Consigned Scheduling Agreement

Nowadays, more and more companies are considering using vendor consignment process to control inventory volume. But on the other hand, we still do need to ensure that the materials are available for our production. So, how do we put them together and still serve their purposes? We can combine both vendor consignment and scheduling agreement processes together. It is called “Consigned Scheduling Agreement.” It has both the advantage of a consignment and a Just-in-time process. What are some of its benefits?

Process Benefits:

• An efficient, systematic and automated consignment process for the business

• Standardized electronic documents, specific to the consignment process are produced

• Daily automated updates to web VCI report showing key data for accurate tracking purposes

• An automated internal invoicing/settlement and payment is generated by the Power Accounts Payable function for our Supplier first thing Monday morning.

• An automated e-mail sent to our supplier after each settlement is made

• Consigned Inventory is segregated - both physically and system-wise

• Cycle counting can be conducted to increase accuracy of inventory

What are some of the processes in SAP?

• Create Consigned Scheduling Agreement (ME31L, item category K)

• A delivery schedule generated by the MRP run and reviewed by planners

• A forecast or JIT schedule is released to the vendor

• The Vendor provides the materials according to JIT schedule

• Warehouse performs goods receiving, and because of item category K, inventory accounts do not get posted until actually consumed. Goods are post to vendor consigned stock.

• When production begins, warehouse issue goods by transferring posting vendor stock to production order (for consumption)

Perform monthly (or periodic) settlement and payment down.