Consignment inventory

Despite the owner initially owning consignment items, consignment inventory is not counted as owned inventory. Because you do not own the consignment items, you cannot transfer them to another location.

Example

A hospital stores prosthetic limbs. Because these items are expensive, the hospital does not pay for the items until they are used for a patient. Then the vendor bills the hospital and replenishes the inventory.

This list shows the flow in the consignment process:

  1. Creating a receipt transaction for the initial consignment item quantity
  2. Creating a requisition for the consignment items
  3. Creating and processing the issue transactions
  4. Completing the replenishment process and creating a purchase order for the consignment items only
  5. Receiving the replenished items so the stock on hand goes back to the agreed upon consignment level
  6. Matching the invoice for the replenishment purchase order and paying the owner for the consignment items used
  7. Posting inventory transactions to Global Ledger

With consignment items, you must set up Inventory Location Account Groups by location.