Consignment or Vendor Managed Inventory

atankersley

The distribution Co. I work for is trying to warehouse $1,700,000 of constantly changing consignment inventory. They have used the same "Item No."s for the consignment and Co. owned inventory. Now I have to figure out a way to isolate the consignment inventory and manage it without anything showing up on the G/L until after they have sold the product or transfered it to another location out of the country. So far, I have not found any helpful information on this subject. Does anyone have an idea or a place to look for one?

ara3n

I suggest to use separate Items. If the have in the past, You can create new items with C infront for Consignment. Keep the cost for the item at zero and it won't affect GL. There is a setup on item card called "Inventory Value Zero", which you can check for these items.

kine

Or you can use separate location for such an item and the item will have 0 cost. If all is setup properly, I do not see any problem on that...

ara3n

Using location gets a little complicated, especially when you transfer inventory. What costing method are you using?

kine

in this case mostly FIFO.

reema

I also agree to use the Location( separate location for consignment).

Can I know Rasheed why don’t u like to u se the location concept for consignment ?
Why it is complicated.

Share your experience about this.

atankersley

We have the inventory in a seperate location. I set it up to transfer the items as needed to the sale or transfer location and allocate qty. to the sales/transfer order on the fly when the sales/transfer order is released. The problem is I need to transfer these items out of the no cost location at zero cost and into the sale/transfer location at current vendor cost.
Then we use the transfer ship lines to generate a report to create the invoice to the vendor.

ara3n

reema wrote:

I also agree to use the Location( separate location for consignment).

Can I know Rasheed why don’t u like to u se the location concept for consignment ?
Why it is complicated.

Share your experience about this.

Main reason is costing. Especially with transfers.

ara3n

atankersley wrote:

We have the inventory in a seperate location. I set it up to transfer the items as needed to the sale or transfer location and allocate qty. to the sales/transfer order on the fly when the sales/transfer order is released. The problem is I need to transfer these items out of the no cost location at zero cost and into the sale/transfer location at current vendor cost.
Then we use the transfer ship lines to generate a report to create the invoice to the vendor.

I suggest to do Positive and negative adjustment, instead of using transfers.

kine

And why not to transfer them and the cost add through the purchase charges?

ara3n

kine wrote:

And why not to transfer them and the cost add through the purchase charges?

To what vendor?

kine

If it is consignment as I know it, I have the items which I do not own until I sell them. After that I receive invoice from my vendor to this sold items. And this invoice I can assign as charge to the items I have sold... or is this something different than you mean? May be just some misunderstanding... :-k

hansika

Hi Folks,
For consignment process , how to receive the material .
Is it through Purchase order or Item Journal.

Because when i create the purchase order , with out entering unit cost system is not accepting the material.
So what is the best way to receive the material from vendor ?

Please let me know.

ara3n

Do you have a modification that prevents zero cost on purchase orders?

hansika

Thanks Rashed,
I am working on cronus database 4.0 sp3 with out any modifications.

Second thing is which is the best way to receive the material.
Is it through Purchase order or item Journal ?

Let me know.

ara3n

The cost is zero, so it doesn't matter if you do it through PO or item journal. There is no financial transaction.