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<ManualTopic ID="/baanerp/wh/onlinemanual/000493" xml:lang="en">
   <Header>
      <Title>Consignment</Title>
      <Keyword type="header" order="d1e2615309">
         <Level1>VMI</Level1>
         <Level2>basic</Level2>
      </Keyword>
      <Keyword type="header" order="d1e2615314">
         <Level1>Consignment</Level1>
         <Level2>basic setup</Level2>
      </Keyword>
   </Header>
   <AimSection ID="Full_VMI">
      <Paragraph>The customer retrieves components from stock that is owned by
		the supplier, but managed and planned by themselves.</Paragraph>
      <Paragraph>The <Link href="/baanerp/wh/glossary/glossary#000471" role="glossary">VMI warehouse</Link> is modeled as an <Link href="/baanerp/wh/glossary/glossary#000467" role="glossary">administrative warehouse</Link> in the supplier's
		ERP system because they are the owners of the goods. In the customer's ERP
		system, the VMI warehouse is modeled as a regular warehouse, because they are
		responsible for warehouse management.</Paragraph>
   </AimSection>
   <ProcedureSection>
      <Steps>
         <Step ID="Suppl_planning_by_cust_step1">
            <StepTitle>Customer plans supply</StepTitle>
            <Paragraph>The customer plans the component supply required for
			 production. The planning is based on the customer's current inventory, the firm
			 demand, that is, outstanding sales orders or sales schedules, and the
			 unconfirmed forecasted demand.</Paragraph>
            <Paragraph>The resulting supply plan consists of a range of dates and
			 times on which particular quantities are to be delivered. Ths supply plan
			 includes a firm part and a planned, that is, unconfirmed part. In the contract
			 between the supplier and the customer, the dividing line between firm and
			 planned demand is laid down. Typically, the demand dated before a particular
			 time fence is to be regarded as firm demand.</Paragraph>
            <Paragraph>If the supply plan includes firm and planned demand, the
			 customer typically uses <Link href="/baanerp/td/glossary/glossary#000000000000011" role="glossary"
                     Update="No">purchase schedules</Link>. If it
			 only includes firm demand, the customer uses purchase orders.</Paragraph>
            <Paragraph>The customer will not request replenishment while having
			 sufficient owned stock. If the owned stock partially covers the demand, the
			 customer allocates owned stock before supplier-owned stock.</Paragraph>
            <Paragraph>The customer sends the supply plan to the
			 supplier.</Paragraph>
         </Step>
         <Step ID="Suppl_planning_by_cust_step2_supp_commits">
            <StepTitle>Supplier commits to supply plan</StepTitle>
            <Paragraph>The supplier checks whether they can fulfill the customer's
			 requirements and commits themselves to the quantities that they can deliver
			 according to the date/time schedule of the supply plan.</Paragraph>
            <Paragraph>Optionally, the supplier commits themselves to the firm
			 demand and the planned demand. For the planned demand, the supplier commits
			 themselves to days rather than times. The supplier typically stores the
			 committed and planned quantities as a <Link href="/baanerp/td/glossary/glossary#SalesSchedu_td" role="glossary">sales schedule</Link> in their ERP system.</Paragraph>
            <Paragraph>The supplier notifies the customer of the quantities they
			 can commit themselves to. If the supplier cannot commit themselves to all
			 requested quantities, the customer can look for other or additional suppliers,
			 or alternative items.</Paragraph>
         </Step>
         <Step ID="Suppl_planning_by_cust_step3_calloff_by_cust">
            <StepTitle>Customer sends call-off</StepTitle>
            <Paragraph>In the purchase schedule, the customer enters a call-off
			 against the committed quantities. In this scenario, replenishment of the
			 component stock is triggered by purchase schedules or purchase orders and
			 EDI/Rosettanet messages.</Paragraph>
         </Step>
         <Step ID="Planning_by_suppl_step3_supp_replenishes_cust_stock">
            <StepTitle>Supplier replenishes the customer's stock</StepTitle>
            <Paragraph>The supplier replenishes the <Link href="/baanerp/wh/glossary/glossary#000471" role="glossary">VMI warehouse</Link> as required.</Paragraph>
            <Paragraph>The customer registers the receipt of the goods in the VMI
			 warehouse.</Paragraph>
            <Paragraph>To notify the supplier of the receipts, the customer sends
			 RosettaNet-XML message Inventory Report/ Receipt to the supplier. This message
			 triggers an inventory receipt to update the inventory levels in the supplier's <Link href="/baanerp/wh/glossary/glossary#000467" role="glossary" Update="No">administrative warehouses</Link>.</Paragraph>
            <Paragraph>Also, in the supplier's ERP system, a consumption record can
			 be created in the <GUIRef href="/baanerp/td/sls/tdsls4140m000" role="session">Inventory Consumptions (tdsls4140m000)</GUIRef> session, either
			 manually or electronically after a call-off message from the customer. This
			 consumption record handles the invoicing in the <GUIRef href="/baanerp/ci/sli" role="module">Sales Invoicing</GUIRef> module
			 for the supplier. LN links the consumption record to the originating sales order to the customer. For more information, refer to <Link href="/baanerp/td/onlinemanual/000451" role="manual">Inventory consumption - process overview</Link>.</Paragraph>
         </Step>
         <Step ID="Planning_by_suppl_step4_invoicing_by_suppl">
            <StepTitle>Supplier sends invoice to customer</StepTitle>
            <Paragraph>Because the supplier owns the components on receipt, the
			 supplier invoices the customer at regular intervals; self-billing by the
			 customer is another option in this scenario.</Paragraph>
         </Step>
         <Step ID="Planning_by_suppl_cust_issues_stock">
            <StepTitle>Customer issues stock</StepTitle>
            <Paragraph>The customer issues components for production or sales,
			 because the customer is responsible for warehouse management for the VMI
			 warehouse.</Paragraph>
            <Paragraph>In the <GUIRef href="/baanerp/td/sls/tdsls4290m000" role="session">Process Inventory Consumptions (tdsls4290m000)</GUIRef> session, the supplier processes the
			 consumption record to create an invoice line linked to the originating sales
			 order line. The invoicing lines are shown in the <GUIRef href="/baanerp/td/sls/tdsls4106m100" role="session">Sales Order Invoice Lines (tdsls4106m100)</GUIRef> session.</Paragraph>
            <Paragraph>If during the process no originating sales order line is
			 found that can be linked to the consumption record, LN generates a sales
			 order of type <GUIRef href="/baanerp/td/sls/tdsls0594m000#tdsls094.cnsi" role="manual">Consignment Invoicing</GUIRef> to create invoicing lines.</Paragraph>
         </Step>
         <Step ID="Planning_by_suppl_cust_notifies_suppl_of_issues">
            <StepTitle>Customer pays supplier</StepTitle>
            <Paragraph>The customer pays the supplier.</Paragraph>
         </Step>
      </Steps>
   </ProcedureSection>
   <RelatedTopics>
      <SectionTitle>Related topics</SectionTitle>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000500" role="manual">Overview of terms and conditions</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/wh/onlinemanual/000462" role="manual">Overview of VMI business scenarios</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/wh/onlinemanual/000461" role="manual">Inventory ownership in Warehouse Management</Link>
      </RelTopic>
   </RelatedTopics>
</ManualTopic>