Managing Customer Consignment Inventory Quovera Confidential 1 Managing

Managing Customer Consignment Inventory Quovera Confidential 1

Managing Customer Consignment • Agenda 1. Consignment scenarios 2. Benefits of consignment programs 3. Determine products for consignment and agreements 4. Internal controls for consignment 5. Managing customer consigned inventory in Oracle – Bill Only, Inventory Interface Workflow 1. Oracle Set Ups 2. Manual Consignment Pull Order Process 3. Processing Errors 4. Customizations to Improve Process 6. Questions and Answers Quovera Confidential 2

Managing Customer Consignment Scenario Quovera Confidential 3

Consignment Scenarios • Consignment Scenarios Ø Customer consigned inventory at customer warehouse Ø Customer consigned inventory at 3 rd party warehouse Quovera Confidential 4

Consignment Definition Customer Consigned Inventory is a practice where you place and maintain goods belonging to you at your customer locations. Customer does not take ownership of product until used (pulled). Quovera Confidential 5

Managing Customer Consignment Benefits of Consignment Program Quovera Confidential 6

Benefits of Consignment Program • Benefits of Consignment Program ØCustomer ü Customer Satisfaction ü Reduced time to Market for new product ü Shorter lead times ü Competitor edge ü Service parts for critical equipment ü Save expedite freight costs Quovera Confidential 7

Benefits of Consignment Program • Downside of Consignment üInventory management ( scraps, cycle counts, replenishment) üManaging of obsolete parts üTimely Pull notifications üShipment notice (3 rd Party Warehouse) üCustomer forecast and supplier production schedule conflicts üInvoice and payment Quovera Confidential 8

Managing Customer Consignment Products Quovera Confidential 9

Consignment Products • Determine products for Consignment Ø Customer Ø Products with high-degree of demand uncertainty ØSupplier Ø Products with high-degree of sales potential but demand is not reasonably known or stable ü New unproven products ü The introduction of existing product lines into new sales channels. ü Very expensive products where sales are questionable. Quovera Confidential 10

Consignment Products • Consignment product characteristic üTransparent to the user üRequires no special handling in Shipping and Receiving üViewable as available in inventory üNon-nettable and not available for planning üCan be cycle counted Quovera Confidential 11

Managing Customer Consignment Agreements Quovera Confidential 12

Consignment Agreements • Consignment Agreements ü ü ü ü Establish min/max inventory levels with a periodic review Determine criteria for consigned item Establish point of transfer of ownership Frequency and means of communication for consumption advice Consumption policy (eg. FIFO) Modified payment terms and agreed payment process Address stolen, lost, damaged, removal or destroyed consigned material Means to share and review customer forecast and schedule Determine who’s responsible for consignment material overhead cost (taxes, insurance…) Consigned item return policy Determine responsibility for the physical security of the consigned item storage location. Inspection and cycle counting Delivery performance measurements (Based on stock outs) Quovera Confidential 13

Managing Customer Consignment Internal controls For Consignment Quovera Confidential 14

Internal Controls for Consignment • Internal control for consignment üEstablish procedure to account for consigned goods movement üEstablish billing, shipping and receiving procedure with necessary approval üRecord adjustment for shrinkage and lost üSegregate consigned and non-consigned goods üSupplier agreement must be approved by company lawyers and does not violate any government regulations üReconciliation and confirmation of consigned goods by consignee Quovera Confidential 15

Managing Customer Consignment Oracle setups for Customer Consigned Inventory Quovera Confidential 16

Consignment Workflow Billing workflow Send consumption advice to supplier Create consignment sales order for consignment customer Generate invoice for billings Replenishment workflow Run min/max planning for consignment subinventory with restock = ‘Yes’ Customer Import and create internal requisition Create internal sales order via order import Pick release and ship goods to consignment location Supplier Quovera Confidential 17

Inventory and Item Setups Define Location Quovera Confidential 18

Inventory and Item Setups Define Consignment Organization and Assign Location Quovera Confidential 19

Inventory and Item Setups Define Consignment Sub-Inventory Quovera Confidential 20

Inventory and Item Setups Enable Item in Consignment Org Quovera Confidential 21

Inventory and Item Setups Set Min/Max value for consigned Item Quovera Confidential 22

Inventory and Item Setups Move Inventory into Consignment Sub. Inventory Quovera Confidential 23

Price List Setups Define Consign Customer Price List and Assign Items Quovera Confidential 24

Order Management Setups Define Order Type Quovera Confidential 25

Order Management Setups Assign Line Flow - Bill Only with Inventory Interface (Generic) Quovera Confidential 26

Order Management Setups Workflow Diagram (Generic) Quovera Confidential 27

Order Management Setups Assign Document Sequence to Order Type Quovera Confidential 28

Order Management Setups Enable Valid Ship Method to Consignment Org Quovera Confidential 29

Customer Master Setups Assign Order Type, Price List, Consignment Org and Valid Ship Method Quovera Confidential 30

Managing Customer Consignment Order Process Order process for Customer Consigned Inventory Quovera Confidential 31

Order Process Enter Order Header Details Quovera Confidential 32

Order Process Verify Consignment Warehouse Defaults Quovera Confidential 33

Order Process Enter Line Details Quovera Confidential 34

Order Process Enter Consignment Sub-Inventory on Line Quovera Confidential 35

Order Process Schedule Line Quovera Confidential 36

Order Process Book Order Quovera Confidential 37

Order Process Line Status Goes to Fulfilled Quovera Confidential 38

Order Process Workflow Proceeds to Invoice Interface Quovera Confidential 39

Order Process Line Status Goes to Closed Quovera Confidential 40

Managing Customer Consignment Invoice Process Invoice process for Customer Consigned Inventory Quovera Confidential 41

Invoice Process Run Autoinvoice Quovera Confidential 42

Invoice Process View Invoice Quovera Confidential 43

Verify Inventory Decrement View Material Transaction Quovera Confidential 44

Managing Customer Consignment Replenishment process for Customer Consigned Inventory Quovera Confidential 45

Replenishment Process Run Min-Max planning report Quovera Confidential 46

Replenishment Process Create and approve internal requisition Quovera Confidential 47

Replenishment Process Create internal sales orders Quovera Confidential 48

Replenishment Process Order import Quovera Confidential 49

Replenishment Process Pick and Ship Confirm Replenishment Inventory Quovera Confidential 50

Verify Inventory Increment View Material Transaction Quovera Confidential 51

Process Errors/Issues Booking Order with No Sub-Inventory Quovera Confidential 52

Process Errors/Issues Line Will Go to Booked without Sub. Inventory – Workflow Stops Quovera Confidential 53

Process Errors/Issues Order Status Remains Booked-must reenter Quovera Confidential 54

Process Errors/Issues Workflow Error – No Sub-inventory or Inventory with Custom WF Quovera Confidential 55

Process Errors/Issues Booking Order with Not Enough Inventory – Line Status will Proceed to Fulfilled Quovera Confidential 56

Process Errors/Issues Line Status will Proceed to Closed and Order is Eligible for Invoice Quovera Confidential 57

Process Errors/Issues If you have No for Allow Negative, Inventory Transaction will get stuck in Transaction Interface Quovera Confidential 58

Process Errors/Issues Reconcile Inventory and Resubmit Quovera Confidential 59

Process Errors/Issues • Other Standard Types of Error Messages – Invalid Item – Invalid Shipment Method (OK for Manual Generic WF, errors in Order Import) – Item not found on Price List – Item not found on Secondary Price List Quovera Confidential 60

Possible Customizations • Add quantity check in WF • Added a second check in WF to flag over consumption of consignment inventory levels • Customize Sales Order Workflow Report • Create Custom WF Error Report • Create Table to Store Customer and Sub-Inventory Details for Automatic Processing • Create Order Import Error Messages for EDI Quovera Confidential 61

Possible Customizations Bill Only with Inventory Interface Workflow Customization Quovera Confidential 62

Possible Customizations Flow Stops if No Qty On Hand Quovera Confidential 63

Possible Customizations Status on Line Remains Booked until Inventory is Reconciled Quovera Confidential 64

Possible Customization Sales Order Workflow Report – Order lines Booked but not Fulfilled Quovera Confidential 65

Possible Customization Table to Store Customer and Sub. Inventory Details for Automatic Processing of EDI/Imported Orders Quovera Confidential 66

Conclusion • Standard Bill Only with Inventory Interface Workflow will work for Manual Order Entry without customization. Must understand: – Flow will fulfill and go to Invoice Interface and Closed with or without enough inventory – Need to manage Negative Inventory conditions – If user fails to enter Sub-inventory at time of booking – Order is stuck in Booked – Will not work for imported Orders – need to custom Quovera Confidential 67

Conclusion Q&A Quovera Confidential 68