Re: Consignment Inventory

Dear Al, I understand the concept of zero value in your inventory but how 
do you handle depletion of inventory and addition to inventory and type of 
transactions.  Secondly,  how do you handle purchase orders, receipts of 
inventory to your books,  to cost bill of material and payment to 
supplier. 
IN our scenario, we will  have the supplier fill an 18,000 tank not 
invoiced in a separate warehouse in BPCS for transfer to "day tanks" for 
our use but looking to minimize manual transactions to transfer in BPCS 
and handle PO receipt etc for inventory valuing and payment of invoices. I 
am thinking of using some kind of blanket Purchase Order,  zero value as 
no commitment until we use the material.  Where I am fuzzy on is handling 
transactions, visibility of consignment inventory not on our books.  Also 
this supplier will be operating in a VOMI (vendor owned and managed 
inventory) environment, they get telemetry readings daily and are 
responsible to keep product in the tank without running out.

Thanks
Teunis Eversen
Sika Corporation
eversen.teunis@xxxxxxxxxxxxx
201-933-8800 



message: 3
date: Tue, 27 Apr 2004 19:03:58 -0500
from: Alister Wm Macintyre <macwheel99@xxxxxxxxxxx>
subject: Re: Consignment Inventory

We are also 405 CD
We have supplier owned inventory mixed in with OUR inventory.
We use a particular item class to designate that it is consignment 
inventory, and we store it at zero cost.  I grant you that GAAP might not 
agree because it really does have value, and it is in our building and 
grounds. I think there may be an insurance liability to be able to show 
the 
value of what we have in our possession, even though not taxable.
With our approach the inventory is indistinguishable from other inventory 
needed by MRP shop orders erc.  The only distraction is reports showing 
inventory with zero cost may need adjustment to recognize that item class 
is A-Ok as zero, and in fact correct any that get costed in error.
We use warehouses for 4 categories of inventory:
Raw Material storage; Ready for Shipping; WIP; awaiting QC decision.

-
Al Macintyre  http://www.ryze.com/go/Al9Mac
Find BPCS Documentation Suppliers 
http://radio.weblogs.com/0107846/stories/2002/11/08/bpcsDocSources.html
BPCS/400 Computer Janitor at http://www.globalwiretechnologies.com/

, you wrote:
>Dear All,
>We are in the process of moving to a consignment type of inventory except
>the supplier will manage the inventory levels and insure supply and we do
>not own it until we use it.
>
>We are on 405cd and believe we need to set up a separate warehouse to 
keep
>off the general ledger and show as inventory.
>
>We want to be able to allocate from either shop orders or MRP, our 
problem
>is how to transfer the inventory to stock to withdraw from and pay
>invoices as per our contract and do in with the least of manual input 
form
>operations, purchasing, planning financial personnel.
>Any information as to type of setup and transactions to do this would be
>greatly appreciated.
>
>Our goal is to expand this for bulk tank liquid products as well as non
>liquid products
>
>
>Thanks
>Teunis
>
>Teunis Eversen Jr C.P.M.
>Corporate Purchasing Manager
>
>SIKA Corporation
>201 Polito Ave
>Lyndhurst, NJ 07071
>
>phone 201-933-8800 ext 4310
>fax 201-933-9379
>
>e-mail:  eversen.teunis@xxxxxxxxxxxxx
>
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