Consignment Processes: Overview of Business Documents
In consignment processes, the buyer must inform the seller when the event that triggers transfer of ownership occurs.  The most common triggering event is the consumption of the inventory, either by using that inventory to product product, transferring the inventory from one location to another, or selling the inventory. 

Either for the consumption of consigned inventory, or the consumption of non-consigned inventory, there is no one "transfer-of-ownership" business document.  Any of several business documents may be used and the choice depends on the consignment and/or replenishment scenario, which related business processes are associated with the inventory consumption.

• Example 1:  If inventory is consigned to a retailer, reseller or distributor, the consumption (sale to a consumer) will be reported in a sales report.  If Inventory Model 2 or Inventory Model 3 is already being used, adding another field or two may be sufficient for reporting data required for reporting transfer-of-ownership.

• Example 2:  If inventory is consigned to a manufacturer who is going to use it to build product, consumption may be reported by adding a field or two to the inventory report in Inventory Model 1.

• Example 3:  If inventory is consumed in a supplier-managed inventory program, the consumption may be reported via an inventory report in Inventory Model 1 or as part of an the Consumption Schedule used to transport other SMI data.

Alternatively, it may be that the seller needs transfer-of-ownership events reported separately, and/or with different timing than the base business message.  In this case, a different message may be used for reporting the transfer-of-ownership event, or a different flavor of the an existing business message may be used.

• Example:  The seller receives data on inventory levels in the consignment warehouse once a week, but wants billable consumption reported daily.  One type or flavor of an inventory report message may be used for the weekly transmission, and another type or flavor of an inventory report used daily to report billable consumption.

• Consignment Scenario : Base Model - Consigned Inventory, Not for Resale (Seller Consigns to Buyer)
  • Option 1:  Add report of inventory consumption to Inventory Report in Inventory Model 1
  • Option 2:  Send separate report of inventory consumption per Inventory Model 4
  • Option 3:  Resale of consigned inventory included in Sales Report, with end-customer detail - Inventory Model 2.
  • Option 4:  Send separate report to report sale of consigned inventory per Inventory Model 2 with report coded to indicate that it contains only report of consigned inventory sold.
  • Option 5:  Resale of consigned inventory included in Sales Report, no customer detail reported - Inventory Model 3.
  • Option 6  Send separate report to report sale of consigned inventory per Inventory Model 3 with report coded to indicate that it contains only report of consigned inventory sold.

Related information:

• Business Documents for Inventory Management Components
• Business Documents for Order and Release Components
• Sales Reporting Scenarios
• Financial Scenarios