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Replenishing Consignment Inventory Using Inventory Adjustments

There are two ways in which consignment inventory can be replenished. The first method uses purchase orders and purchase receipts. With the second method, inventory adjustment transactions are used. The method that you choose will depend on who is responsible for maintaining the stock levels.

If your organization manages the consigned inventory, you will most likely choose the purchase order/receipt approach. This approach provides you with the most control and visibility of the status of the inventory. If the suppliers are managing their own inventory, you can choose to use the inventory adjustment approach.

This topic explains how to replenish consignment inventory using inventory adjustments.

This method still uses a replenishment requisition to generate the list of resources that need to be replenished. However, rather than issuing a purchase order and entering receipts, you must enter adjustments to update the balances with the supplier’s new quantities. The consignment adjustment transaction has the following unique characteristics:

•	The items are added to inventory at the supplier’s current consignment price.

•	A “supplier responsibility” reason for adjustment must be used. If the adjustment reason supports site-specific settings, the consignment responsibility might differ depending on the transaction site.

•	No accounting information is included on the transaction. The item is still owned by the supplier.

This process is significantly different than the process used to purchase regular items. Because of this, you might prefer to use the purchase order/receipt method, provided your purchasing system allows it.

See also Replenishing Consignment Inventory Using Purchase Orders and Receipts.

To replenish consignment inventory using adjustments:

•	A replenishment requisition is generated for the warehouse items. The replenishment process determines which items need to be reordered and includes them on the replenishment requisition.

When inventory adjustments are being used, you should create separate replenishment requisitions for each consignment supplier. Use the are replenished to inventory group options on the generate replenishment requisition dialog to limit the items replenished.

To create a replenishment requisition, see Replenishing a Warehouse or Creating a Manual Replenishment Requisition.

•	Review the replenishment requisition and forward a copy to the suppler. The printed replenishment requisition identifies the items that the supplier needs to replenish.

•	Manually close the replenishment requisition. See Manually Closing Requisitions.

•	Enter an inventory quantity adjustment for each item replenished. Select a “supplier is responsible for the adjustment” reason for the adjustments. See Adjusting Inventory and Adjusting Consigned Inventory.