Oracle® Inventory: Consigned Inventory From Supplier Process Guide Release 12.1
Oracle® Inventory: Consigned Inventory From Supplier Process Guide Release 12.1
Oracle® Inventory: Consigned Inventory From Supplier Process Guide Release 12.1
April 2009
Oracle Inventory Consigned Inventory from Supplier Process Guide, Release 12.1 Part No. E13470-02 Copyright 2003, 2009, Oracle and/or its affiliates. All rights reserved. Primary Author: Maneesha Nanda Contributing Author: Greg Comlish, Muralidharreddy Venkatasesha, Janardhan Gidijala, John Salvini, Lina Valesquez Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners. This software and related documentation are provided under a license agreement containing restrictions on use and disclosure and are protected by intellectual property laws. Except as expressly permitted in your license agreement or allowed by law, you may not use, copy, reproduce, translate, broadcast, modify, license, transmit, distribute, exhibit, perform, publish or display any part, in any form, or by any means. Reverse engineering, disassembly, or decompilation of this software, unless required by law for interoperability, is prohibited. The information contained herein is subject to change without notice and is not warranted to be error-free. If you find any errors, please report them to us in writing. If this software or related documentation is delivered to the U.S. Government or anyone licensing it on behalf of the U.S. Government, the following notice is applicable: U.S. GOVERNMENT RIGHTS Programs, software, databases, and related documentation and technical data delivered to U.S. Government customers are "commercial computer software" or "commercial technical data" pursuant to the applicable Federal Acquisition Regulation and agency-specific supplemental regulations. As such, the use, duplication, disclosure, modification, and adaptation shall be subject to the restrictions and license terms set forth in the applicable Government contract, and, to the extent applicable by the terms of the Government contract, the additional rights set forth in FAR 52.227-19, Commercial Computer Software License (December 2007). Oracle USA, Inc., 500 Oracle Parkway, Redwood City, CA 94065. This software is developed for general use in a variety of information management applications. It is not developed or intended for use in any inherently dangerous applications, including applications which may create a risk of personal injury. If you use this software in dangerous applications, then you shall be responsible to take all appropriate fail-safe, backup, redundancy and other measures to ensure the safe use of this software. Oracle Corporation and its affiliates disclaim any liability for any damages caused by use of this software in dangerous applications. This software and documentation may provide access to or information on content, products and services from third parties. Oracle Corporation and its affiliates are not responsible for and expressly disclaim all warranties of any kind with respect to third party content, products and services. Oracle Corporation and its affiliates will not be responsible for any loss, costs, or damages incurred due to your access to or use of third party content, products or services.
Contents
Purchasing Material
Overview of Purchasing Consigned Material.......................................................................... 2-1 Defining Approved Supplier Lists........................................................................................... 2-2 Requisitioning Consigned Materials........................................................................................ 2-6 Using AutoCreate...................................................................................................................... 2-7 Using Automatic Document Creation Workflow..................................................................... 2-8 Entering Purchase Orders for Consigned Materials.................................................................2-8 Receiving Consigned Inventory............................................................................................. 2-11 Returning Consigned Inventory to Vendors.......................................................................... 2-11 Querying Consigned On Hand Quantities............................................................................. 2-11 Purchasing Intelligence and Consigned Inventory................................................................ 2-14 Using Retroactive Price Update.............................................................................................. 2-14
Consuming Material
Overview of Consuming Material............................................................................................ 3-1 Transferring Ownership of Consigned Inventory................................................................... 3-3 Aging Based Ownership Transfer............................................................................................ 3-4 Consumption Transactions....................................................................................................... 3-4
iii
Generating Consumption Advice............................................................................................. 3-4 Querying the Consumption Advice.......................................................................................... 3-7 Overview of Billing................................................................................................................... 3-8 Miscellaneous Transactions for Consigned Transactions........................................................3-9 Consigned Inventory Diagnostics............................................................................................ 3-9 Querying Inventory Aging Details......................................................................................... 3-13 Oracle iSupplier Portal............................................................................................................ 3-14 Inquiries............................................................................................................................. 3-14 Search - Consigned Items Windows............................................................................ 3-15 Consigned On-Hand Quantity Inquiry Window........................................................ 3-15 Consigned Shipments Inquiry Window...................................................................... 3-16 Consumption Advice Inquiry Window....................................................................... 3-16 Material Transactions Inquiry Window...................................................................... 3-17 Consigned Inventory Aging Inquiry........................................................................... 3-17
Setting Up
Overview of Setting Up............................................................................................................. 5-1 Related Product Setup Steps..................................................................................................... 5-1 Setup Flowchart and Checklist................................................................................................. 5-2 Setup Steps................................................................................................................................ 5-4 Creating Approved Suppliers................................................................................................... 5-7 Defining Consumption Transaction Rules...............................................................................5-9 Setting Up Self Billings........................................................................................................... 5-10 Pay on Receipt Autoinvoice Concurrent Program.................................................................. 5-12 Pay On Receipt Autoinvoice Parameters................................................................................ 5-13
Index
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Oracle Inventory Consigned Inventory from Supplier Process Guide, Release 12.1
Part No. E13470-02
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Preface
Intended Audience
Welcome to Release 12.1 of the Oracle Inventory Consigned Inventory from Supplier Process Guide.
Assumptions
This guide assumes that you have a working knowledge of the following: The principles and customary practices of your business area The Oracle Applications graphical user interface.
To learn more about the Oracle Applications graphical user interface, read the Oracle Application's User's Guide. See Related Information Sources on page viii for more Oracle Applications product information.
Documentation Accessibility
Our goal is to make Oracle products, services, and supporting documentation accessible
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to all users, including users that are disabled. To that end, our documentation includes features that make information available to users of assistive technology. This documentation is available in HTML format, and contains markup to facilitate access by the disabled community. Accessibility standards will continue to evolve over time, and Oracle is actively engaged with other market-leading technology vendors to address technical obstacles so that our documentation can be accessible to all of our customers. For more information, visit the Oracle Accessibility Program Web site at http://www.oracle.com/accessibility/.
Structure
1 Overview 2 Purchasing Material 3 Consuming Material 4 Costing and Accounting 5 Setting Up A Windows and Navigator Paths
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ix
1
Overview
This chapter covers the following topics: Overview of Consigned Inventory Using Vendor Managed Inventory with Consigned Inventory
Overview 1-1
consumed by the buying organization. After consigned stock is consumed, suppliers can invoice the buying organization. Optionally, if pay on use is used, the buying organization can create invoices on behalf of the supplier, and fully automate the payment process. Using Oracle iSupplier Portal, suppliers can view consigned stock balances and the transactions that affect it. They can also review automatically generated consumption advice transactions, and initiate the invoicing process. Warehouse personnel can transfer goods from consigned to regular stock using the Consigned Transactions window in Oracle Inventory, or through a mobile device that has been configured with Oracle Mobile Supply Chain Applications. Oracle Inventory also enables the automatic consumption of consigned materials, such as WIP issues, sales order issues, inter-organization transfers, and subinventory transfers. Using the Material Workbench window, you can query the status of consigned inventory at any time . You can also use the Material Workbench to view consigned on-hand quantities and inquire on consumed stock inventory.
Consigned and VMI Integration The Consigned Inventory from Supplier process is often combined with VMI; the supplier continues to own goods stored at the customer facility, and also determines the quantities and timing of deliveries. In this combined process, buyers or plant managers define the items and suppliers for which a VMI and consignment relationship exists, and establish minimum and maximum inventory levels for each item. Suppliers perform a material request manually or automatically through iSupplier Portal, according to agreed thresholds, forecasted demand, and other information. Purchase orders are created in response to supplier initiated requisition demand, and goods are received and stored in consigned stock. Alternatively, you can transfer the planning responsibility of goods from the supplier to the customer without involving consumption. In this way, the customer takes responsibility for planning the item even though ownership resides with an outside party. When materials are consumed implicitly, such as a work in process issue or sales order issue, the system automatically consumes and transfers the planning responsibility to the consuming organization. When the goods are transferred to regular stock, the planning responsibility also changes from the external planning party to the buying organization. For more information, see: Vendor Managed Inventory (VMI) in Oracle Applications, in the Inventory White Papers on My Oracle Support Forum.
Overview 1-3
Non-stockable items
2
Purchasing Material
This chapter covers the following topics: Overview of Purchasing Consigned Material Defining Approved Supplier Lists Requisitioning Consigned Materials Using AutoCreate Using Automatic Document Creation Workflow Entering Purchase Orders for Consigned Materials Receiving Consigned Inventory Returning Consigned Inventory to Vendors Querying Consigned On Hand Quantities Purchasing Intelligence and Consigned Inventory Using Retroactive Price Update
When a buyer determines that supply is required for items purchased on consignment, the relevant purchase order shipment lines are automatically flagged as consigned. Similarly, receipts are designated as consigned receipts, and therefore no accounting is performed. When consigned goods are delivered into inventory, they are stored as consignment material and the supplier and supplier site are listed as the owning party. You can report to the supplier all of the on hand balances of material held on consignment, including real-time information about consigned stock, consumption transactions, and invoices. This function is performed either through the Oracle iSupplier Portal or Oracle Inventory inquiries. If you and the supplier agree to change purchase prices after consumption transactions are executed, you can retroactively reflect these price changes on consumption advices
A consignment relationship can be established for a combination of Item, Supplier, and Supplier Site. Local and Global Approved Supplier Lists Your approved supplier can be either 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.
Inventory Tab
On the Inventory tab, you can enable consigned inventory, indicate Billing Cycle Days, and define the Aging parameters. The Consigned from Supplier feature can only be enabled under the following conditions: Encumbrance is not enabled in the operating unit. The ASL is being defined for a combination of Item, Supplier and Supplier Site. The Item for which the ASL is being defined is not: Outside Processing Item Expense Item (Inventory Asset Value set to No) ATO or PTO Model EAM Asset Item Non-transactable or Non-stockable item
The validation for local ASL is done for the organization in which the ASL is being created. For Global ASL, this validation is done for all organizations under the same set
of books. Billing Cycle (Days): Indicates how frequently you would like to group the consumption transactions into a consumption advice. Consumption advice is the document against which supplier can raise an invoice and gets paid for. The default is null. If the value is null, a consumption advice is created every time the Create Consumption Advice concurrent program is run. Last Billing Cycle Date: This is set to the system date when you initially set up Consigned Inventory from Supplier. It is updated each time a new consumption advice is created as per the billing cycle for this ASL. Billing cycle and last billing date in conjunction control the frequency at which the consumption advice is created. A new consumption advice is created when the following occurs: System date > Last Billing Date + Billing Cycle Days Consume on Aging: In some consigned relationships, the supplier stipulates the maximum period for which he can make the material available at your site on consignment basis and you are required take ownership of any balance material after this period. If you are required to consume consigned material within such a stipulated time period, enable the Consume on Aging check box. Consigned Inventory Aging queries would report your commitments from such agreements. Selecting this option does not automatically transfer the ownership of the overdue consigned stocks; however, it enables you to use the Consigned Inventory Aging inquiries to identify the consigned stocks that are overdue for consumption. Aging Period (Days): Indicates the maximum number of days the material may be kept in consigned status by your supplier.
On the Source Documents tab, you can associate specific quotations and blanket purchase orders agreements with the supplier and item combinations. This enables Purchasing to default source documents automatically. All consigned enabled suppliers must have a referenced blanket purchase agreement. However, only blanket purchase agreements may be used as source documents for consigned inventory. The blanket purchase agreement may be either local or global. When the consigned material is consumed, the system refers to the source document to retrieve the price applicable for the consumption. You can assign a specific blanket purchase agreement here, or set the profile option PO: Automatic Document Sourcing to Yes. Setting this profile option to Yes automatically makes the pricing information default from the most recently created blanket agreement. If the profile is set to No, the approved supplier list (ASL) is used to determine the blanket agreement.
Related Topics
Overview of Consuming Material, page 3-1
material. You can create a purchase order from a requisition for consigned material, only if the corresponding requisition is a Purchase requisition and not an internal requisition. The requisition must have a destination type of Inventory. After the system generates your requisitions, you can use the AutoCreate or Workflow processes to create purchase orders. You can use Vendor Managed Inventory (VMI) in conjunction with consigned inventory, requiring your supplier to replenish your warehouse with consigned goods up to agreed upon levels. For VMI, the supplier creates the requisitions to ensure the replenishment of consigned goods according to agreed levels.
Related Topics
Assigning Sourcing Rules, Oracle Purchasing User's Guide Assigning Sourcing Rules and Bills of Distribution, Oracle Purchasing User's Guide
Using AutoCreate
You can use AutoCreate to create standard purchase orders for consigned material from requisitions. With AutoCreate you can choose between manually or automatically creating a new purchase order, or adding to an existing purchase order. When creating purchase orders from requisitions for consigned material, AutoCreate performs the following actions: Determines whether a valid record exists on the Approved Supplier List. Removes document references on the requisition before creating the purchase order including global agreements, and contracts. Reviews requisition line destination typeexpense destination type is not used for consigned material procurement. If consigned relationship or VMI with consigned relationship is established on the ASL for the requisition line, then only standard purchase order is allowed as the document type. If the requisition line is for VMI-only material, then only blanket release is allowed as the document type.
Document References
When using either Manual Creation or Automatic Creation mode, you cannot use a document reference. Whether a document reference is associated with the requisition, or you attempt to add a document reference using the New Document window, the document reference is not copied on the purchase order. All document references must be removed before creating the purchase order because
consigned shipments are not releases against global or contract agreements, and should not be calculated in the amount released against those agreements. These references are automatically removed by the system. If you attempt to create a purchase order using the manual autocreate process, the system generates the following message:
Note: The document reference is not valid for consigned shipments and
is enabled by setting the Release Method field on Item-Supplier attributes window of the approved supplier list to Release Using Autocreate. Also, ensure that the PO Create Documents workflow item attribute of Is Automatic Creation Allowed? is set to Yes.
Related Topics
Overview of Procurement Workflows, Oracle Purchasing User's Guide Workflow for Creating Purchase Orders or Releases, Oracle Purchasing User's Guide Choosing Workflow Options, Oracle Purchasing User's Guide Setting Up Automatic Sourcing, Oracle Purchasing User's Guide
Organization Consigned materials are purchased in the context of a given warehouse or across warehouses. You enable consigned material for a warehouse or warehouses by establishing a local or global ASL entry.
Supplier This supplier and supplier site for the item purchased on consignment must be defined on the Approved Supplier List.
Item The consigned relationship should be established for the item, supplier, and supplier site on the Approved Supplier List for the receiving Inventory Organization.
Document Reference Document references (such as contracts and price lists) are not permitted on orders for consigned material.
Note: Oracle recommends that you do not use the header level
amount agreed for your blanket purchase agreement. Using this option limits your ability to consume material above agreed levels.
Shipments Window
You can view the shipment line details in the Shipments window. Shipment lines for consigned material have the following attributes: Invoice Close Tolerance value 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 consigned shipment is not invoiced. Invoice Match Option value is PO Based Matching, regardless of value entered on the Supplier window, because the shipment is not matched against an accounts payable invoice. Accrue on Receipt is disabled because financial liability is deferred until ownership is transferred to your organization. Consigned check box is enabled. Status values is Close for Invoicing.
Distributions Window
The Destination Type for all consigned shipment distributions is always set to Inventory.
Related Topics
Entering Purchase Order Shipments, Oracle Purchasing User's Guide Entering Purchase Order Headers, Oracle Purchasing User's Guide Creating Approved Suppliers, page 5-7 Entering Purchase Order Distributions, Oracle Purchasing User's Guide
stock, ensure that they are first returned to consigned status before making a return to vendor transaction.
Related Topics
Accounting and Costing Transactions for Consigned Inventory, page 4-2
Workbench. Consigned and VMI stocks are identified by the owning party and planning party attributes on the on hand quantities. Select the Consigned/VMI Tab on the Material Workbench to search for inventory that is designated for Consigned or VMI. The Owning Party region is used to enter the search criteria, and can be limited to All Owning Parties, All Consigned Stock, or you can Select Owning Party. Use the Planning Party region to enter the search criteria and select either All Planning Parties, All VMI Stock, or Select Planning Party.
consigned material is same as that for regular material. Consumption advices are retroactively update only when the profile PO: Allow Retroactive Pricing of Pos is set to ALL RELEASES. You can execute retroactive price updates either from the PO Approval screen or by submitting the Retroactive Price Update concurrent program. When using the PO Approval screen to make retroactive price updates, enable the Apply Retroactive Price Update to Existing PO/Releases check box.
Note: Retroactive price update only applies to the consumption advice.
Consumption transactions, for which consumption advices have not been created, will not be affected by retroactive price updates. Also note that Agreed Amount limit defined in the blanket purchase agreement (BPA) is not imposed when the price of the consumption advice is updated retroactively. The retroactive priced releases for consigned item are approved automatically, and are not submitted for approval checks even if it exceeds the agreed amount in the BPA.
3
Consuming Material
This chapter covers the following topics: Overview of Consuming Material Transferring Ownership of Consigned Inventory Aging Based Ownership Transfer Consumption Transactions Generating Consumption Advice Querying the Consumption Advice Overview of Billing Miscellaneous Transactions for Consigned Transactions Consigned Inventory Diagnostics Querying Inventory Aging Details Oracle iSupplier Portal
consumption is necessary, and selects the owning parties whose stock will be used up to complete the required transaction. So, for example, when you issue material from consigned stock to a discrete job, an implicit consumption is triggered automatically to transfer the stock from consigned to regular before it is issued to the job. Some transactions always consume consigned materials. These transactions include the following: Sales Order issues WIP issues Inter-organization transfers Miscellaneous issues
Other transactions can be set up to consume according to rules in the Consumption Transaction Setup window (located in Oracle Inventory). These transactions include Subinventory Transfers, Move Orders, Backflush Transfers, and others. In Oracle Inventory, you can use both consigned and regular stocks in the same subinventory or locator. When both the stocks are used, at the time of issue no preferential treatment is given to either stock - material quantities are selected on a first in, first out (FIFO) basis. When consigned inventory is consumed, explicitly or implicitly, the system accesses the relevant blanket purchase agreement to determine the price that is in effect at the time of consumption. Consumption transactions are grouped into consumption advice based on the billing cycle defined in the approved supplier list. The consumption advice is a purchasing document that provides evidence of consumption to the supplier, and can be used to match invoices. Creating and matching invoices against the consumption advice generates the corresponding inventory accounts payable accrual reversal. This matching process performs in the same way as standard functionality. After consumption occurs, it cannot be reversed automatically. For example, if you perform a work in process component issue and later reverse the operation through a component return transaction, the consigned attribute is not restored to the material. After materials are consumed and the consumption advice is generated, you can use any supported method for paying your supplier.
Related Topics
Defining Consumption Transaction Rules, page 4-2 Transferring Ownership of Consigned Inventory, page 3-3
The consumption of Lot/Serial controlled items can be completed with some restrictions. The Lot/Serial button is unavailable when you enter consigned transactions. To consume serial controlled items, you can perform the consigned transaction in a serial triggered mode. Similarly, you can enter consigned transaction for each lot number separately. You cannot enter the transfer to regular transaction for a range of lots/serial in a single transaction. When you complete a transfer to a regular transaction, the ownership of the material changes from supplier to your internal organization. Two Transfer to Regular transactions are created for each ownership transfer: the first transaction represents the issue of stock from supplier ownership (owning party is supplier) and the next transaction represents the receipt of stock into your internal organization (owning party is the inventory organization).
Note: Whenever both the VMI and the consigned relationship are
applicable and a transfer of ownership occurs, then planning transfer also takes place simultaneously, and the planning organization is
Related Topics
Transferring Consigned and VMI Material, Oracle Inventory User's Guide
Consumption Transactions
You can use document sourcing to source the blanket agreement to determine the relevant prices of goods during consumption. If you set the PO: Automatic Document Sourcing profile option to No, then you must indicate the Blanket Purchase Agreement on the Approved Supplier List Source Documents tab. If you set the Automatic Document Sourcing option to Yes, the system uses the most current valid Blanket Agreement as the basis for pricing goods consumed. The currency and unit of measure values of the blanket agreement may differ from the functional currency and the primary unit of measure values in the consuming organizations. In these cases, conversions are done at the time of consumption. For blanket agreements, the exchange rate type, exchange rate date, and exchange rate, default from the blanket agreement header regardless of the date of consumption. For global agreements, the exchange rate type defaults from the Purchasing Options of the owning organization's operating unit. Exchange rate date is the date of consumption. Exchange rate information is obtained by accessing exchange rate information in the Oracle Financials application.
Note: Oracle recommends that you do not select the header level
amount agreed for your blanket purchase agreement. Selecting this option limits your ability to consume material above agreed levels.
The Create Consumption Advice program is used to generate consumption advices which can be submitted from the Transaction Reports window in Oracle Inventory. The consumption transactions, over a period of time, are grouped together for the creation of consumption advice.
Create Consumption Advice Program
You can run the program for a particular supplier, site, item or inventory organization. You can indicate the Batch size and Max. workers or leave them blank, the default values are 1000 and 1 respectively. 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. Using the billing cycle, you can choose between the option of combining a number of consumption transactions into a single consumption advice, or having a separate consumption advice for each transaction. For example, if the billing cycle is zero days the consumption advice will group the consumption transactions based on the Create Consumption Advice concurrent program schedule. 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 consumption advice was created against this ASL. Billing cycle and last billing date in conjunction control the frequency at which the consumption advice is created. A new consumption advice is created when System date > Last Billing Date + Billing Cycle Days.
Price information is based on the source document. The system retrieves this information from either the Blanket PO referred to in the ASL, or automatically from the most current Blanket Purchase Agreement (the profile option PO: Automatic Document Sourcing must be set to Yes). If the source document is a blanket agreement, the consumption advice is a blanket release. If the source document is a global agreement, the consumption advice is a standard purchase order. Consumption transactions are grouped into separate consumption advice documents based on the following grouping criteria. If the source document is a normal blanket agreement, then a separate release is created for the unique combination of the following: Blanket Purchase Agreement Operating Unit Accrual Account Charge Account Variance Account Rate Type Rate Owning Organization (Supplier, Supplier Site) Need by Date: The Need by Date is used as the grouping criteria only if the profile INV: Summarize consumption releases by Need By Date is set to YES, otherwise the Need By Date is not used for grouping. Currency Code
If the source document is global blanket agreement, then a separate standard purchase order is created for the unique combination of the following: Blanket Purchase Agreement Operating Unit Accrual Account Charge Account Variance Account Rate Type
Rate Owning Organization (Supplier, Supplier Site) Need by Date Currency Code
A separate shipment is created for the unique combination of the following: Inventory Item Organization Price Tax Code Recoverable Tax Non-recoverable Tax Tax Recovery rate ASL
The consumption advice has three control options: Close Finally Close Open for Invoicing
If the purchasing source documents are not available, for example, the agreement is no longer valid, closed or cancelled, the transactions are not processed by the program. When the source document is a global agreement the consumption advice is created in the primary unit of measure of the consuming organization.
Related Topics
Defining Consumption Transaction Rules, Oracle Inventory User's Guide
To query the consumption advices that are bill-only standard purchase orders, run the query by selecting the Consumption Advice check box. Use the VMI and Consigned drop down boxes in the line regions to query shipments that are Consigned, VMI, or both. These attributes are not applicable for querying consumption advices.
Overview of Billing
You communicate consumption transactions to your suppliers on a periodic basis, by producing consumption advice documents. These purchasing documents can be sent to your supplier manuallyor your supplier can view them online using Oracle iSupplier Portal. The consumption advice signals that consigned materials are ready for invoicing. You can choose either manual billing or Pay On Use, when procuring and using consigned material. Manual billing provides you with an invoiceelectronic or paper or you can enter data in Oracle iSupplier Portal. Pay On Use is a self billing technique that automates accounts payable invoice creation. Pay On Use enables you to automatically register invoices on behalf of your supplier. This decreases the cycle time between material consumption and payment to your supplier. Suppliers accept payment for goods after consumption, and then monitor the consignment status of
Related Topics
Setting up Self Billing, page 5-10
concurrent program identifies errors and provides you with information to resolve the problem: The Consumption Diagnostics program reports the errors related to the consumption of consigned material. The Consumption Advice Diagnostics reports the errors related to the billing of consumption.
Optionally, you can send a notification to the buyer when exceptions are encountered.
Consigned Inventory Diagnostics Window
The Results window displays the Consumption Advice Status and Consumption Advice Error Explanation fields.
Note: The Consumption Advice field is enabled only when the
The results that display on the Consumption Advice tab provide information about consumption advice for each line.
Consigned stocks that are past the consumed before date should be transferred to regular stock. Use the Advance Search option for additional search criteria.
Note: Please note that this inquiry reports lot and serial controlled
items.
Suppliers can monitor their consigned shipments using the iSupplier Portal.
Inquiries
Oracle iSupplier Portal provides the following inquiry windows for consigned inventory:
Search - Consigned Items Consigned On-Hand Consigned Shipments Consumption Advice Consigned Receipts Consigned Returns Material Transactions
4
Costing and Accounting
This chapter covers the following topics: Overview of Costing and Accounting in Consigned Inventory Accounting and Costing Transactions for Consigned Inventory Return to Vendor Transactions (RTV) Retroactive Price Update
At consumption: Material is transferred from consigned stock to regular stock by transferring the ownership from supplier to the inventory organization. When the 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.
Consumption transactions are grouped at the end of the billing cycle by running the concurrent process.
Related Topics
Overview of Standard Costing, Oracle Cost Management User's Guide Overview of Average Costing, Oracle Cost Management User's Guide Overview of FIFO/LIFO Costing, Oracle Cost Management User's Guide
Consigned Stock Accounts Debit: Inventory at standard cost Credit: AP Accrual at PO price Credit: PPV at variance
None
Generation of Consumption Advice Generate invoice and match against consumption advice
Not applicable
None
Not applicable
Debit: AP Accrual at PO price Credit: Liability at invoice price Debit: Invoice Price Variance
None
--
Debit: AP Accrual at PO price Credit: Inventory at standard cost Debit/Credit: PPV at cost variance
--
Not applicable
Transaction Miscellaneous receipt into consigned stock Miscellaneous issue from regular stock
Not applicable
Miscellaneous issue from consigned stock (this triggers transfer to regular transaction and then miscellaneous issue from regular transaction).
Not applicable
Debit: Inventory at standard cost Credit: AP Accrual at PO price Debit/Credit: PPV at variance Credit: Inventory at standard cost Debit: Miscellaneous account at standard cost
Regular Stock Accounts Debit: Inventory at PO cost Credit: Receiving Inspection at PO cost Debit: Expense at PO cost Credit: Receiving Inspections at PO cost None
None
None
Generation of Consumption Advice Generate invoice and match against consumption advice
Not applicable
None
None
Debit: AP Accrual at PO cost Credit: Liability at invoice price Debit: Invoice Price at Variance
None
--
--
Regular Stock Accounts Debit: Inventory at miscellaneous cost Credit: Miscellaneous Receipt Account at miscellaneous cost
Miscellaneous receipt into consigned stock Miscellaneous issue from regular stock
Not applicable
None
Debit: Miscellaneous issue account at Miscellaneous cost Credit: Inventory at Miscellaneous cost
Not applicable
Miscellaneous issue from consigned stock (Transfer from consigned to regular stock, the issue from regular stock)
Not applicable
Debit: Inventory at PO cost Credit: AP Accrual at PO cost Debit: Miscellaneous issue account at miscellaneous cost Credit: Inventory at miscellaneous cost
You perform a Transfer to consigned transaction, this restores the material to consigned status. The reversal accounting entries are generated for the corrected quantity. The consumption advice will reflect the net quantity, and consequently no credit memos are needed. If the consumption advice has not been generated and you cannot locate the original consumption transaction, first perform a Miscellaneous issue from regular stock. Next, create a Miscellaneous receipt into consigned stock.
Note: Miscellaneous issue transactions are based on standard or
current average cost information. A manual credit memo must be created, and a manual adjustments to the Purchase Price Variance (PPV) account must be made.
If the consumption advice has been created, or consumption transaction have been generated implicitly, you cannot perform a Transfer to consigned transactions. To perform an RTV transaction: Create a miscellaneous issue out of the regular stock area, and a miscellaneous receipt into the consigned stock area. Create a manual credit memo and match it to the appropriate consumption advice.
There is a current limitation in consigned inventory that prevents the use of expense items (Inventory Asset Value turned off). Nevertheless, a consigned item can be delivered into an expense Inventory. If you receive into an expense Inventory, the expense account assigned to the Inventory is used instead of the material valuation account. Subinventories containing consigned material must have the Quantity Tracked parameter enabled. This option allows the maintenance of on-hand quantities and is required in order to record consumptions properly.
and the distribution is created when the cost manager runs. Price adjustments journals for consigned materials need to be transferred from inventory to the GL.
Verify that all WIP material/resource transactions or INV material transactions have stopped for the period Execute the WIP/Lot Move Transaction Manager, verify that it completes successfully. Optionally run the Material Transaction Manager (depending on TP mode), verify that it completes successfully. Run the Cost Manager, verify that it completes successfully. Optionally run the INV Physical or INV Cycle Count, approve and post adjustments. Run the Create Consumption Advice, verify that it completes successfully. Run Retroactive Price Update. Restart creating WIP material/resource transactions, and INV material transactions.
2.
3.
4. 5.
6. 7. 8.
Verify that all WIP material/resource transactions or INV material transactions have stopped for the period. Run the WIP/Lot Move Transaction Manager, verify that it completes successfully. Optionally run the Material Transaction Manager (depending on TP mode), verify that it completes successfully. Run the Cost Manager, verify that it completes successfully. Run Create Consumption Advice, verify that it completes successfully. Run Retroactive Price Update. Run Standard Cost Adjustment. Restart creating WIP material/resource transactions, and INV material transactions.
2. 3.
4. 5. 6. 7. 8.
In this case, consider a consignment consumption of item X, where purchase price = 10 USD, and unit cost = 10 USD Dr. INV Material 1,000 USD (100EA @ 10 USD) Cr. AP Accrual 1,000USD (100EA @ 10 USD) If the price is retroactively changed from 10 USD to 15 USD; Adjusted amount = New Line Amount (100EA x 15USD) Old Line Amount (100EA x 10USD) Dr. Price Adjustment 500 USD Cr. AP Accrual 500 USD Unit cost is adjusted from 10 USD to 15 USD Dr. INV Material 500 USD (100EA @ 5 USD) Cr. Standard Cost Adjustment 500 USD (100EA @ 5 USD) Price Adjustment account and Standard Cost Adjustment can be netted if an item's Purchase price and unit cost are the same Price change and cost change are the same
5
Setting Up
Overview of Setting Up
This section contains an overview of the steps to complete to set up Consigned Inventory from Supplier. Setup involves several phases, including setting up other applications including Oracle Costing, Oracle Inventory, Oracle iSupplier, Oracle Payables, and Oracle Purchasing. You may not need to perform some of the steps below if you've already performed a common-application setup.
Oracle Inventory
Set up Oracle Inventory and ensure that all the following steps have been completed: Create your organizations Define your organization parameters Define items and item costs Define your units of measure
Setting Up 5-1
Oracle Payables
Set up Oracle Payables and ensure that all the following steps have been completed: Define payment terms Define suppliers
Oracle Purchasing
Set up Oracle Purchasing and ensure that all the following steps have been completed: Define purchasing options Define buyers Define approved suppliers Define receiving options
Oracle Workflow
Oracle Purchasing uses Oracle Workflow technology to perform document to handle requisition and purchase order approvals, automatic creation of purchase orders and releases, order changes, and account generation. Consigned Inventory from Supplier uses specific settings in these workflow automated processes. See: Setting Up Oracle Workflow, Oracle Workflow Guide, and Choosing Workflow Options, Oracle Purchasing User's Guide.
Required Step With Defaults refers to setup functionality that comes with pre-seeded, default values in the database. You need to perform optional steps only if you plan to use the related feature or complete certain business functions.
Setup Checklist
The following table lists setup steps. After you log on to Oracle Applications, complete these required steps to implement Oracle Consigned Inventory from Supplier.
Step No. Step 1 Step Set Up Organizations
Setting Up 5-3
Step Set Up Oracle Inventory Items Set Up Oracle Approved Supplier List and Supplier Sites Set Up Profile Options Numbering Options Set Up Oracle Purchasing Blanket Purchase Agreement Define Consumption Rules (optional) Set Up Pay Options in Oracle Payables Set Up Oracle Workflows
Setup Steps
Step 1: Set Up Organizations (Required)
You may not need to complete this step if you have already set up or performed a common-applications set up, or installed Oracle Inventory. You first must complete the following tasks: Define legal entities organizations. Assign business groups and operating units to responsibilities. Define organizations. Define organization lookups. Define business groups.
See: Creating an Organization, Using Oracle HRMS - The Fundamentals. Next, define one or more inventory organizations before using Oracle Inventory. Organizations describe distinct entities in your company and may include separate manufacturing facilities, warehouses, distribution centers, and branch offices. Because Oracle Inventory enables you to implement multiple sets of books with multiple
organizations, specify the set of books for each organization. Complete the following tasks: Classify the organizations as inventory organizations. Define accounting information for inventory organizations. Define inventory organization parameters. Define receiving options for the inventory organizations.
Manufacturing organizations.
Consigned inventory items are defined in the Master Items window with attributes Transactable, Stockable, and Inventory Asset Value set to Yes. For more information, see: Defining Items, Oracle Inventory User's Guide.
Note: Consigned Inventory from Supplier does not use Outside
Setting Up 5-5
Supplier-Item Attributes window: Release Method: Release Using AutoCreate. Source Documents: Blanket purchase agreement required. Inventory tab: Enable boxConsigned Inventory from Supplier (for consigned items).
Local and Global supplier lists Your approved supplier can be either 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.
Setting Up 5-7
Source Documents tab On the Source Documents tab, you can associate specific quotations or blanket purchase orders agreements with the supplier and item combinations. This enables Purchasing to default source documents automatically. All consigned enabled suppliers must have a referenced blanket purchase agreement. Only blanket purchase agreements may be used as source documents for consigned inventory. The blanket purchase agreement may be either local or global. You can assign a specific blanket purchase agreement here, or set the profile option PO: Automatic Document Sourcing to Yes. Setting this profile option to Yes, automatically defaults pricing information from the most recently created blanket agreement. If it is set to No, Approved Supplier List (ASL) is used to determine the blanket agreement.
Inventory tab On this tab, you can enable consigned inventory, indicate Billing Cycle Days and define the Aging parameters. The Billing Cycle (Days) value 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 initially set up Consigned Inventory from Supplier. It is updated each time the program runs. The default is null. If the value is null, a consumption advice is created every time consigned material is consumed. The current system date is the default Billing Date, and this date is subsequently updated every time the Create Consumption Advice concurrent program is run. If you are required to consume consigned material within a stipulated time period, select the Consume on Aging check box. Indicate the maximum number of days material may be kept in consigned status using the Aging Period Days.
Related Topics
Overview of Consuming Material, page 3-1 Defining Approved Supplier Statuses, Oracle Purchasing User's Guide Defining the Supplier and Item/Commodity Combination, Oracle Purchasing User's Guide Defining the Supplier/Item Attributes, Oracle Purchasing User's Guide
Setting Up 5-9
2. 3.
Select a value in the Transaction Type field, such as issue or transfer type. Optionally, select values in the Organization, Planning Party, and Owning Party fields. To restrict the consumption to specific items, subinventories, or locators, then select values in the applicable field. Optionally, you can enter a value in the Item field.
Consumption Set Up Window
4.
5. 6.
Select the Consume Consigned check box to generate a consumption record. Save your work.
In the Self Billing region, select the following values: Pay On Select a payment method. The supplier site must be a purchasing site. Receipt is used for material that is not consigned. Use is employed for consigned material, and Receipt and Use is for material that can be either consigned or non-consigned material. Alternate Pay Site Optionally, you can select a different pay site than the supplier site. The supplier site is the default pay site. Invoice Summary Level Enter the level you want to use for consolidating invoices for this supplier site when submitting the Pay on Receipt AutoInvoice Program. The invoice summary levels are dependent on the Pay On method selected: If Receipt and Use has been selected, the invoice summary level available is Pay Site. If Use has been selected, the invoice summary level options are Consumption Advice, and Pay Site. Pay Site summary level groups invoices together based on the following grouping criteria: Currency
Setting Up 5-11
Payment terms
Consumption Advice summary level creates a separate invoice for every eligible consumption advice processed.
Pay On Use
Select Use in the Transaction source parameter when running the Pay on Receipt Autoinvoice concurrent program. 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 payable for the line matched with the corresponding purchase order or blanket release.
Region of the Suppliers and Supplier Sites Windows, Oracle Payables User's Guide.
Invoices are not created if the concurrent program fails. This is dependent on the Commit Interval parameter that is being used. For a consumption advice to be invoiced, the status must not be Finally Closed.
Payment Currency
If the purchase order currency and the supplier site currency are not fixed rate currencies, the purchase order currency is used. Otherwise, if the purchase currency and the supplier site are fixed rate currencies, the supplier site payment currency is used. If a supplier site payment currency is not specified, the supplier site invoice currency is used if it is fixed rate compared to the purchase order currency. If the supplier site invoice currency is not fixed rate, use the purchase order currency as the payment currency.
Payment Terms
Payment terms are derived from the following purchase order data: The payment terms specified on the order line are used first. If payments terms are not specified on the order line, the payments terms on the purchase order header are used. If payments terms are not specified on the purchase order header, the payment terms at the pay site are used.
Invoice Date
The invoice date defaults from the consumption advice if the invoice summary level is Consumption Advice. If the summary level is Supplier Site, the date of the invoice is the date of the latest consumption advice grouped onto the invoice.
Exchange Rate
The exchange rate defaults from the consumption advice if the invoice summary level is Consumption Advice. If the summary level is Supplier Site, the rate is derived from the latest consumption advice grouped onto the invoice. If the exchange rate is user specified, the exchange rate date and rate information are based on values specified on the blanket purchase agreement used to source the consumption advice.
Setting Up 5-13
concurrent program for the consumption advice. Commit Interval: Required. The default is 1. The commit interval is a numeric representation of the number of invoices evaluated before they are committed. For example, if you have a commit interval of 10, after 10 consumption advice documents have been processed and invoices created, they are saved. If you then process another 5 and the concurrent program fails, only 5 will not be committed. The previous 10 will not be affected. Receipt Number: Optional. Enter a receipt number if you only want that receipt processed. If the value in this parameter is null, all receipts that have not been invoiced are processed. Aging Period: Optional. You may want to allow time for corrections or returns against the receipts before converting the receipts into invoices. The profile option PO: ERS Aging Period enables you to specify this delay period between the receipt date and the invoice creation date. See: Profile Options, Oracle Purchasing User's Guide.
A
Windows and Navigator Paths
This appendix covers the following topics: Windows and Navigator Paths
Although your system administrator may have customized your navigator, typical navigational paths include the following:
Window Name Approved Supplier List Navigation Path PO > Supply Base> Planning Approved Supplier List iSP > Home page > Consigned Items or INV > Reports > Consigned Inventory
Consigned Inventory
Navigation Path INV>Reports>Consigned Inventory iSP> Home > Product > Consigned Inventory
INV>Reports>Consigned Inventory INV > Transactions > Consigned Transactions INV > Setup > Transactions > Consigned/VMI Consumption INV > On-hand Availability > Material Workbench > Query Material > Consigned/VMI tab > Find INV > Reports > Transactions > Create Consumption Advice (Name) PO > Purchase Orders > Purchase Orders PO > Purchase Orders > Shipments button PO > Supply Base > Approved Supplier List > Attributes button
Material Workbench
Index
A
Approved Supplier List window, 5-7 Approved suppliers creating, 5-7 AutoCreate, 2-7 Automatic document creation, 2-8 Vendor Managed Inventory, 1-2 VMI, 1-2 Ownership transfer, 3-3
P
Pay On Receipt and Use, 5-12 Pay on Receipt Autoinvoice Concurrent Program, 5-12 Pay On Use, 5-12 Purchase orders, entering, 2-8 Purchasing Intelligence, support of consigned inventory, 2-14
C
Consumption setting up rules, 5-9 transactions, 3-4 Consumption Setup window, 5-9 Consumption transaction rules, defining, 5-9 Costing transactions, 4-2 return to vendor, 4-6
R
Requisitioning consigned materials, 2-6
S I
iSupplier Portal, 3-14 Self billing, 5-10 supplier site options, 5-10 Setup checklist, 5-3 flowchart, 5-2
N
Navigational paths, A-1
O
Overview of billing, 3-8 Consigned Inventory, 1-1 consuming material, 3-1 costing and accounting in Consigned Inventory, 4-1 purchasing consigned material, 2-1
T
Transferring ownership, 3-3
Index-1