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Quovera Confidential 1
Managing Managing
CustomerCustomer
ConsignmentConsignment
InventoryInventory
Quovera Confidential 2
• AgendaConsignment scenariosBenefits of consignment programsDetermine products for consignment and agreements Internal controls for consignmentManaging customer consigned inventory in Oracle –
Bill Only, Inventory Interface WorkflowOracle Set UpsManual Consignment Pull Order ProcessProcessing ErrorsCustomizations to Improve Process
Questions and Answers
Managing Customer Consignment
Quovera Confidential 3
Consignment Scenario
Managing Customer Consignment
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• Consignment ScenariosCustomer consigned inventory at customer
warehouseCustomer consigned inventory at 3rd party warehouse
Consignment Scenarios
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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).
Consignment Definition
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Benefits of
Consignment Program
Managing Customer Consignment
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• Benefits of Consignment ProgramCustomer
Customer Satisfaction Reduced time to Market for new productShorter lead times Competitor edgeService parts for critical equipmentSave expedite freight costs
Benefits of Consignment Program
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• Downside of Consignment Inventory management ( scraps, cycle counts,
replenishment)Managing of obsolete partsTimely Pull notificationsShipment notice (3rd Party Warehouse)Customer forecast and supplier production
schedule conflictsInvoice and payment
Benefits of Consignment Program
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Consignment
Products
Managing Customer Consignment
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• Determine products for Consignment Customer
Products with high-degree of demand uncertainty
SupplierProducts with high-degree of sales potential but demand is
not reasonably known or stableNew unproven productsThe introduction of existing product lines into new sales
channels.Very expensive products where sales are questionable.
Consignment Products
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• Consignment product characteristic Transparent to the userRequires no special handling in
Shipping and ReceivingViewable as available in inventoryNon-nettable and not available for
planningCan be cycle counted
Consignment Products
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Consignment
Agreements
Managing Customer Consignment
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• 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)
Consignment Agreements
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Internal controls
For Consignment
Managing Customer Consignment
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• 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 lostSegregate consigned and non-consigned
goodsSupplier agreement must be approved by
company lawyers and does not violate any government regulations
Reconciliation and confirmation of consigned goods by consignee
Internal Controls for Consignment
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Oracle setups forCustomer
Consigned Inventory
Managing Customer Consignment
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Consignment Workflow
Run min/max planning for consignment subinventory with restock = ‘Yes’
Create internal sales order via order import
Generate invoice for billings
Send consumption adviceto supplier
Pick release and ship goods to consignment location
Customer Supplier
Create consignment sales order for consignment customer
Billing workflow
Replenishment workflow
Import and create internal requisition
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Define Location
Inventory and Item Setups
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Define Consignment Organization and Assign Location
Inventory and Item Setups
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Define Consignment Sub-Inventory
Inventory and Item Setups
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Enable Item in Consignment Org
Inventory and Item Setups
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Set Min/Max value for consigned Item
Inventory and Item Setups
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Move Inventory into Consignment Sub-Inventory
Inventory and Item Setups
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Define Consign Customer Price List and Assign Items
Price List Setups
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Define Order Type
Order Management Setups
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Assign Line Flow - Bill Only with Inventory Interface (Generic)
Order Management Setups
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Workflow Diagram (Generic)
Order Management Setups
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Assign Document Sequence to Order Type
Order Management Setups
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Enable Valid Ship Method to Consignment Org
Order Management Setups
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Assign Order Type, Price List, Consignment Org and Valid Ship Method
Customer Master Setups
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Order process
forCustomer Consigned Inventory
Managing Customer Consignment Order Process
Quovera Confidential 32
Enter Order Header Details
Order Process
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Verify Consignment Warehouse Defaults
Order Process
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Enter Line Details
Order Process
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Enter Consignment Sub-Inventory on Line
Order Process
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Schedule Line
Order Process
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Book Order
Order Process
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Line Status Goes to Fulfilled
Order Process
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Workflow Proceeds to Invoice Interface
Order Process
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Line Status Goes to Closed
Order Process
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Invoice process
forCustomer Consigned Inventory
Managing Customer Consignment Invoice Process
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Run Autoinvoice
Invoice Process
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View Invoice
Invoice Process
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View Material Transaction
Verify Inventory Decrement
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Replenishment process
forCustomer Consigned Inventory
Managing Customer Consignment
Quovera Confidential 46
Run Min-Max planning report
Replenishment Process
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Create and approve internal requisition
Replenishment Process
Quovera Confidential 48
Create internal sales orders
Replenishment Process
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Order import
Replenishment Process
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Pick and Ship Confirm Replenishment Inventory
Replenishment Process
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View Material Transaction
Verify Inventory Increment
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Process Errors/Issues
Booking Order with No Sub-Inventory
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Process Errors/Issues
Line Will Go to Booked without Sub-Inventory – Workflow Stops
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Process Errors/Issues
Order Status Remains Booked-must re-enter
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Process Errors/Issues
Workflow Error – No Sub-inventory or Inventory with Custom WF
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Process Errors/Issues
Booking Order with Not Enough Inventory – Line Status will Proceed to Fulfilled
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Process Errors/Issues
Line Status will Proceed to Closed and Order is Eligible for Invoice
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Process Errors/Issues
If you have No for Allow Negative, Inventory Transaction will get stuck in
Transaction Interface
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Process Errors/Issues
Reconcile Inventory and Resubmit
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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
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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
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Possible Customizations
Bill Only with Inventory Interface Workflow Customization
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Possible Customizations
Flow Stops if No Qty On Hand
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Possible Customizations
Status on Line Remains Booked until Inventory is Reconciled
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Possible Customization
Sales Order Workflow Report – Order lines Booked but not Fulfilled
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Possible Customization
Table to Store Customer and Sub-Inventory Details for Automatic
Processing of EDI/Imported Orders
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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
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Conclusion
Q & A