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Order Management Consigned Setup / Consignment Orders (Doc ID 1349925.1)

In this Document

Goal
Solution
References

APPLIES TO:

Oracle Order Management - Version 12.1.1 and later

Information in this document applies to any platform.
***Checked for relevance on 18-JUN-2014***

GOAL

Trying to use consignment orders, i.e.: make an inventory transfer to customer subinventory via sales order. What are the
steps required to setup the following scenario?.

Current Setup:
1) A Generic inventory organization defined
2) Subinventory defined for each customer

Expected action :
1) When selecting the customer address, customer subinventory should default to subinventory field (it can be done by
defaulting rules)
2) According to selected subinventory, an inventory transfer (or inventory movement) is created between main warehouse and
customer subinventory.

SOLUTION

The key setup steps are:

1. Define a customer organization for each customer site.

You create an external organization and associate it the customer site you will be replenishing. The key step in this process is
ensuring the association of the customer site to the organization that you are defining. Once the organization has been defined,
you will create the VMI item in this organization.

2. Setup a blanket sales agreement containing pricing information

Setup a blanket sales agreement for this item. In the event that there are multiple blanket orders defined, the hierarchy that is
used to determine which blanket gets used is as follows:
1- An item-specific order
2- And item-category specific order
3- A customer-specific order (this is mandatory for a blanket order)
4- Other Order Management Setups:
a. Transaction type: Define a transaction type and associate the "œLine Flow - Generic, Bill Only with Inventory Interface"
process to it (seeded)
b. The destination profile option MSC| Order Type for Consigned VMI should contain the value of the transaction type defined in
4 (a)
Note: The sales order that is automatically created when the customer posts a consumption advice will be of the type defined
in the profile option.

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3. Define the VMI item in the customer organization that you defined in (1). You will specify the key parameters that drive the
replenishment process.
Assign items to customer organization
-> Set item to be consigned
-> Source organization: default warehouse from which material should be shipped
Choose replenishment method
-> Min &“ max
-> Reorder point / Fixed order quantity
-> Days of supply (min and max)
Choose forecast type for avg. daily demand calculation
-> Sales forecast (from Oracle Demand Planning)
-> Order forecast (from customer system)
-> Historical sales (POS data)
Auto-expire Advanced Shipment Notice (ASN)
-> Yes: assume that material is received by planned arrival date
Release authorization
-> Customer: customer authorizes replenishment
-> Supplier: planner authorizes replenishment
-> None: automatic replenishment
->No: consider to be in-transit until customer acknowledges receiving material

The process is then executed as follows:

1. You run the VMI replenishment engine to generate the replenishment orders
Automatically or manually release replenishment orders
Create internal sales orders in Order Management
2. If authorization is required, a planner can approve the replenishment orders
3. Run the create internal orders (Purchasing) and Order Import (OM) concurrent requests. This results in automatic creation
of the internal sales orders.
4. Run the regular processes to fulfill the order and pick release and ship confirm.
5. If required, receive the material into the customer organization
6. Customer posts consumption advice and you receive the consumption advice
A consumption advice is used by customers to signal that they have pulled material from the consigned stock. This can be done
manually through a customer portal (if one exists), uploading a flat file, or using XML.
7. Results in the automatic creation of the sales order, and inventory is decremented in the customer organization; it also kicks
off the regular invoicing process.

REFERENCES

NOTE:391582.1 - Obtain Information On Consignment Orders

NOTE:406390.1 - FAQ: Using Consigned Inventory / Consumption Advise / Vendor Managed Inventory (VMI)
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