The “Consigned Transfer (Customer)”

transfers the financial ownership to the customer organization.

Invoke the “Consigned Transfer (Customer)” window.

Select the document type “Consigned Transfer (Customer)” and select the associated

Customer to be billed. Then, click the ‘Add’ icon for the Transfer Line item.

When adding a new Transfer Line item, select the Product, the Locator, and the

Quantity. Save.

When the Transfer Line has been completed, go back to the Consigned Transfer

(Customer) screen. Here you will first ‘Complete’ the transaction and then click the

“Generate Invoice from Consigned Transfer” button to initiate the process. See below:

Note: When Generating the Invoice, enter a Price List only if you want to explicitly select

the Price List for this Invoice. In most instances it should be left blank which will use the

price defined on the Consigned Blanket Sales Order.

The invoice to the customer is successfully generated.

You have now recorded a Sales Order Release on the Blanket Sales Order.

AR Invoice

Once the Consigned Transfer is completed, you can generate the Invoice to the

customer. Standard invoicing and AR procedures are in place at this stage for collection

of payment.

Returned to Consigned (Customer)

There are two possible scenarios with a Return

Return Before Transfer of Ownership This creates a customer return transaction and is linked directly to the Blanket Sales Order rather than to a specific release line. Financial ownership never changed hands, and hence no need to generate credit memos. Return After Transfer of Ownership This creates a reversal to the original transaction for the quantity being returned. This step automatically creates a sales order release reversal document . A Credit Memo can then be created from the Consigned Return.

Once the Return transaction is ‘Complete’, the final step is to click the ‘Generate Invoice from Consigned Transfer’ button to generate the AR Credit Memo.

Accounts Receivable Credit Memo

Known Issues with Consigned Inventory:

UOM

During the Beta release process, there were several areas of enhancement that were

identified. In particular, handling of Units of Measure could be improved. It is

anticipated that these new features will be included in release 3.8.1.

Migration

There is a potential to have problems when migrating data from older instances of

Compiere, version 3.5 and previous versions. There was an issue related to the storage

of product data in these older versions. This problem is not able to be resolved during

migration and may cause errors in processing with Consigned Inventory. In this case

products may need to be re-created to resolve the issue.

This is the conclusion of Consigned Inventory (Customer)