Managing and Monitoring consignment inventory Process using Vendor Collaboration in Microsoft Dynamics 365 Finance and Operations: Part-5

Consignment inventory is inventory that’s owned by a vendor but stored at your site. When you’re ready to consume or use the inventory, you take over the ownership of the inventory.

This topic includes information about how to physically receive vendor-owned inventory on-hand without creating general ledger transactions, how to start a production process where the vendor-owned inventory can be physically reserved.

 and how to change the ownership of the raw material to be able to process the consumption as part of the production order processing. There’s also some information about how vendors can monitor consumption of their inventory using the vendor collaboration interface.

To Read earlier parts of the series:

Part-1, Part-2, Part-3, and Part-4

Overall Process:

Setup:

Scenario:

Company USMF has a consignment agreement with vendor 1001 for the product L0106O. Vendor consigned 1000 QTY at USMF and later 150 QTY used by USMF from the consigned inventory.

Step-1: Setup Inventory ownership

Navigate to, Inventory Management > Setup > Dimension > Inventory Owners

Step-2: Setup Tracking Dimension

Navigate to, Product Information Management > Setup > Dimension and variant group > Tracking Dimension and Attache this to the product

Note: This process works with only Moving Average and standard cost inventory valuation.

Process:

Step-1: Create Consignment replenishment order in Finance and Operations

Navigate to, Procurement and sourcing > Consignment > Consignment replenishment order > Select vendor and add lines to order

Step-2: Post Product Receipt and View Inventory transactions in Finance and Operations

Note: ownership of the inventory is with vendor.

Step-3: View On hand Consignment Inventory on vendor collaboration

Step-4: Change ownership of inventory for 150 Qty

Create Inventory ownership journal and post

Step-5: View Impact of Posted Journal in Finance and Operations

1. System will automatically create the purchase order for 150 QTY
2. System will transfer the ownership of 150 qty from vendor to USMF
3. Cost will be taken based on defined price on item master

Step-6: View Product received from consignment and purchase orders for consignment consumption on vendor portal

Step-7: Now Vendor can submit invoice against the Received purchase order

Note: How to submit vendor invoice using vendor collaboration Reda here

That’s’ it for this blog, we have covered all the processes using vendor collaboration.

Thank you!!! Keep reading and sharing!!!