Consignment or Vendor Managed Inventory

atankersley · 2009-04-22

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 · 2009-04-23

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 · 2009-04-23

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 · 2009-04-23

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

kine · 2009-04-23

in this case mostly FIFO.

reema · 2009-04-23

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 · 2009-04-24

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 · 2009-04-25

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 · 2009-04-25

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 · 2009-04-25

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

ara3n · 2009-04-25

kine wrote:

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

To what vendor?

kine · 2009-04-25

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 · 2009-05-07

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 · 2009-05-07

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

hansika · 2009-05-08

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 · 2009-05-08

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

Consignment or Vendor Managed Inventory

Comments

Categories