Consignment Inventory

Additional Information
Reconcile Consignment Inv to G/L

The Consignment Inventory feature of Enterprise provides you with a tool to track Inventory between your Warehouse and a consigned location, which might be a Customer, one of your show rooms or one of your Sales Reps. The consignee is set up as a Customer in Maintain Customer Master (SU13) and the Order Entry/Invoicing modules are used to move stock between your Warehouse and the consignee.

  • Note: There is no tracking of lot/serial numbers directly within the Consignment Inventory master file. Only total quantities are tracked within Consignment Inventory.

Consignment Inventory is controlled through the assignment of special TAT codes on the Order/Invoice detail line. Depending on the TAT code assigned, stock will be affected in your Warehouse, in the consignment inventory file or in both. Depending on the setting of the TAT code update flags, there is an opportunity to assign an override GL account for Consignment Inventory. If the Consignment Inventory account is entered opposite the 'Update Cost of Sales' flag, then it overrides the normal Cost of Sales account defined in Company Control Initialization (CC00/Invoicing/General Ledger). If the Consignment Inventory account is entered opposite the 'Update Quantity on Hand' flag, then it overrides the normal Inventory Control account defined in CC00/Invoicing General Ledger.

TAT codes are created and maintained in Maintain T.A.T. Codes (IN02). Each TAT code contains a 'Consignment Code' (flag), which triggers special inventory update routines when that TAT code is assigned on an Invoice detail line. Here is an example of the set up for one of the commonly used consignment TAT codes:

IN02
Maintain TAT Codes (IN02)

There are four possible settings for the Consignment Code that are related to controlling Consignment Inventory. The available settings, suggested TAT codes and their usages are outlined in the following table:

Consignment Code Sugg.
TAT

Usage

A

 SEC Used to initially set up the Consignment master file.  A “dummy” invoice is processed for all products on Consignment referencing this TAT code. The impact of the transaction will update the Consignment quantity but will not alter inventory on hand balances (as reported by the Consignment print program and any Inventory print program).
B SHC Used when shipping stock out of inventory to a consigned location. Inventory on hand is reduced and consigned quantities are increased.
C SOC Used when stock is sold out of a Consignment location. An invoice is issued to the customer who received the goods. The invoicing program will prompt for entry of the Consignment customer’s code (i.e. a salesperson) once this TAT code has been entered. Consignment balances are reduced, not inventory on-hand balances.
D BIC Used when goods already on Consignment are to be billed to the Consignment customer. An invoice is issued to the Consignment customer; Consignment balances are reduced.

Note: If the TAT code being defined does not pertain to the control of Consignment Inventories, then select N for No Consignment in the Consignment Code field.

An example of the typical TAT code settings for Consignment Inventory is as follows:

TAT Description Unit
Demand		 Sales
Units		 Sales
Dollars		 Cost of
Sales		 Qty On
Hand		 Consignment
Code
SEC Set up Consignment N N N N N A
SHC Ship to Consignment N N N N Y B
 

Note: The N/Y setting will allow the entry of the G/L code for Consignment Inventory in the COS GL field; the On-Hand GL code field should be left blank in order to accept the regular Inventory GL account as defined in CC00/Inventory-General Ledger.
SOC Sold out of Consignment Y Y Y Y N C
 

Note: the Y/N setting will allow the entry of the GL code for Consignment Inventory in the On-Hand GL field; the COS GL code field should be left blank in order to accept the regular COS GL account as defined in CC00/Inventory-General Ledger.
BIC Bill Consignment Customer Y Y Y Y N D
 

Note: the Y/N setting will allow the entry of the GL code for Consignment Inventory in the On-Hand GL field; return through the COS GL code field in order to accept the default regular COS GL account.

Here are examples of how these TAT codes are used:

  • Establish Initial Consignment Inventory

    • A Direct Bill is issued to the consignee for the goods that are already in their possession; TAT code SEC assigned.
    • A no-charge Invoice is produced.
    • Consignment stock is increased; Warehouse stock is not changed.
    • No GL postings flow out of this transaction. The purpose is to build the Consignment master file. Which stores the consigned quantity and average cost of the consigned goods by consignee.
    • Typically a separate GL account exists for Consignment Inventory. If code SEC is used, ensure that the Consignment Inventory reconciles to the balance in the GL control account.

  • Ship Goods to Consignee

    • An Order is entered with TAT code SHC. This Order is automatically priced at 100% discount.
    • The no-charge Order is Invoiced.
    • Warehouse stock is reduced; consignment stock is increased.
    • Consignment Inventory is debited and Warehouse Inventory is credited using the Warehouse average cost.
    • An average cost is also maintained in the Consignment file (e.g. if you consign a Product out twice and the Warehouse average cost changes between those transactions, then the consignment cost will be an average of the incoming Warehouse costs).

  • Goods Returned from Consignee

    • A Credit Note is issued with TAT code SHC.
    • A no-charge Credit Note is produced.
    • Consignment stock is reduced; Warehouse stock is increased.
    • Warehouse Inventory is debited and Consignment Inventory is credited using the average cost from the Consignment file.
    • Note: If the goods were damaged, return them to inventory and then use IC50 to adjust them out of the Warehouse.

  • Goods Sold from Consignment

    • Consignee sells consigned stock to a third party.
    • A Direct Bill is issued to the third party Customer with TAT code SOC, which triggers the program to prompt for entry of the consignee Customer code.
    • Consignment stock is reduced; Warehouse stock is unchanged.
    • Demand statistics and Units/Sales/COS in the sales statistics are updated.
    • Cost of Sales is debited and Consignment Inventory is credited using the average cost from the Consignment file.

  • Bill Consignee for Goods

    • Consignee decides to purchase Inventory that has been consigned to them.
    • A Direct Bill is issued to the consignee with TAT code BIC.
    • Consignment stock is reduced; Warehouse stock is unchanged.
    • Demand statistics and Units/Sales/COS in the sales statistics are updated.
    • Cost of Sales is debited and Consignment Inventory is credited using the average cost from the Consignment file.

Managing Consignment Inventory

  • Display Product Availability (IC45/R2 Consignment Inventory) to display Consignments by product.

  • Customer Inquiries (SU45/R2 Consignment Inventory) to display Consignments by customer.

  • IC88 to print Consignment Report
    • With or without movement
    • With or without Consignment average cost

  • IC81 Inventory Evaluation with Restriction 5 - Include Consignments.

  • IC89 to purge zero quantity Consignment records.
 
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