Re: BPCS 4.05 CD Vendor Managed Inven -- BPCS-L

We also 405 CD
Perhaps I misunderstood you.
Hopefully some of these ideas are helpful.

We call something Consigned Inventory. (Consigned to us)
In our case some customers supply some raw materials we to use on their parts.
The customer owns those raw materials.

The customer does not have a good system of correlating supplying us with
our needs to fulfill their needs, so there is a risk that we could run out
of their raw materials while making their parts.  There is also a risk that
when they do a model change, there will be excess their raw materials left
over in our possession.

There is a variation on this where the customer has contracted with some
vendor to supply some raw materials, that the customer has paid for, direct
to the vendor.

We must have visibility to it.
We need to be able to inform the customer of our inventory of their stuff.

It is not OUR inventory in the GLD
We DO want to include it in MRP so that as we run low we can notify the
supplier in a timely manner.

It gets used up just like any other raw materials, through JIT600 labor
reporting.
It is included in our Annual Physical and regular Cycle Counting, just like
any other inventory.

Does it make sense to run this through PO, what transaction receive it in via?
Do you want to use a different transaction than the one involved in 3 way
match?

We have a number of specialized transaction effects used exclusively for
very unique events.

We mix it into the rest of our inventory in stock room, shop floor, because
productivity for the work force using any inventory from any source is the
name of the game.
The ONLY time we keep inventory separated is when it is mandated by some
customer, such as the military, or QC reasons.

We have a separate Item Class for it, so it shows up separate in GL.
We have a set of rules for our people what to do with that Item Class like
in BOM.
We carry it on our books with zero standard cost, zero actual cost.
Our various reports to list items with missing costs or other suspicious
things, exclude that item class.
They also exclude some other specialized classes, such as suspected
obsolete, phasing out.

One of our facilities has plenty extra warehouse space, so it has a blocked
off area that is designated as a location actually within the stock room
warehouse of a distant facility, which can request that THEIR inventory of
particular items be transferred to the stock room physically at the same
building as the owning facility.  Even though this is not physically same
place as the facility, it is treated as an extension of the stock room for
BPCS purposes.

However, we modified some MRP reports used in checking on what raw
materials might be needed.  The on-hand box shows how much is actually here
as opposed to in that other storage area, to help dispatch some as needed.

We also have to be careful when doing physical inventory.  Normally we do
100% of one facility one month end, then 100% of another facility another
month end, since we have a crew of people who are really good at doing
this.  This also means taking care of stuff logically in a facility but not
physically in it.

There's a similar kind of Inventory.
The Customer calls it Just In Time Inventory.
They phone us and tell us how much to ship right now.
They do not have as good a system as BPCS so it is kind of sporadic what
they ask for.
But it takes us several days to make it, so we have excess sitting in our
shipping warehouse based on their estimated needs, and not shipped out
until they say so.

I do not know how accounting manages this, because I would think that if we
have to make it in advance, we should be paid before actual shipment.

We have similar arrangement with some vendors.
For example when we run low on cartons of computer paper, and some
specialized forms, we call them to release some more of our order, and they
do not expect to have to wait until we call for them to be paid for the
paper they made for us.  In fact we pay extra for the use of their
warehouse space, so paper always available and we never run out.

I would think there should be a special category in the GL to show the
value of stuff that is owned by an entity actually in the possession of
another entity.  It is like an obligation to fulfill.

In another lifetime at another employer, we had arrangements with other
companies in our business, that we were in competition with (I do not know
what the Federal Justice Dept would have to say about this practice), in
which they designated part of their warehouses to store our inventory, and
we designated part of our warehouse to store inventory of our
competitors.  The reason for this was drop shipment in close proximity to
end customers.

We would get an order from some Asian customer, and we would have one of
our Asian competitors drop ship from a warehouse in the back yard of the
customer, for example.  On a monthly basis, or when special request, we
would exchange inventories of who had how much of whose inventory.

We have inventory warehouses for inventory in transit between our facilities.
Labeled TO the facility where it is headed.
We need to keep track of this inventory, but it is not available to MRP
while in transit.

The locations are names representing the vehicles of various employees.
When it leaves one facility, it is transferred to the vehicle.
When it arrives, it is transferred to stock room.
We run reports to verify nothing got forgotten in an employee vehicle,
since transferring the inventory that way is not the primary reason for the
employees commuting between our facilities.
We use same system for OUR inventory in transit via commercial transit
systems (e.g. UPS) between our facilities.
We used to have a very distant facility in which the location was an 18
wheeler.
If any accident in transit, we have list what's on the vehicle.

-
Al Macintyre (macwheel99@sigecom.net via Eudora)
http://radio.weblogs.com/0107846/

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>Good morning.
>
>We will probably have to figure a way to deal with
>"Vendor Managed Inventory" ( correct term? )
>   The vendor owns the inventory
>   The inventory is still in their warehouse
>   We want visibility to it
>   We do NOT want to consider it "on hand" for MRP
>   We do NOT want to count it or value it for G/L
>
>We are thinking about a separate warehouse
>in a separate facility in a separate company.....
>
>Any suggestions ??
>
>Peace,
>Jim Barry