Re: Consignment Inventory

from Al Macintyre - it may be that what You call "consigned" is not the same 
reality as what We call "consigned."

>  From:    dmorrison@stanleyworks.com (Morrison, Doug)
>  CC:  gcolegrove@stanleyworks.com (Colegrove, George)
>  
>  We are running BPCS 4.05CD and would like to know how others are handling
>  consignment inventory within BPCS.  

We are also running BPCS 405 CD.

For most of our customer parts, all the raw materials are ordered & paid for 
by us.
We have several facilities, some of which manufacture materials that are raw 
to other facilities.
For a few customers, they supply the raw materials we are supposed to use, 
but sometimes they are a bit disorganized, so there is the risk that we might 
run out of the raw materials involved,
We have a unique item class & MRP planner on this, so we can run reports for 
people that do not mix up the different kinds of raw materials, so for 
example, purchasing does not want to have the consigned stuff on their 
reports to review what we should be purchasing, and other people only want to 
see the status on re-supply orders.   There is a $ info side to this ... 
accounting wants lists of items in which profit cost figures are missing or 
not right, but let's not include consigned stuff in these lists.  We can send 
inventory reports to the customers to let them know what all we have on hand 
that is their stuff.

>  We currently have a consignment
>  warehouse setup within each facility.  When we receive the material in we
>  assign a lot number to it and store it in the consignment warehouse.  

We also have several warehouses in each facility - raw materials, WIP, 
finished goods, QC problems.  We are not using lot #s.

>  When
>  we use the material we move it from the consignment warehouse to the wip
>  warehouse and pay the vendor.  

We pay vendors based on terms associated with the sale ... some number of 
days after the vendor delivered it.  Consignment inventory is the property of 
the customer into which we are going to assemble the end product ... we never 
pay for that.  Stuff that one of our facilities makes for another of our 
facilities is paid for by virtual money.

At time of shop order launching, the raw material that is needed for any 
given order could be in the raw material warehouse, or it could be on the 
shop floor, because we use materials on reels that might have 100,000 feet or 
100,000 units on a reel, but one order might only need 10,000 feet ... which 
sometimes causes another problem if there are a lot of little batches in 
progress but only a few large reels.

>  The problem is with shop order allocation and
>  backflushing.  When the shop order is released against the wip warehouse 
the
>  material is still in the consignment warehouse so the shop order does not
>  allocate the material.  

Some human being has to physically move the material from the raw material 
warehouse into the WIP area so that the shop order can consume it ... 
although some misreporting might make it seem like we made a shop order 
without all the ingredients, in reality the materials were consumed & they 
got to the shop floor via INV510 transfer from raw material warehouse to 
where needed.

We hire & train some inventory control clerks who have systems in place ... 
if a factory foreman or woman needs some material & the clerk is not around, 
they are trusted to walk off with what they need, provided they write down 
the details, and then when the clerk returns, those transactions get keyed in 
real quick.

Our inventory reporting is almost real time.
Our shipping process is almost real time.
Our labor transactions are entered as a single batch once a day, except for 
the final transaction that put it into shipping.
Usually the inventory clerk keys in the day's labor transactions, using 
JIT600 which is a combination of SFC600 & the inventory transactions - one 
entry reports the labor, what we made & what we consumed.  If there is a 
problem entering the transaction - the inventory clerk is well placed to 
resolve it ... but I have heard no complaints of this nature ... lots of 
complaints, but none on allocations since we left BPCS/36.
Our shipping / billing drives on-hand negative for what was billed, then next 
day the production reporting gets caught up with yesterday's shipments.
However, most orders go through a series of steps or sub-assemblies between 
the time that the raw materials were consumed & the product is shipped out.

>  When the end item is shipped the material is in the
>  wip warehouse but since it was not allocated it does not get backflushed. 

There's a bunch of flags in the item master & other files that specify the 
rules you want the system to follow & we periodically have to tinker with 
them ... we do not have the problem you are describing.  We did have it on 
BPCS/36.

Hope my info has been somewhat of help.

Al Macintyre
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