User Guide: QAD Purchasing

Chapter 4

Supplier Consignment

Inventory

The Supplier Consignment Inventory module lets you plan, order, receive, stock, track, and report supplier-consigned inventory using an automated system that reconciles inventories between suppliers and customers. Receiver matching and accounts payable

(AP) transactions are deferred until the inventory is used. Customer use includes transfer, shipping, manufacturing, or distribution to its own customers.

This chapter describes how to set up and manage consigned inventory. It also gives an overview of the reporting tools available for reviewing and tracking consignment activity:

Overview of Supplier Consignment Inventory 76

Introduces the Supplier Consignment Inventory module and describes many of its functions.

Planning and Setup 80

Details the setup and prerequisite data and processes necessary to use the module.

Managing Consigned Inventory 86

Lists and describes the key management functions of the module and illustrates how to create transaction history, order, receive, and use consigned inventory, make inventory adjustments, process returns, rejects, and corrections, track, and manage consigned and aged inventory.

Reporting Supplier Consignment Inventory Data 102

Describes the reports and inquiries that allow evaluation and management of accounts and inventory.

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User Guide — QAD Purchasing

Overview of Supplier Consignment Inventory

The Supplier Consignment Inventory module lets you plan, order, receive, stock, track, and report supplier-consigned material while at the same time deferring receiver matching and accounts payable (AP) transactions. A company using consigned inventory pays for only what they use, not for what they receive.

The module extends the purchase order process by providing new transactions to receive material and identify it as consigned. These transactions also delay the standard AP process until material is consumed but allow the consigned items to be visible for planning. When items are consumed, such as in a manufacturing process, the receiver becomes available for receiver matching.

When consumption is reported back to the supplier, the supplier can transfer liability for the material in their system and issue an invoice if self-billing is not being used.

Using consigned inventory alleviates the need for the supplier to buy back the excess sent to the customer or remaining at the end of the consignment period. Because the supplier still owns the inventory, any excess is simply returned.

Using key features of Supplier Consignment Inventory, you can:

•

Create PO consigned inventory and inventory offset accounts at the domain level, for product lines, or for combinations of sites and product lines.

•

Delay the transfer of ownership of consigned inventory by deferring AP transactions until you use the inventory.

•

Determine at the domain level whether consigned inventory should be consumed first or only after non-consigned inventory is exhausted.

•

Set up consignment defaults for the majority of your purchase orders and supplier scheduled orders and tailor defaults for individual supplier addresses and items.

•

Create supplier invoices for payment of shipping charges immediately, while delaying receiver matching for material until it is actually used.

•

Indicate for selected sites and locations that inventory transfers should initiate a change in ownership.

•

Determine the tax point for consigned inventory based on settings in the associated tax rate.

The tax point can be either at receiver matching or consumption.

•

Create a purchase order or scheduled order with both non-consigned and consigned items.

•

Manually adjust consigned inventory if needed.

•

Include or exclude consigned inventory during physical inventory or cycle count.

•

Export EDI transmissions to inform suppliers of item usage, or create records to send manually.

•

Retain visibility of consigned inventory information including its location, status, age, and order details.

•

Manage and update aging dates.

•

Generate reports and inquiries that sort and display details according to your needs:

•

Identify unconsumed inventory that exceeds its maximum aging date.

•

Compare inventory received with inventory consumed.

Supplier Consignment Inventory

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Supplier Consignment Inventory Business Workflow

Figure 2.1 shows the complete consignment inventory workflow beginning with the contract and ending with accounts payable.

Fig. 4.1

Consignment Inventory Business Flow

1

Stockroom

Contract

Supplier

6a

Receiving

2

Consigned Inventory

Inventory

Inventory

Pay to

Check

$

5

Supplier Invoice

Picking

3

4

6b

Invoices Accounts Payable

Consumption

Log

Transfer

Shipping

Manufacturing

Distribution

Optional

EDI Transmission

Creating a Purchase Order

A contract is created between a customer and a supplier that dictates the items to be sold on

consignment (step 1 in Figure 4.1). The contract is either a standard purchase order, a blanket

purchase order, or a scheduled purchase order. It includes clauses on deferring liability. The contract may also include a maximum number of aging days that a customer is permitted to hold items without liability of payment. This ensures that inventory will be consumed in a timely manner.

Receiving Inventory

As consigned inventory arrives, it is handled by the standard receiving process (step 2 in

Figure 4.1). The inventory is immediately nettable to MRP and available for allocation according

to the inventory status of the stock location.

Cumulative receipt quantities are automatically updated for scheduled purchase orders. Because the consigned inventory is not yet available for receiver matching, any supplier invoice process selecting open receipts bypasses receipts of consigned inventory until it is consumed.

Only shipping-related charges (trailer and freight) can be matched with the supplier invoice at the time of receipt.

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Consuming the Inventory

The consigned inventory is eventually consumed by the customer (step 3 in Figure 4.1).

Consumption occurs in the following ways:

•

Issues to a manufacturing order such as a work order, repetitive order, or flow schedule

•

Unplanned issues

•

Issues to a configured item final assembly order

•

Transfers to another location within a site

•

Shipment of consigned parts (sales order shipments or shipper confirm)

•

Manual consumption of aged inventory

See “Using Supplier Consigned Inventory” on page 94.

Consumption activity is logged (step 4 in Figure 4.1) for audit purposes and for batch processing.

When reported to the supplier (step 5 in Figure 4.1), it triggers the transfer of liability.

Consumption can be reported manually or using EDI eCommerce.

Once the inventory is consumed, the receiver is available for receiver matching, but only for the amount consumed. This can be a partial amount and may not always be the total amount on the receiver. The system tracks how much of the receiver is available for receiver matching. A cumulative quantity is kept to track the total material consumed on the contract.

Paying for the Inventory

Supplier Invoices are created either manually using functions in Accounts Payable (AP) or automatically by Evaluated Receipts Settlement (ERS). Both distinguish between receipt of consigned inventory that has been consumed and receipt of consigned inventory that has not been consumed; for example, when only a portion of an order has been consumed.

Because receiver matching follows standard processing, it is not discussed in this chapter.

See User Guide: QAD Financials for details on AP processing.

Using Supplier Consignment Inventory with EMT

Enterprise Material Transfer (EMT) lets you translate sales orders into purchase orders automatically and transmit those purchase orders to secondary business units (SBU) electronically using EDI eCommerce. By definition, the system creates all lines of EMT purchase orders as nonconsigned. You cannot change the consignment setting on these system-maintained orders.

See User Guide: QAD Sales for information on EMT.

Supplier Consignment Programs

Table 4.1 lists programs included in Supplier Consignment Inventory.


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Table 4.1

Supplier Consignment Inventory Programs

Menu Number Description

5.18

5.18.1

Supplier Consignment Inventory...

Supplier/Item Controls Maintenance

5.18.2

5.18.6

5.18.7

5.18.8

5.18.9

5.18.10

5.18.13

5.18.14

5.18.15

5.18.16

5.18.24

5.18.25.1

36.9.4

Program Name

Supplier/Item Controls Browse

Consignment Inventory Report

Consignment Inventory By Order

Consignment Usage Report

Consignment Usage Summary Report

Consignment Usage Export Report

Aging Inventory Update

Aging Inventory Batch Update

Aging Inventory Report by Order

Aging Inventory Report by Part

Supplier Consignment Control

Consignment Inventory Adjustment pocnvdmt.p

pobr014.p

ppptrp10.p

pocnrp01.p pocnrp02.p pocnrp03.p pocnrp04.p pocnaimt.p

pocnaiup.p

pocnairp.p pocnair1.p pocnspm.p

pocnadj.p

Supplier Consignment Accounting Control fipocnsp.p

Consignment Process Summary

Figure 2.2 shows the sequence in which the Supplier Consignment Inventory module processes data.

Fig. 4.2

Consignment Overview

Unconsume

PO Return

Negative (-)

PO Receipts

PO Shipper Receipts

PO Receipts

PO Shipper Receipts

PO Return

Negative (-)

PO Receipts

PO Shipper Receipts

Process consigned inventory and pending consumption.

Consume

= Consigned

Inventory

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Planning and Setup

Before using the Supplier Consignment Inventory module, you must set up different kinds of data:

•

Base data standard to the system such as items, addresses, and general ledger (GL) accounts.

These activities are not discussed in this chapter.

•

Base data specific to the Supplier Consignment Inventory module.

•

Supplier consignment control settings that determine defaults and processing options.

Figure 2.3 illustrates the typical workflow for setting up Supplier Consignment Inventory.

Fig. 4.3

Supplier Consignment Setup Flow

Activate Supplier

Consignment Inventory and configure control settings.

Set up consignment accounts.

Update settings for sites and locations.

Set up product line and purchasing detail accounts.

Create control records for specific supplier/item combinations.

Update Control Settings

Use two programs to define domain-level controls, as well as to establish default values for managing consignment functions:

•

In Supplier Consignment Control (5.18.24), activate the Supplier Consignment Inventory module and define other operational control values.

•

In Supplier Consignment Accounting Control (36.9.4), specify operational settings that have an impact on financial activities, such as the PO cost point.

All values default to Supplier/Item Controls Maintenance (5.18.1) where you can modify them for specific combinations of suppliers and items.

Fig. 4.4

Supplier Consignment Control (5.18.24)

Using Consignment Inventory.

This is the single place where you can activate the Supplier

Consignment Inventory module. The default is No.

No: Enter No to display standard purchase order programs. The system bypasses all consignment screens.


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Yes: The Supplier Consignment Inventory module is active. You can use Supplier

Consignment Inventory programs.

Once you have activated the module, created consigned items, or performed transactions, entering No to deactivate the module displays a warning message. Unless all consigned items are consumed, the system warns you that non-invoiced consigned items exist and prompts you to confirm your action.

Consignment Orders.

Specify the default value for the Consignment Orders field in the header of new purchase orders, scheduled orders, and blanket purchase orders:

No: Enter No if most of your inventory transactions are for non-consigned items.

Yes: The Consignment Orders field on the header of new orders is Yes.

In either case, you can combine lines for both consigned and non-consigned inventory on one order.

Note

The value defined here is used on new orders only if the system does not find a more specific match in Supplier/Item Controls Maintenance.

Maximum Aging Days.

Enter the maximum number of days consigned inventory is allowed to reside at your facility.

The default value is 0 (zero), which indicates no scheduled aging deadline exists. See

“Managing Aged Inventory” on page 98.

Use Consigned First.

When a location contains both consigned and non-consigned inventory, this field determines which inventory is processed first:

No: Use non-consigned inventory first.

Yes: Use consigned inventory first.

Default: Let the system select inventory based on the picking logic specified in Inventory

Control.

See User Guide: QAD Master Data for details.

Fig. 4.5

Supplier Consignment Accounting Control (36.9.4)

Transfer Ownership.

Specify Issue/Backflush. Transfer of ownership (consumption) is allowed only at the time items are issued or backflushed. No other value is currently supported.

PO Cost Point.

Specify which purchase order cost you want the system to use to calculate the purchase price variance. This is the cost at which the usage is paid/invoiced.

Usage: Use purchase order cost at time of usage.

Receipt: Use purchase order cost at time of physical receipt.

The value in this field defaults to Supplier/Item Controls Maintenance. When no record for a supplier exists, the field defaults to PO Maintenance (5.7).

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Create Supplier/Item Control Records

Use Supplier/Item Controls Maintenance (5.18.1) to define specific default values for suppliers or for combinations of suppliers and items. The values entered here override the settings in Supplier

Consignment Control or Supplier Consignment Accounting Control only for the specified supplier. When new orders are created for a specific supplier, the system looks for the most specific record first to determine the defaults to use. Orders previously entered into the system remain unchanged.

Fig. 4.6

Supplier/Item Controls Maintenance (5.18.1)

The settings in this program apply either to the supplier alone or to the supplier/item number combination specified in the header frame. Only the supplier is required.

Supplier.

Enter a valid, active supplier code to identify this control record. This code represents the company that supplies consigned items.

This is a required field. Associated control values apply to this supplier only.

Item Number.

Optionally enter an item number to use as part of the unique identifier for this control record. This item number represents the consigned item being received into inventory.

When you enter an item number, this control record applies to purchase order lines for this item only.

Items must be previously defined in Item Master Maintenance (1.4.1).

Leave this value blank to indicate that this control record applies to all items from this supplier without a specific control record.

Note

Do not specify a supplier item defined with Supplier Item Maintenance (1.19) in this field. When you specify a supplier item on an order line, the system converts it to the internal item before looking for defaults defined with this program.

PO Cost Point.

Specify which purchase order cost you want the system to use to calculate the purchase price variance. This is the cost at which the usage is paid/invoiced.



Initially, this field defaults from Supplier Consignment Accounting Control. The value you specify defaults to Purchase Order Maintenance. Each item record created for a particular supplier must have the same PO cost point.

When you try to change the value for a supplier/item combination and other records for that supplier exist, you are prompted to change the PO Cost Point value for all instances of that supplier in this program.


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Important

Responding Yes updates the PO cost point for all records for the specified supplier including supplier/item combination records. No returns you to the PO Cost Point field and no updates are made.

Set Up Consignment Accounts

Use three programs to identify accounts for tracking supplier consignment inventory:

•

Domain/Account Control (36.9.24)

•

Product Line Maintenance (1.2.1)

•

Purchasing Account Maintenance (1.2.5)

Create accounts first in Account Create (25.3.13.1). These accounts must be of GL type Inventory

Control. Use Domain/Account Control to set up defaults. Codes entered in Domain/Account

Control default to Product Line Maintenance. Product Line Maintenance accounts default to

Purchasing Account Maintenance.

Note

One of the Consignment Inventory modules must be activated to access the Consignment

Accounts frame.

Fig. 4.7

Domain/Account Control (36.9.24)

Supplier

Consignment

Inventory module fields

PO Consigned Inventory Acct.

Enter the GL account, sub-account, and cost center codes used to track consigned inventory that has been received into inventory.

PO Consigned Offset Acct.

Enter the GL account, sub-account, and cost center codes used to track deferred payable amounts for consigned receipts.

The PO Consigned Inventory and PO Consigned Offset accounts are updated simultaneously to record consigned activity and do not affect the balance sheet. Other accounts are not updated until inventory is used.

The remaining account fields in this frame are used by the Customer Consignment Inventory module.

Customer Consignment Inventory is described in User Guide: QAD Sales.

Set Up Product Line Accounts

Use Product Line Maintenance (1.2.1) to tailor consignment accounts for items that belong to a particular product line. If you do not define specific product line accounts, the system uses the default GL accounts from Domain/Account Control.

84


Fig. 4.8

Consignment Accounts in Product Line Maintenance (1.2.1)

Optionally use Purchasing Account Maintenance (1.2.5) to further define GL accounts designated for consignment. By setting up accounts for combinations of product line, site, and supplier type, you can separately track accounts for multiple sites and types of suppliers.

Set Up Purchasing Detail Accounts

Purchasing detail accounts default from Product Line Maintenance. Often, these are used to associate cost centers with different sites and supplier locations.

Fig. 4.9

Consignment Accounts in Purchasing Account Maintenance (1.2.5)

Update Tax Rates

When the Supplier Consignment Inventory module is active, you have an additional option for determining when the system creates GL transactions for tax amounts on consigned purchases.

The tax point is determined by settings defined for the tax rate in effect in Tax Rate Maintenance

(29.4.1).

Fig. 4.10

Setting Tax Accrual in Tax Rate Maintenance (29.4.1)


85

Taxes accrue when inventory is used.

The Accrue Tax at Receipt setting normally determines the tax point for purchased items. This field is ignored when using this module.

For consigned items, the Accrue Tax at Usage setting lets you accrue taxes when consigned items are used. Items can be used in a variety of ways, including:

•

Issue to a work order, distribution order, sales order, repetitive order, or configured item final assembly work order

•

Unplanned issue

•

Transfer to another location or site

When Accrue Tax at Usage is No, the system creates tax transactions for consigned items at receiver matching.


86


Update Settings for Sites and Locations

When the Supplier Consignment Inventory module is active, you can use the Transfer Ownership field to indicate how consigned inventory should be managed when it is transferred to a specific site.

Fig. 4.11

Transferring Ownership in Site Maintenance (1.1.13)

Ownership is transferred for locations in this site.

The value you specify for a site determines the default value for new locations created in the site.

This default applies both to locations created in Location Maintenance (1.1.18) and any locations created by the system when Automatic Locations is Yes. You can modify the default in Location

Maintenance as needed.

The same field exists in Location Maintenance. At the location level, this field has the following effect:

No: Inventory received into the location retains its consigned status.

Yes: Receiving inventory into the location initiates a transfer of ownership (usage). To track the ownership change, RCT-PO and CN-ISS transactions occur in addition to the inventory transfer and receipt. The supplier can now invoice you for the inventory, and GL accounts are updated.

When the Supplier Consignment Inventory module is not active, the Transfer Ownership field is disabled.

Transfer of ownership occurs automatically when consigned inventory is issued to work orders, sales orders, or final assembly orders and when unplanned issues occur. Ownership transfer is optional only during inventory transfers and receipts.


Note

Distribution order issues are a type of transfer.

Managing Consigned Inventory

Key management functions of the Supplier Consignment Inventory module are to:

•

Manage inventory quantities.

•

Provide inventory valuation and update GL accounts.

•

Defer AP transactions until consumption.


87

When you activate the Supplier Consignment Inventory module and begin receiving inventory, the system automatically tracks consigned inventory ownership, quantities, age, use, receiver matching, and payment.

It does this by first identifying which purchase order lines are consignment lines. The system then manages the receipt of consignment line items with special consignment transactions. Information associated with consigned receipts is maintained in a cross-reference table, in addition to the standard inventory information.

The inventory references the PO line on the receipt. These inventory cross-reference records are visible for usage and aging analysis.

Creating Inventory Transaction History

Every inventory transaction creates a record in inventory transaction history. Each record has a unique, sequential transaction number and a transaction type. Transactions include the following information:

•

Transaction data

•

Inventory data

•

Cost data

•

GL transaction data

•

User ID of the person entering the transaction

Supplier Consignment Inventory Transaction Types

The transaction type code identifies the function used to initiate the inventory change. Table 4.2

lists the supplier consignment transaction type codes included in inventory history records with a brief description of each type and some of the programs that create the transactions. Any other programs that create similar transactions (ISS-SO, ISS-WO, RCT-TR, ISS-UNP) for consigned inventory would also create the special consigned transactions.

Table 4.2

Consignment Transaction Types

Transaction Type

CN-RCT

Menu

Number

5.13.1

5.5.5.11

5.13.20

Program that Creates the

Transaction/Description

Purchase Order Receipts

PO Shipper Receipt

Receives consigned inventory into a location.

Credits PO Consigned Inventory, debits PO

Consigned Offset.

CN-ADJ, RCT-PO

CN-ADJ

5.18.13

Aging Inventory Update

Adjusts balances of consigned inventory. Instead of extending the aging date of consigned inventory, enter Yes in the Use field to indicate consumption. Initiates receipt transactions.

5.18.25.21 Consignment Inventory Adjustment

Adjusts locations, quantities, and other details of consigned inventory. Debits or credits PO

Consigned Inventory account and credits or debits

PO Consigned Offset account.

88



ISS-TR, RCT-TR

RCT-PO, CN-ISS

ISS-DO, ISS-GIT

RCT-DO, CN-ISS

ISS-WO,

RCT-PO, CN-ISS

3.12

16.10

16.12

16.19

17.13.7

17.6.5

18.14

18.17

18.22.13

18.22.17

3.13.2

Menu

Number

3.4.1

3.4.2

3.4.3

3.4.4

10.5.13

11.1.1.13

11.11.6

18.3.6

18.22.3.6

18.22.5.11

19.7

19.11



Transfer Single Item

Transfer Multiple Item (positive quantities only)

Transfer with Lot/Serial Change

Batchload Transfer with Lot/Serial Change

Project Activity Recording

Call Activity Recording

Material Order Shipments

Repetitive Picklist Transfer

Sub-Shipper Issue

Quality Order Maintenance

Quality Order Results Entry

12.15.20

12.17.21

12.17.22

Moves inventory from one location to another.

Note: Consignment transactions occur only when

Transfer Ownership is Yes for the receiving location.

Distributed Order Receipt

Distribution Order Processing

Distribution Order Shipments

Note: Consignment transactions occur only when

Transfer Ownership is Yes for the receiving location.

Receipts–Backward Exploded

Work Order Component Issue

Work Order Receipt Backflush

Work Order Operation Backflush

Flow Schedule Receipts

Kanban Fill/Receive

Repetitive Labor Transaction (manual backflush)

Receipts–Backward Exploded (manual backflush)

Backflush Transaction

Rework Transaction (manual backflush)

Cycle Count Results Entry CYC-CNT,

RCT-PO, CN-ISS

ISS-SO,

RCT-PO, CN-ISS

ISS-FAS,

RCT-PO, CN-ISS

7.9.5

7.9.7

7.9.15

7.9.21

7.13.1

7.25.3

11.7.1.16

7.18.13

7.18.14

7.18.15

7.18.19

7.18.22

8.13

Pre-Shipper/Shipper Confirm

Pre-Shipper/Shipper Auto Confirm

Sales Order Shipments

Shipper Unconfirm

Pending Invoice Maintenance

SO Batch Shipment Processor

RMA Shipments

When using Supplier Consignment as Customer

Consignment:

Inventory Usage Create

Authorization Usage Create

Sequenced Usage Create

Shipper Usage Create

Usage Create Undo

Sales Order Release to Work Order


89


ISS-UNP,

RCT-PO, CN-ISS

CN-ISS

Menu

Number

3.7

19.7

19.11

All



Issues–Unplanned

Quality Order Maintenance

Quality Order Results Entry

Credits PO Consigned Offset, debits PO

Consigned Inventory

Reviewing Transaction History

Use Transactions Detail Inquiry (3.21.1) to display detailed inventory transaction history records sorted by transaction number. Enter the transaction number to display all the information about that transaction.

When consigned inventory is used, multiple inventory transactions are processed and corresponding transaction history records created. For the consigned transaction, the system records the number of the standard transaction initiating it in the Remarks field.

The transactions for purchasing, receiving, and using consigned inventory are shown sequentially in the following figures.

Figure 4.12 shows a purchase order (P1136) for 100 consigned items.

Fig. 4.12

Purchasing Consigned Inventory

Figure 4.13 shows the transaction created when 10 of those items are received into the

consignment location, which generates a CN-RCT transaction type. The Remarks field identifies this as a consignment transaction.

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Fig. 4.13

Receiving Consigned Inventory (CN-RCT)

Transaction is

Consigned.

Figure 4.14 represents the usage of consigned inventory from the consigned location using an

unplanned issue. The ISS-UNP transaction balances against the CN-RCT transaction to credit the consignment GL accounts that were debited at CN-RCT.

Fig. 4.14

Issuing Consigned Inventory (ISS-UNP)


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The unplanned issue creates two additional transactions: RCT-PO and CN-ISS. When consigned

inventory is used/consumed, it changes ownership and becomes non-consigned. Figure 4.15 shows

transaction type RCT-PO that was generated from the usage in Figure 4.14. The RCT-PO balances

the ISS-UNP. The Remarks field references the transaction number.

Fig. 4.15

Receiving Regular Inventory (RCT-PO)

References the

ISS-UNP transaction that generated this

RCT-PO transaction.

Figure 4.16 shows the CN-ISS transaction created during a usage. The RCT-PO transaction

generates a CN-ISS transaction, which represents the change in inventory status from consigned to non-consigned. This balances the original CN-RCT transaction.

Fig. 4.16

Transaction History for Issuing Consigned Inventory (CN-ISS)

References the

ISS-UNP transaction that generated the

CN-ISS transaction.

Ordering Consigned Inventory

When the Supplier Consignment Inventory module is active, additional frames and fields display for user input during order entry in:

•

Blanket Order Maintenance (5.3.1)

•

Supplier Scheduled Order Maintenance (5.5.1.13)

•

Purchase Order Maintenance (5.7)

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In all three programs, the system uses a hierarchical approach to retrieve previously entered default data that applies to specific suppliers and items.

•

When entering a new order, the system uses default values for the supplier defined in

Supplier/Item Controls Maintenance. If a record does not exist for the supplier and a blank item, the system uses defaults defined in Supplier Consignment Control or Supplier

Consignment Accounting Control.

•

At the purchase order line, the system first uses defaults defined in Supplier/Item Controls

Maintenance for the order supplier and line item. If a record does not exist, values default from the order header.

Purchase Order Maintenance

Specify Yes in the Consign field in the purchase order header to indicate that the order includes consigned items.

Note

Scheduled orders and blanket orders are processed the same way using similar fields and frames. They are not illustrated here.

Fig. 4.17

Consign Field in Purchase Order Maintenance (5.7)

Set Consign field to Yes for consigned orders.

Consign.

Enter Yes if most items on this purchase order are received from the supplier as consigned inventory.

Enter No if most items purchased from this supplier are non-consigned.

When you specify Yes in the header Consign field, a Supplier Consignment frame displays,

illustrated in Figure 4.18. Scheduled orders and blanket orders are processed the same way using

similar fields and frames.

Fig. 4.18

Consignment Frame in Purchase Order Maintenance (5.7)


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Maximum Aging Days.

Optionally enter the maximum number of days consigned inventory on this order is allowed to reside at your facility. Enter 0 (zero) to indicate that no scheduled aging deadline exists.

The system automatically adds the number of days entered here to the receipt date to determine the maximum aging date. The calculated date is used by reports to determine how long inventory has been at your facility.

You can extend the maximum aging date as many times as required using Aging Inventory

Update (5.18.13) or Aging Inventory Batch Update (5.18.14). An extension automatically updates each receipt.

PO Cost Point.

Specify which purchase order cost you want the system to use to calculate the purchase price variance.



The value defaults from Supplier/Item Controls Maintenance or Supplier Consignment

Accounting Control. Once a consigned receipt is processed, this field cannot be updated.

When Usage is specified on scheduled purchase orders, the system looks for the current price in the following order:

•

Price list associated with the scheduled order

•

Supplier/item price

•

Cost of the purchase order

When Usage is specified on discrete purchase orders, the system always uses the cost on the purchase order.

Regardless of what you enter on the header, you are prompted during line-item entry to specify whether the particular line is consigned. If you specify Yes, you can also specify the maximum

aging date for the line. Figure 4.19 illustrates the Consignment field for a PO line.

94


Fig. 4.19

Consignment Line Item Frame in Purchase Order Maintenance

Receiving Consigned Inventory

You can receive items purchased on consignment using either:

•

Purchase Order Receipts (5.13.1)

•

PO Shipper Receipts (5.13.20)

Instead of a standard RCT-PO, which makes the purchase order available for receiver matching, a

CN-RCT transaction records the receipt of consigned inventory. The RCT-PO occurs when items are used, causing transfer of ownership from the supplier and making the items available for receiver matching.

Receiving consigned items creates the following GL transactions:

•

Debits the PO Consigned Inventory account defined in Purchasing Account Maintenance for the product line, site, and supplier type, if available. Otherwise, the account from Product Line

Maintenance is used.

•

Credits the PO Consigned Offset account defined in Purchasing Account Maintenance for the product line, site, and supplier type if available. Otherwise, the account from Product Line

Maintenance is used.


Using Supplier Consigned Inventory

The system records the receipt of consigned inventory with a CN-RCT transaction instead of a standard RCT-PO. The RCT-PO occurs when items are used, causing transfer of ownership from the supplier and making the items available for receiver matching.

Inventory can be consumed at various points in the manufacturing process, initiating the transfer of ownership. Some examples include the following:

•

Issue to a manufacturing order, such as a work order, repetitive order, flow schedule, or final assembly work order.

•

Issue to a sales order.


95

•

Backflush in a manufacturing process.

•

Manually use in a consignment aging program.

•

Transfer to a location that is defined as initiating an ownership transfer, either an inventory transfer or issue to a distribution order.

For inventory transfers (ISS-TR) and issues to distribution orders (ISS-DO), transfer of ownership depends on the value of the Transfer Ownership field associated with the receiving location. When this is Yes, usage transactions occur.

Other types of issues always transfer ownership. These include ISS-SO, ISS-WO, ISS-FAS, ISS-

UNP.

See “Update Settings for Sites and Locations” on page 86.

The value of Use Consigned First in Supplier Consignment Control determines how the system processes inventory when consigned and non-consigned items are located together.

See “Use Consigned First” on page 81.

GL Effects of Usage

Issuing items with an ownership transfer updates the following consignment accounts:

•

Credits the PO Consigned Inventory account defined in Purchasing Account Maintenance for the product line, site, and supplier type

•

Debits the PO Consigned Offset account defined in Purchasing Account Maintenance for the product line, site, and supplier type

In addition, transactions are created for all of the accounts normally updated during a PO receipt.

Once a usage transaction (RCT-PO, CN-ISS) occurs, the quantity associated with the receiver is available to be matched with the supplier invoice. Receiver matching of receipts for consigned items occurs in the same way as standard items. Re-averaging of costs takes place when consigned inventory is consumed.

Average costing occurs upon transfer of ownership or at usage of supplier-consigned inventory.

Re-averaging of the item cost for non-consigned on-hand inventory is initiated at the time of receipt.

Notifying Suppliers of Usage

You can use two methods to notify your suppliers that you have used consigned inventory:

•

Generate a report to send to them.

•

Use EDI eCommerce to export usage data.

Generating a Usage Export Report

Use Consignment Usage Export Report (5.18.10) to notify your supplier about consigned items you have used. This is useful if you are not using EDI eCommerce transmissions to communicate usage records.

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When run in update mode, the system marks selected records as having been reported. These records are not included the next time the report is run.

Use Consignment Usage Report to see all inventory that has been used regardless of whether it has been reported to the supplier.

Exporting EDI Files

Use Consignment Usage Export (35.4.2) to notify your trading partners, defined in EDI eCommerce, of inventory transactions (RCT-PO, CN-ISS) initiating a transfer of ownership.

Enter ranges of selection criteria for purchase order, item number, supplier, site, and transaction usage dates that apply to the records you want to export. When your supplier imports this information, they can then invoice you for the items used.

See User Guide: QAD EDI eCommerce.

Using Supplier Consignment and Customer Consignment

If you have both consignment modules active, you can ship items received from a supplier on consignment to one of your customers to be kept on consignment at the customer facility. This type of consignment activity is called a pass through.

Example

Your company manufactures printers and ships to large distributors. You receive ink cartridges from one of your suppliers on consignment. When you ship printers to your distributors, you send ink cartridge kits with them on consignment.

In this kind of business scenario, the receiver matching of the items received from your supplier is delayed until your customer uses the items and you receive the usage information from them. To manage this delay, shipping the items does not create an ISS-SO transaction, but a CN-SHIP.

When your customer uses the item, the CN-USE transaction triggers the RCT-PO and CN-ISS on the supplier consignment side.

See “Shipping Consigned Inventory” in the Customer Consignment Inventory chapter of User

Guide: QAD Sales.

Using Supplier Consignment with Kanban

When you use Kanban Fill/Receive (17.6.5) to receive and transfer kanban-controlled items, three types of kanban transactions can occur: purchase receipt, item movement, and production receipt.

See User Guide: QAD Lean Manufacturing.

Inventory balances are updated depending on the setting of Impact Inventory in Kanban Master

Maintenance (17.1.1). When Impact Inventory is Yes for a kanban card and the items involved are consigned, additional consignment transactions also occur.

•

Executing a purchase receipt transaction records a CN-RCT instead of the standard PO-RCT.

•

Executing an item movement transaction creates PO-RCT, CN-ISS transactions if the receiving location is set up for ownership transfer.

•

Executing a production receipt transaction creates PO-RCT, CN-ISS transactions as well as the WO-ISS transaction.


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Making Inventory Adjustments

Use Consignment Inventory Adjustment (5.18.25.21) to manually modify consigned inventory information such as quantities and locations.

Fig. 4.20

Consignment Inventory Adjustment (5.18.25.21)

Purchase order and line number are required. The system validates that the items on the order line were consigned. A warning displays if there are no consigned items in the location specified.

You might use this program after doing a physical inventory to indicate that surplus items are consigned.

See “Tracking Consigned Inventory During Inventory Counts” on page 100.

Adjustment generates records of type CN-ADJ to record consignment adjustment.

A negative quantity adjustment:

•

Credits the PO Consigned Inventory account

•

Debits the PO Consigned Offset account

A positive quantity adjustment:

•

Debits the PO Consigned Inventory account

•

Credits the PO Consigned Offset account

Important

Consignment Inventory Adjustment is designed only to update the consignment quantity. It does not adjust any other elements of the regular consignment business cycle. Before using it, be aware that:

•

This function does not make any changes to the quantity on hand. This can lead to possible discrepancies between inventory valuation reports and the inventory GL balance. You should make appropriate adjustments to quantity-on-hand balances, as needed.

•

Pending supplier invoices are not updated based on this adjustment. Changes to the amount due the supplier must be made manually.

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Processing Returns, Rejects, and Corrections

Rejects and Returns

If no usage has occurred against the PO, consigned inventory being rejected is returned to the supplier using:

•

Purchase Order Returns (5.13.7)

•

Purchase Order Receipts (5.13.1)

•

PO Shipper Receipt (5.13.20) with a negative line item quantity

No transfer of ownership occurs during inventory returns to the supplier because the supplier already owns the material.

Corrections and Returns

When Use Consigned First is Yes in Supplier Consignment Control, consigned inventory being returned as a correction is returned to consignment by processing a reversal for a negative quantity using standard programs. The system returns inventory to its consigned site and location to the extent that it has not been reported to the supplier as used.

When Use Consigned First is No or Default, consigned inventory is returned as non-consigned.

If usage against the PO has been reported to the supplier, consigned inventory being returned as a correction is returned to the designated site and location as non-consigned.

The system excludes reported usage records for reversals, thus eliminating the risk of double payment for consigned inventory when original usage was reported and paid prior to a reversal transaction. Usage records created due to the aging of consigned inventory are also excluded from reversal transactions.

In addition to a standard issue transaction for the negative quantity, negative quantities processed as consigned reversals create RCT-PO and CN-ISS transactions. The quantity is transferred back to consigned inventory.

When reversals of consigned inventory occur, the system creates a GL transaction that debits the

Consigned Inventory account and credits the Consigned Inventory Offset account.

The system automatically adjusts the existing unpaid pending supplier invoice that was created when the material was first consumed.

Managing Aged Inventory

In the Supplier Consignment Inventory module, you can track inventory by receipt date or by how long it has been in a consignment location. By assigning maximum aging days to the purchase order line, you can:

•

Identify inventory on a particular purchase order receipt that exceeds the maximum aging date without being consumed.

•

Extend the aging date by number of days or date on items received on individual or multiple purchase orders.

•

Transfer ownership of the consigned inventory from a supplier to yourself.


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When you have not consumed or returned consigned inventory by the maximum aging date, ownership can be transferred to you. The transfer of ownership does not occur automatically, however, allowing you and your supplier to negotiate a compromise.

Note

The aging date is separate from the expiration date.

To determine the date that maximum aging occurs, the system uses the following calculation:

receipt date + maximum aging days = maximum aging date

•

Receipt date is the date recorded in Purchase Order Receipts (5.13.1) or PO Shipper Receipt

(5.13.20).

•

Maximum aging days is taken from the consignment purchase order line data in Purchase

Order Maintenance (5.7) or Supplier Scheduled Order Maintenance (5.5.1.13).

The calculated maximum aging date for each shipment is shown in various aging reports.

Identifying Aged Inventory

Use Aging Inventory Report by Order (5.18.15) to determine how long unused inventory has been consigned for ranges of PO or scheduled order numbers. You can make daily, weekly, or monthly determinations for six periods, such as six calendar weeks.

Fig. 4.21

Aging Inventory Report by Order (5.18.15)

Use Aging Inventory Report by Part (5.18.16) to identify consigned inventory by item number.

Extending the Aging Date

Use Aging Inventory Update (5.18.13) to extend the allowed time of consignment by setting a new aging date or adding days to the existing date. You can extend the maximum aging date as many times as required. An extension automatically updates each purchase order receipt.

Enter selection criteria in the first frame. The system displays matching order lines in the Cross

Reference Details frame. Select a record for update and modify it as required in the Max Age Date frame.

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Fig. 4.22

Aging Inventory Update (5.18.13), Cross Reference Details and Max Age Date Frames

Values default from receipt data. You can update the following fields in the Max Age Date frame:

Use.

Enter Yes to designate this inventory as used. Entering Yes generates transaction history records of type CN-ADJ to record the transfer of consigned inventory and RCT-PO to record receipt from the supplier.

New Date.

Enter the new maximum age date you want to assign to this inventory, unless you enter the number of calendar days you want to add to the age date.

Days.

If New Date is blank, enter the number of calendar days you want to add to the maximum age date. The system automatically calculates the new date.

Use Aging Inventory Batch Update (5.18.14) to revise aging dates for items received on multiple purchase orders. When you extend the aging date, the system automatically updates the age date on each PO receipt.


Tracking Consigned Inventory During Inventory Counts

During cycle count and physical inventory count processes, you must determine procedures for managing consigned inventory. Typically, you include supplier consigned inventory during a count because it is physically present at your site.

Various cycle count and physical inventory programs let you manage supplier consigned inventory according to your needs. You can count:

•

Only consigned inventory

•

Only non-consigned inventory

•

Both consigned and non-consigned inventory

For example, you can use consignment fields in Cycle Count Worksheet Print (3.13.1) to select inventory to count.

See User Guide: QAD Master Data for cycle and physical count procedures.


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Fig. 4.23

Tracking Consigned Inventory Using Cycle Count Worksheet Print (3.13.1)

Worksheet includes supplier consigned inventory.

Similarly, when you use Item Tag Create (3.16.1), you can choose to update tags for only consigned, only non-consigned, or both types of inventory.

Fig. 4.24

Tracking Consigned Inventory Using Item Tag Create (3.16.1)

Tags include supplier consigned inventory.

When you exclude consigned inventory, any inventory adjustments affect non-consigned inventory only. If you choose to include consigned inventory or do a count of consigned inventory only, the system uses special transactions when adjusting inventory downward.

These transactions occur in Cycle Count Results Entry (3.13.2) and Inventory Balance Update

(3.16.21).

When consigned and non-consigned supplier inventory are combined in a location, the system checks the value of Use Consigned First in Supplier Consignment Control to determine how to manage adjustments. Downward adjustments to supplier consigned inventory create the standard

CYC-CNT or TAG-CNT transaction, followed by RCT-PO and CN-ISS transactions to track the inventory changes and transfer ownership of material.

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The various possibilities are shown in Table 4.3.

Table 4.3

Balancing Consigned Inventory After Cycle or Physical Counts

Results Action Option Entered

Only consigned

Shortage Shortage is reduction of consigned inventory.

Transactions

CYC-CNT or TAG-CNT

RCT-PO, CN-ISS

CYC-CNT or TAG-CNT

Include consigned and non-consigned

Surplus Surplus is nonconsigned.

Shortage Depends on value of

Use Consigned First in Supplier

Consignment Control

If Yes:

CYC-CNT or TAG-CNT

RCT-PO, CN-ISS

If No:

CYC-CNT or TAG-CNT

CYC-CNT or TAG-CNT Surplus Surplus is nonconsigned.

Exclude consigned

Shortage Shortage is reduction of non-consigned.

Surplus Surplus is nonconsigned.

CYC-CNT or TAG-CNT

CYC-CNT or TAG-CNT

Use Consignment Inventory Adjustment (5.18.25.21) to associate the surplus (non-consigned) inventory to a consignment order, if needed.


Reporting Supplier Consignment Inventory Data

The system automatically collects consigned inventory data during transactions. The Supplier

Consignment Inventory module provides several reports for collecting, locating, tracking, and reviewing consigned inventory. These reports are designed to clearly show data for consigned and consumed inventory.

A number of reports let you evaluate accounts and track inventory movement from its initial

receipt to ownership transfer or consumption. Table 4.4 shows reporting tools available in Supplier

Consignment Inventory and a brief explanation of the data that each provides.

Consigned inventory data is also shown in many standard inventory reports and inquiries. For a list of these reports, see the Customer Consignment Inventory chapter in User Guide: QAD Sales.

Table 4.4

Reports and Inquiries in the Supplier Consignment Inventory Module

Menu Report Function/Purpose

5.18.2

5.18.6

Supplier/Item Controls Browse Displays data defined for consigned inventory items and suppliers.

Consignment Inventory Report Displays consigned inventory items of a product line by selected criteria including site, location, lot/serial number, ABC class, grade, assay %, status, expiration date, and other details.


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Menu Report

5.18.7

Function/Purpose

Consignment Inventory by Order Displays selected consigned inventory receipts sorted by PO. Displays with or without quantities and is sorted by:

(1) Site, customer, supplier, item, PO,

(2) Item, site, supplier, PO, or

(3) PO, item.

5.18.8

5.18.9

5.18.10

Consignment Usage Report

Consignment Usage Summary

Report

Consignment Usage Export

Report

Displays detailed inventory usage by selected criteria including PO, item, supplier, site, and usage date. Is sorted by:

(1) Site, supplier, item, PO,


(3) PO, item.

Displays inventory usage by selected criteria including PO, item, supplier, site, and date. Is sorted by:

(1) Site, supplier, item, PO,


(3) PO, item.

Displays inventory usage with the option to mark usage records as reported.

5.18.15

5.18.16

Aging Inventory Report by Order Displays inventory quantities and aging dates by purchase order.

Aging Inventory by Part Displays inventory quantities and aging dates by item number.

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User Guide: QAD Purchasing

Chapter 4

Supplier Consignment

Inventory

Overview of Supplier Consignment Inventory

Supplier Consignment Inventory Business Workflow

Supplier Consignment Programs

Consignment Process Summary

Planning and Setup

Update Control Settings

Create Supplier/Item Control Records

Set Up Consignment Accounts

Update Tax Rates

Update Settings for Sites and Locations

Managing Consigned Inventory

Creating Inventory Transaction History

Ordering Consigned Inventory

Receiving Consigned Inventory

Using Supplier Consigned Inventory

Making Inventory Adjustments

Processing Returns, Rejects, and Corrections

Managing Aged Inventory

Tracking Consigned Inventory During Inventory Counts

Reporting Supplier Consignment Inventory Data

Table of contents