| # Consignment in Sales and Procurement You can use consigned inventory, for which inventory ownership and storage are handled by different parties, and select either a basic or extended consignment setup. Note: Both setups can be used in Vendor managed inventory (VMI). Extended consignment In an extended consignment setup, vendor managed inventory (VMI) settings are laid down in a terms and conditions agreement between business partners. Therefore, if you want the item ownership to be consigned, in the Order Terms and Conditions (tctrm1130m000) session, set the Payment field to Pay on Use for a combination of item, business partner, and warehouse (Procurement) or Ship-to Warehouse (Sales). When a (replenishment) order/schedule is created for the defined combination of item, business partner, and (ship to) warehouse, the Payment field on the order line/ schedule (line) is set to Pay on Use, as defaulted from the terms and conditions. If consignment inventory is consumed, the consumption can be linked to an existing order/schedule. For each consumption, the following is generated: Procurement A purchase payable receipt that is linked to an existing receipt in the Purchase Payable Receipts (tdpur4130m000) or Purchase Payable Receipts for Schedules (tdpur3118m000) session. Sales A consumption line that is linked to an existing delivery in the Inventory Consumption - Lines (tdsls4640m000) session. After the consumption line is processed in the Process Inventory Consumptions (tdsls4290m000) session and invoicing is required, in the Sales Order Invoice Lines (tdsls4106m100) or the Sales Schedule Invoice Lines (tdsls3140m200) session, an invoice line linked to the sales order/schedule line is created for the consumption. With extended consignment, you directly link the payment/invoicing for a consumption of consignment inventory to the replenishment order or schedule. The price for the payment/invoicing of consigned inventory is based on the price that is valid at the moment of replenishment or consumption, which you can define in the Price Determination Based on field of the Order Terms and Conditions (tctrm1130m000) session. Note If LN cannot link the consumption of consigned inventory to an existing order or schedule, the following happens: Procurement A Purchase Payment order is automatically generated. If no receipt is available yet, based on the number group for warehouse receipts, a receipt is generated in Procurement and a purchase payable receipt is created. Sales A Consumption order is automatically generated based on the Consignment Invoicing Order Type field in the Sales Order Parameters (tdsls0100s400) session. Basic consignment In a basic consignment setup, the order and schedule procedures are split into a replenishment part and a payment/invoicing part. Specify the following: Purchase order procedure In the Purchase Order Type - Activities (tdpur0694m000) session, create separate Consignment Replenishment and Consignment Payment order types and define their activities. Enter the order types in the Order Type for Consignment Replenishment and Order Type for Consignment Payment fields of the Purchase Order Parameters (tdpur0100m400) session. Purchase schedule procedure Select the Consigned check box in the Purchase Contract Lines (tdpur3101m000) session. In the Price Determination Based On field of the Purchase Order Parameters (tdpur0100m400) session, define how the price for the payment of consignment inventory is determined. Sales order procedure In the Sales Order Type - Activities (tdsls0694m000) session, create separate Consignment Replenishment and Consignment Invoicing order types and define their activities. Consignment replenishment If consigned inventory must be replenished: Procurement You handle the purchase orders/schedules up to the receipt of the goods. You need not pay the goods before consumption, so no invoice is created yet. Sales You handle the sales order up to the delivery of the goods. You need not invoice the goods before the customer uses them, so no invoice is created yet. You can only use the consignment replenishment part of the order/schedule procedure to replenish the consignment inventory. Consignment payment/invoicing If consigned inventory is used: Procurement You must pay for it. Carry out the consignment payment part of the purchase order/schedule procedure. If you consume consigned inventory, a Purchase Payment order is automatically generated. For each consumption, a purchase payable receipt is linked to the purchase order line in the Purchase Payable Receipts (tdpur4130m000) session. Sales You must invoice the customer for it. You must manually create a Consignment Invoicing sales order. Caution! In a basic consignment setup, the payment/invoicing for a consumption is not directly linked to the replenishment order or schedule. Related topics Vendor managed inventory Overview of VMI business scenarios Inventory ownership in Warehouse Management Inventory consumption handling Consignment Overview of terms and conditions Purchase organizational data Purchase order procedure |