Concepts Tasks Settings Replenishing Consignment Inventory Using Purchase Orders and Receipts 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 purchase orders and receipts. With this method, the standard inventory and purchasing functions are used: • 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. To create a replenishment requisition, see Replenishing a Warehouse or Creating a Manual Replenishment Requisition. • For warehouse items that have a consignment inventory group defined as their replenishment inventory group, the supplier’s consignment price is used. • Generate purchase orders to order the items that need to be replenished. The system creates a consignment-type order for the consigned items. To create a purchase order from a requisition, see Turning a Requisition into a Purchase Order. • If necessary, approve the purchase order and then send the order to the supplier. See Sending Purchase Orders for Approval, and Sending a Purchase Order to a Supplier. • After you receive the consigned items, create receipt transactions to add the items to inventory. The items are received into the supplier’s warehouse inventory group. To create receipt transactions, see Receiving Purchase Orders and Blanket Releases. The steps involved with the purchase order and receipt method are identical to replenishing regularly purchased items. However, there are some subtle differences in the information associated with the purchase order and receipt. The consignment purchase order line has the following unique characteristics: • The supplier’s consignment price is used. • No accounting information is included on the purchase order. The consignment receipt transaction has the following unique characteristics: • The items are received at the supplier’s consignment price. • No accounting information is included on the transaction. The item is still owned by the supplier. • The transaction is flagged as not invoiceable. The disadvantage of this method is the use of “phantom” purchase orders to initiate the reordering. If you are interfacing the APM materials system to a non-APM purchasing system, you must ensure that your purchasing system is capable of dealing with these phantom purchase orders. If not, you will have to use the inventory adjustments approach. See also Replenishing Consignment Inventory Using Inventory Adjustments.
