Consignment Purchase Orders

date: Thu, 1 Mar 2007 12:22:26 +0200
from: frank.shaw@xxxxxxxxxxxx
subject: [BPCS-L] Consignment Purchase Orders

We require a method whereby we can place a purchase order for stock items 
for which we expect receipt of stock but that is where the chain of events 

stop.
No creditors invoice will ever be captured against these orders as these 
stock items are managed on behalf of a third party and they only get paid 
once the stock is sold.
At month end we programmatically perform the following on both HPH and 
HPO:
change the status in both HPH and HPO to '3'.
make the qty received and qty costed the same as qty ordered.

The purchasing month end then purges these records.

We would manage this workaround easier if volumes weren't so large but we 
literally have thousands monthly. 
 
Any ideas/input/feedback would be welcomed.
 
Kind regards,

Frank Shaw
Clover Information Services
Tel: +27 11 758 5380
Mobile: +27 82 451 0256
Fax: +27 11 758 5300
Email: frank.shaw@xxxxxxxxxxxx

------------------------------
date: Thu, 1 Mar 2007 09:22:23 -0600
from: "Milt Habeck" <mhabeck@xxxxxxxxxx>
subject: [BPCS-L] Consignment Purchase Orders

Hi ...

This is intriguiging.

So, do you process a receipt transaction <<yes>> and then hold the 
consignment items 
in BPCS inventory with a zero inventory value? <<no>> Are the consignment 
inventory 
counts held in BPCS <<yes>>?

Do shipments from Clover to the ultimate customers generate revenue for 
Clover in the form of some sort of per-unit handling fee <<yes>> rather 
than the 
typical sales less COSales = gross profit revenue cycle? Said another way, 

is your A/R collected from the owner of the consignment inventory <<no>> 
rather 
than the enterprises that receive shipments of the inventory from your 
warehouse? If these guesses are correct, then it seems as if the owner of 
the inventory cuts an invoice to its customer once you tell that 
enterprise 
that a shipment has departed from your door.<<no, we generate our own 
invoices to our customers on behalf of the consignment owner and the keep 
our percentage handling fee>>.

If you do process a BPCS receipt transaction, I'm curious how you get the 
inventory removed from BPCS when you ship it <<normal billing>>.

All these questions prove that I'm in the dark about your business process 

... but the point that keeps popping into my head is that you may not be 
doing yourself any favors by processing the purchase orders in BPCS. Why 
can't the owner of the consignment inventory cut POs that are drop shipped 

to you? <<they are not technically able to>> They would have to have some 
sort of PO on their system anyway if 
they wanted to 3-way match before paying their supplier <<they are 
manufacturers, no 3 way match needed>>.

If you can't convince the consignment inventory owner to cut his own POs, 
then maybe you need a blanket PO processed outside of BPCS and manage 
releases against the PO using a Kanban signal.<<It is easier doing it the 
way we are because inventory is being managed within BPCS INV, PUR and 
ACR).

En pocas palabras, don't let the business process owner at Clover convince 

you that this is a BPCS software problem.

Peace to you,

Milt Habeck
President
Unbeaten Path
www.upisox.com

North American  (262) 681-3525
International (888) 874-8008
---------------------------------------------------------------------------------------------------
date: Thu, 01 Mar 2007 16:13:59 +0000
from: "DANIEL WARTHOLD" <daniel.warthold@xxxxxxxxxxxx>
subject: Re: [BPCS-L] Consignment Purchase Orders

Just throwing some ideas, if the stock in consignement is not owned, I 
think 
it should not be received under a PO, and should not create accruals for 
invoices to receive <<no accrual in ledger>>, it should not create 
inventory assets in the balance 
sheet <<it does not>>, and should not create invoices when shipped out 
<<it must in order to collect revenue from our customers on behalf of the 
consignment owner>>. I think the 
quantities on hand and the in and out movements should be accounted for 
with 
another kind of transaction: lerhaps some kind of miscellanous receipt or 
stock adjustment. The warehouse should not be included in the GL <<we are 
excluding this stock from the warehouse value via a manipulation of the 
reason code>>. Also, the 
company is giving a service, so their revenues should be invoiced with a 
non-inventory service item, not the inventory items <<revenue is 
calculated on sales value not on inventory items moved, but we still need 
to manage inventory levels and movements>>.

Daniel Warthold
------------------------------
Al, It appears that you have the same issues as us with the 
clearing/housekeeping of HPH and HPO. Our costing and gl entries is not a 
concern.

A summary of the part of the business in question:
Clover is a dairy business and we manufacture mainly milk related products 
such as yogurts, milk, cheese etc.
We have teamed up with a large chicken producer (amongst other 
producers/manufacturers)to enable our customers to be able to include 
chicken with their orders. 
We receive and hold their inventory but they only receive payment when our 
customers have been invoiced.
The main issue we have is the housekeeping of HPH and HPO.
Many thanks for your contributions.

Kind regards,

Frank Shaw
Clover Information Services
Tel: +27 11 758 5380
Mobile: +27 82 451 0256
Fax: +27 11 758 5300
Email: frank.shaw@xxxxxxxxxxxx