Working with Consignment Stock in Dynamics 365 Supply Chain Management

In Dynamics 365 Supply Chain Management (D365SCM) it is possible to work with inbound consignment stock. This means, that the vendor owns the stock until is has been consumed by the customer. In this blog post I will be exploring how to set up and work with consignment stock in D365SCM.

Consignment Stock Set Up

As mentioned above, consignment stock is owned by the vendor until it is consumed by the customer. This means, that when and a product is set up in D365SCM we must select a Tracking dimension group with the inventory dimension “Owner” activated as shown in the following screenshot.

In addition, we must associate the Owner inventory dimension value with supplier. This is done under Inventory management / Setup / Dimensions / Inventory owners. In the following example, I have associated vendor account “SAM-001” with inventory dimension value “SAM-001”.

This, essentially, is all the set up required to use consignment stock.

Inventory On-Hand View in Vendor Collaboration Workspace

In this example, I have set up item “SAM-003 Glat uPVC afløbsrør m/muffe – EN 1401” to use the “SAM-001” Owner inventory dimension. Therefore, when a vendor collaboration user for vendor “SAM-001” logs on, they can see on-hand stock for this item under Vendor collaboration / Consignment inventory / On-hand consignment inventory as shown below.

Replenishment Orders

Consignment stock is replenished through replenishment orders. These are found under Procurement and sourcing / Consignment / Consignment replenishment orders. In the below example, we have ordered 100 pieces from vendor “SAM-001”.

The vendor does not receive an order, but can see the requirement in the on-hand consignment inventory view in the vendor collaboration portal instead.

Product Receipt

Based on the requirement generated by replenishment order, the vendor can now send the required products. In the Arrival overview found under Inventory management / Inbound orders / Arrival overview the warehouse worker can see that we expect 100 pieces to arrive from “SAM-001” on a replenishment order as shown below.

The warehouse worker will perform a normal items arrival process from here.

This generates the below arrivals journal, which must be posted in the normal way.

As you can see in the above screenshot, the system automatically fills in the Owner dimension based on information on the replenishment order.

When we look at on-hand stock for item “SAM-003”, we can see that 100 pieces are now available.

The same information is also available in the vendor collaboration portal.

Since posting the arrival journal only recorded the goods as registered, we will now post a product receipt to formally receive the goods into stock. This is done from the replenishment order as shown below.

At this stage, the status of the stock transaction for the 100 pieces is “Purchased” as this screenshot shows.

However, since the stock is still owned by “SAM-001”, no ledger transactions have been generated at this point.

Consuming Consignment Stock through a Sales Order

In this example we will use a sales order to consume consignment stock. As the below screenshot shows, it is not possible to reserve against the consignment stock since it is not owned by Contoso.

Please note, it is possible to reserve against consignment stock not owned by Contoso from a production order line.

Change of Ownership

Therefore, before I can consume the consignment stock, I need to change ownership. This is done in a journal under Procurement and sourcing / Consignment / Inventory ownership change.

As the above example shows, I use the journal to change the ownership from “SAM-001” to “USMF” for 20 pieces. This results in the following two stock transactions.

The system has now automatically created a new purchase order (00000700) and set the status for this order to “Received”. Contoso now formally owns 20 pieces of “SAM-003” and a goods-received-not-invoiced (GRNI) accrual has been posted.

In my system, I am using the business event for product receipt to automatically generate an e-mail to vendors set up for collaboration. This is the e-mail received by the vendor:

Now the vendor knows that the ownership of the consignment stock has changed and they can invoice 20 pieces. This is the power of Power Automate.

In the vendor portal, the purchase order is now visible under Vendor collaboration / Consignment inventory / Purchase orders consuming consignment inventory as shown here.

The vendor can now use vendor collaboration invoicing workspace to generate an invoice based on the purchase order.

The Sales Order Revisited

Now, when I go back to the sales order and try to reserve the same lot (20 pieces), the system will now allow this and the sales order can be processed as the following screenshot shows.

Additional Information

For more information on how to work with consignment stock in D365SCM, please visit this link.