Consignment Pull Operations For Lean Supply Chain
Consignment operations at a typical HTDM organization form an integral part of the sales process. It is a strategic operation both from volume and revenue standpoint.
Business Requirement:
• Maintain stock in the customer owned warehouses in order to reduce the lead time.
• To meet the customer demand, based on their forecast, by replenishing stock in the customer owned warehouses.
• Export Control and legal compliance.
• Invoicing customers for product consumption from consignment locations.
In order to meet the business requirements, organization may choose to implement a solution via Oracle EBS.
Organization Structure:
• Consignment warehouses should be set up as separate internal organizations in the Oracle Inventory Module. This gives an advantage of explicitly tracking inventory at any given point in time.
• Specific nomenclature should be attached to the warehouse.
Order Entry:
• Manual Order Entry: The process starts with the user entering the consignment pull sales order upon receipt of pull information from a customer.
• Order Import: Alternatively, for EDI connected customers, the pull orders are directly imported into the system.
Based on the pull, the inventory status (on-hand) will be reduced in the consignment subinventory to reflect the current on-hand quantity. Appropriate inventory accounting entries should be passed. The order line (consignment pull order line) gets closed. An invoice will be generated for the shipped quantity. Appropriate invoicing accounting entries will be passed.
Stock Replenishment in Consignment Warehouse:
• Replenishment of the stock in the consignment (VMI) warehouse could be regulated and planned by a central planning engine, via a main warehouse. We can integrate Oracle E-Business suite with the Planning engine in order to achieve this. This could be a custom solution.
• IR-ISO cycle can be used to replenish the consignment warehouse.
• Depending on the proximity of the VMI warehouse from the main warehouse, the direct or in transit shipping networks are setup between the main and the VMI warehouses.
• We can also provide for internal requisitions that are imported via EDI using the Oracle Open Interface.
• Stock movement would have to be based on FIFO method of inventory management.
Export Control and Legal Compliance:
System can be modeled to support the export control regulations and the document printing requirements whenever the consignment warehouse is situated outside the host country.
Inventory Synchronization and Reporting:
• System can provide for Inventory Synchronization for the VMI warehouses using the EDI data sent by the warehouse.
• A number of reports can also be made available to support the consignment operation in the system.
There could be other specific business requirements like consolidated AR invoice generation that could be solutioned for. This means generation of one invoice for a period of time like one day, one week etc. that suite the business needs.
To summarize, one could leverage Oracle INV, PO, OM and AR to provide seamless integration to support the consignment operations at a typical HTDM organization, providing customization wherever necessary or desired.
