|
EIDX/CompTIA Consignment Scenario V
Third-Party Warehouse, Seller Contracted
The seller has inventory deposited in a third-party warehouse
contracted by the seller. The inventory remains on the seller's
books and warehouse does not take ownership at any time.
To the buyer, the third-party warehouse is just another location
of the seller's. Legal terms for liability established between
seller and warehouse, and between buyer and seller.
Replenishment takes place per appropriate two-party
Consignment Inventory Management Model. When a buyer orders
from the seller, the seller sends a shipment order to warehouse.
Warehouse ships directly to buyer, and notifies the seller of the
event. Seller sends a shipment notification to the buyer per
appropriate Shipment Model; the buyer may optionally send receipt
advice. The warehouse performs inventory counts and sends inventory
reports and adjustment notices used to keep inventory levels and
status in synch with the seller.
Click here to view a larger image.
|
Step
|
Description
|
| 1. |
Inventory Management Model 8 - The
seller may produce goods that are stored in the third-party
warehouse, or may buy goods for resale that are stored in the
warehouse. The seller transfers goods to the warehouse
or has goods drop-shipped from its (the seller's) supplier to
the warehouse.
The seller notifies the Warehouse that product is being
transferred or shipped to that location.
The warehouse notifies the seller when the transferred or
shipped goods have been received.
|
| 2. |
Inventory Management Model 1 - (Optional)
Inventory is physically located at the warehouse facility.
The warehouse performs inventory counts and reports to seller
(scheduled, as-needed, or at seller request). Seller may invoice
for inventory shrinkage depending on the terms of the consignment
agreement. |
| 3. |
Debits and Credits Model 5 - If
inventory shrinkage is reported, the seller may request a debit
from the next payment to the warehouse. |
|
4.
|
Two-Party Consignment Scenarios and Replenishment Scenarios-
The the buyer (the seller's customer) may or may not have
products on a consignment program between the buyer and seller.
If there is a consignment program between buyer and seller,
the buyer and seller establish the appropriate two-party consignment
process, including appropriate replenishment (Order and Forecast)
models, and reporting of inventory balances.
For parts that will not be on a consignment program with
the buyer, the buyer and seller establish the appropriate
two-party replenishment process.
|
|
5.
|
Inventory Management Model 9 - Seller sends Shipping Order
to warehouse when parts need to be shipped to the buyer. Warehouse
ships parts to buyer. Warehouse sends Warehouse
Shipping Advice to let seller know parts have been shipped.
|
|
6.
|
Seller sends ship notice to buyer per appropriate Logistics
Scenario.
|
|
7.
|
Seller invoices buyer or payment is triggered per appropriate
Financial Scenario.
|
| 8. |
The warehouse invoices the seller
for services or payment for services is triggered per appropriate
Financial Scenario. |
|
9.
|
Inventory Management Model 10 - The warehouse sends inventory
adjustment advice to the seller to report any adjustments
due to inventory counts. If there is inventory shrinkage,
the seller may request a debit from money owed the warehouse
for services, depending on the terms of the consignment
agreement.
The seller may send inventory adjustment advice to the seller
to the warehouse to report a variance noted, to ask the warehouse
to put inventory on hold or reserve it for a specific customer,
notify of a product recall, etc.
|
Activity Diagram
Click here to view a larger image.
| Step |
Description |
| A. |
At start state A, the
seller has in-house inventory that is to be transferred to the
warehouse or has inventory in-transit that is being drop-shipped
from the seller's supplier. The seller at this point is
in the role of "buyer" using buyer-contracted warehouse
per Consignment Scenario 4. The seller is the depositor. |
| 1. |
Inventory Management
Model 8: The seller sends the warehouse a notification
that inventory is being shipped to it, either from the seller's
in-house stores or via drop-shipment from the seller's supplier
(the seller in this step is in the role of "buyer"
using buyer-contracted warehouse per Consignment Scenario 4).
The warehouse notifies the seller when the transferred or shipped
goods have been received. |
| B. |
At End State B, the
warehouse is now in possession of inventory that is owned by
the seller. Title to the inventory will not pass to the
warehouse at any time. |
| C. |
At Start State C, the
warehouse and seller have agreed that the warehouse will report
the status of the consigned inventory to the seller (scheduled,
as-needed, or at seller request). |
| 2. |
Inventory Model 1 -
The warehouse performs inventory counts and reports to
seller. |
| D. |
At End State D, there
are no billable shrinkages reported, so seller is not triggered
to request a debit from the warehouse for lost inventory; the
buyer and seller are in synch about the inventory levels in
the Consignment Warehouse. |
| 3. |
If shrinkages were reported,
seller asks for a debit to be taken against what it owes the
warehouse for services. |
| E. |
At End State E, the
seller has requested a debit from the warehouse and the warehouse
has responded. |
| F. |
At Start State F, the
buyer and seller have agreed upon terms and are ready to launch
a Replenishment Cycle. |
| 4. |
The Replenishment Scenario on this diagram is an example.
The the buyer (the seller's customer) may or may not have
products on a consignment program between the buyer and seller.
If there is a consignment program between buyer and seller,
the buyer and seller establish the appropriate two-party Consignment
Scenario, including appropriate Replenishment Scenario, and
reporting of inventory balances.
For parts that will not be on a consignment program with
the buyer, the buyer and seller establish the appropriate
two-party Replenishment Scenario.
|
| G. |
At End State G, the
buyer has received the seller's order acknowledgment and now
waits for a shipment of goods. |
| 5. |
Upon approaching the
promised delivery date, the seller sends a Shipping Order to
the Warehouse with instructions to ship goods to the buyer.
The Warehouse sends Warehouse Shipping Advice to let seller
know parts have been shipped. |
| 6. |
A Ship Notice is sent
to the buyer per the appropriate Shipment Scenario, and the
buyer notifies the seller when the goods have been received. |
| 7. |
Seller invoices buyer
or payment is triggered per appropriate Billing or Payment model. |
| H. |
At End State H, the
goods have been shipped to the buyer and the buyer has made
payment to the seller. |
| I. |
At Start State I, the
warehouse is ready to begin a billing cycle. |
| 8. |
The warehouse invoices
the seller for services or payment for services is triggered
per appropriate Billing or Payment model. |
| J. |
At End State J, the
payment has been made to the warehouse. |
| K. |
At Start State K, the
warehouse has determined that an inventory adjustment needs
to be reported to the seller. |
| 9. |
Warehouse reports inventory
adjustments to seller. Resolving discrepancies is usually
handled manually. |
| L. |
At End State L, there
are no billable shrinkages reported, so seller is not triggered
to request a debit from the warehouse for lost inventory. |
| M. |
At Start State M, the
seller has determined that it is necessary to request that the
warehouse make one or more inventory adjustments. |
| 10. |
The seller may send
Inventory Adjustment Advice to the seller to the warehouse to
report a variance noted, to ask the warehouse to put inventory
on hold or reserve it for a specific customer, notify of a product
recall, etc. |
| N. |
At End State N, the
warehouse and seller are in synch about the inventory levels
and inventory status in the Consignment Warehouse. |
|
contact
us 
