Re: Consignment Purchase Orders -- BPCS-L

We're running 6.04 Mixed mode with the 3 way match product retro fitted.

We use a specific item class for these consignment items. The items are
held in stock at standard cost but excluded from month end stock
valuations.

This means that we have the stock levels and values in the system and MRP
can run and place vendor schedules as though they are normal parts.

1 Goods received with normal U transaction.
2 Macroable event (driven by item class) used to bypass GL processing
for consignment items so no inventory or GRN accrual in the GL
3 Custom program runs each night to set GRN record to 'GZ' (complete)
for items with consignment class.
4 Goods consumed by back flush 'CI' transaction like normal items. GL
control account goes negative for this usage.
5 Report produced for vendor at month end of consumption so they can
raise invoice. Reconciled to GL inventory control account.
6 Invoice matched against PO. GL account clears down .

There can be cut off issues when you change to consignment inventory,
change prices or revert to normal trading again.

Just keep a cool head.

Paul Bogle
European IS Manager
+44 7979 745404

frank.shaw@clover
.co.za
Sent by: To
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.com@xxxxxxxxxxxx
Subject
[BPCS-L] Consignment Purchase
02/03/2007 14:24 Orders

Please respond to
SSA's BPCS ERP
System
<bpcs-l@midrange.
com>

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
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