Purchasing-- Consigned and Vendor Managed Inventory

 VMI Consigned Inventory

Consigned and Vendor Managed Inventory (VMI)

Overview of Consigned Inventory

Consigned inventory from supplier exists when inventory is in the possession of one party (a dealer, agent, distributor, and so on), but remains the property of another party (such as the manufacturer or primary contractor) by mutual agreement. Consigned inventory from Supplier refers to one type of consigned inventory practice where you receive and maintain goods belonging to one or more of your suppliers. Both suppliers and customers benefit through a consigned inventory strategy:

• Suppliers can compete on the basis of availability and delivery when finished goods are at the customer site, particularly when lead times are lengthy.
• Holding material on consignment reduces the lead time for items that might be required to fill sales orders.
• Customers experience increased inventory turns—thus, reducing funds invested in inventory. 
• Financial resources are free until customer commitments are ensured, or items are used in production.

VMI Process Overview

The VMI supplier monitors the current level of inventory items through access into the customer system (such as Oracle iSupplier Portal or Oracle Collaborative Planning). The view of inventory is restricted to items for which the supplier has VMI planning responsibility. The supplier can see the balance of on hand stock, in-transit quantities, open requisitions and purchase orders, and other information, such as forecasts.

A request results in the creation of an approved purchase requisition. The buyer can manually assign these requisitions onto a blanket purchase order with the VMI supplier, or set up the system to have this process automated. The supplier ships upon approval of the blanket release. When the goods are delivered to your site, the receipts are recorded and the supplier tracks all stages through delivery into stock.

The customer inventory or plant employees use material at any time. When the goods are transferred or placed into production, the material becomes part of internally planned goods—and the supplier no longer has visibility to that portion of stock. If the new VMI on-hand quantity is below thresholds, the supplier manually or automatically requests new shipments on behalf of the customer.

Using Vendor Managed Inventory with Consigned Inventory

 Vendor Managed Inventory (VMI) is a procurement and planning practice in which a company delegates key inventory management functions to its suppliers. Suppliers initiate a replenishment request based on current inventory levels and the customer forecasts. VMI benefits customers through greater service levels and reduced risk of stock-outs. A successful VMI program can provide trading partners with greater efficiency and lower cost, by eliminating the need for repetitive manual tasks involved in ordering commonly required items.

The table below lists the profile options that control Consigned Inventory and VMI

Consigned and VMI Profile Options :

Profile Option	Default	User Access	System Administrati on: Site	System Administrati on: Application	System Administrati on: Responsibili ty	System Administrati on: User
PO: Display VMI Warning,	Yes	No Access	Update	No Access	No Access	No Access
PO: Supplier Consigned Enabled,	No	No Access	Update	No Access	No Access	No Access
PO: VMI Enabled,	No	No Access	Update	No Access	No Access	No Access

PO: Display VMI Warning

Yes or No indicates whether a warning will be displayed when Vendor Managed

Inventory (VMI) item is being placed on a Purchasing document. Default is Yes, the

warning will be displayed.

PO: Supplier Consigned Enabled

Yes or No indicates whether inventory consignment from supplier features are enabled

in Oracle Purchasing.

PO: VMI Enabled

Oracle Vendor Managed Inventory: Yes or No indicates whether Vendor Managed

Inventory (VMI) is enabled in Oracle Purchasing.