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EIDX/CompTIA ConsignmentScenario II
Consignment with Consumption-Based Supplier Managed Inventory
Supplier-managed
Inventory process. Buyer is in possession of inventory owned by
the seller. Buyer reports consumption (in-house), transfer or resale.
Report of consumption/transfer/resale triggers transfer of ownership
and billing/payment cycle; seller calculates
replenishment requirements based upon consumption information.
Optionally, seller may compare buyer’s planning forecast to
consumption data when evaluating requirements.
Buyer is typically a retailer selling to consumers or an end customer, such as
a prime contractor (a/k/a OEM) or Contract Manufacturer (CM), but may be a Distributor
or Value-Added Reseller. Seller may be a Component Supplier, Contract Manufacturer,
Distributor, etc.
| Step |
Description |
| 1. |
Pre-Order
Model 2: The buyer and seller negotiate the
terms for the consignment process and the related Blanket
Purchase Orders. The pre-order process includes
the establishment of pricing and a Terms and Conditions
Agreement. |
| 2. |
Buyer
issues Blanket Purchase Order (BPO) to seller per Order
Model 2 component of Replenishment
Scenario 6. |
| 3. |
The buyer
reports the transfer-of-ownership event. There
is more than one choice here because reporting an event
that triggers transfer-of-ownership in a consignment
process very often means using business message that
is already being exchanged, and may or may not require
the addition of a data element or two.
In this
Consignment Scenario, reporting of consumption or sales may
trigger replenishment and is therefore shown as occurring before
any shipment process. This is because the consumption
or sales data event is needed in order to determine whether
or not replenishment is required. It is assumed that
there is an initial stocking of the consignment warehouse before
the cycle of events described in this Consignment Scenario
begin. The following options are described
in more detail in the supporting
documentation:
|
| 4. |
If
supplier determines that replenishment is required during
the current planning cycle, the seller generates a release
against the buyer's BPO per the Order
Model 3B component of Replenishment
Scenario 6. |
| 5. |
Seller
transfers (ships) goods to consignment warehouse per
appropriate Shipment Model.
The Shipment Scenario here
is embedded within Order Model 3B because the
Shipment Notification document is serving a dual purpose
in Supplier-Managed Inventory, acting both as Ship Notice/Manifest
and as a "reverse
release," informing the buyer that a release has been
made against its BPO.
If a third-party warehouse
is used, see Consignment Scenario 4 -
Third-party Warehouse, Buyer-Contracted or Consignment
Scenario 5 - Third-party Warehouse, Seller-Contracted.
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| 6. |
Inventory
Management Model 1: (Optional) Inventory
is physically located at buyer’s facility. Buyer
performs inventory counts and reports to seller (scheduled,
as-needed, or at seller request). Seller may
invoice for inventory shrinkage.
The buyer may also use the
Inventory Report to report billable consumption of inventory. In
that case, Step 3 above may not be required, but at least
one of Step 3 or Step 6 is required.
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| 7. |
(Optional)
The buyer reports may report inventory adjustments, if
applicable. See Inventory
Management Model 10 or adjustments may be included
in Inventory Reporting per Inventory
Management Model 1 (Step 6). |
| 8. |
Financial
Scenario: Ownership transfers from seller
to buyer per contractual terms. Seller invoices
buyer or payment is triggered per appropriate Financial
Model. Seller may also bill for inventory shrinkage
per contractual terms. |
Activity Diagram
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