Consignment Order Process Flow

Some mass merchants buy products from companies on a consignment basis. Products continue to be ordered via EDI orders and subsequently shipped to them. However, title to the inventory remains with the company until the mass merchant sells it. The company bears more financial risk in this consignment model, and must keep track of inventory at specific mass merchant/customer locations.

A customer consignment order is a combination of a sales order and a transfer order type.

Works Best as Type	Comments
Sales	Ship-to complexities (ship-to DC or direct to store, ship via bill of lading, ship via routes/stops, etc.)
Transfer	Inventory is decreased from the shipping warehouse, and then subsequently increased in a consignment warehouse that is associated with the customer/EDI partner.

This is the process flow for doing customer consignment orders:

Process	Step	Comments
Setup	Order Class Maintenance - Set up an order class using a customer consignment type.	The same customer could have products sold normally as well as those sold on consignment. These must be entered on different orders.
	Location Maintenance - Set up sales/shipping locations to be used for consignment customers.	This location will keep track of inventory on consignment with the customer. Make sure the general ledger resolutions are set up correctly.
	Product Location Maintenance - Set up for products on consignment at this customer location.	There should only be one unit of measure set up that should reflect the customer’s reporting unit of measure.
	EDI Trading Partner Maintenance - For EDI trading partner customers, indicate the consignment order class and consignment location to be used.	When EDI orders are received for consignment orders, this will be the order class and the location to which products are transferred.
	Customer Maintenance - Optionally indicate a customer consignment location if the customer is not an EDI trading partner.	Some non-EDI customers have consignment requirements as well.
Order Processing	EDI Order Import - Import the customer’s consignment order. After the order is created, the customer consignment location displays an on-order quantity.	The EDI map will reflect an element that indicates that this is a consignment type of order.
	Order Entry - The customer and transfer-to location are displayed on consignment orders.
	Pick Demand Create and Print and Pick Demand Confirm - No changes to the process of printing and confirming pick demands.
	Confirmed Pick Demand Inventory Adjust - No changes to this process.
	EDI 856 and UCC 128 labels - No changes to this process.
	Invoice Create and Print - Select the Prep Consignment Orders radio button.
	EDI Invoice Export - The EDI invoice is still needed by the customer to keep track of the quantity shipped and related unit price information (especially when prices change) for remittance purposes.
	Invoice Post - Select a new option labeled Customer Consignment. This removes the inventory from the warehouse and puts it into inventory in transit on the general ledger.	Make sure your general ledger resolutions have been set up properly.
Customer Receives Inventory	Receiving Entry - The timing of entering this information will be different from customer to customer, depending upon whether they provide EDI product activity information.
	Inventory Receipt Post - This removes inventory from inventory in transit and adds it to the inventory general ledger account set up for this customer consignment location.
Customer Consignment Sales Reporting	EDI Product Activity Import - On a periodic (typically weekly) basis, an EDI product activity file is received, listing quantity sold/returned information.	The quantity sold information is used to create a sales order import against the customer’s consignment location.
	Invoices are created and posted after the normal order processing cycle.
Customer Payment Remittance	The customer sends in the remittance for the products sold.	Generally, a spreadsheet is sent outlining the details of the payment remittance; this payment is applied against the customer invoices created.
	Resolve pricing timing differences.	If a product’s price changes, there will be a need to create additional invoice or credit memo transactions from the customer consignment location to apply the payment correctly.
Customer Returns Products	Upon the receipt of a return, a transfer order is created to move the product from the customer’s consignment location to the warehouse where it is being returned. After it is in the warehouse, it can be stock adjusted for damage, etc.	A return of a consigned product is just a transfer back to the warehouse from the customer’s consignment warehouse.