Inventory consumption handling

In vendor managed inventory (VMI) and subcontracting environments, consumptions are recorded to view and maintain consumption data in the supplier's or manufacturer's administrative warehouse. This warehouse mirrors the customer's or subcontractor's warehouse from which the customer/subcontractor consumes materials supplied by the supplier/manufacturer.

Handling inventory consumptions includes the creation and processing of these consumptions.

Note: In this topic, supplier refers to the supplier or the manufacturer, customer refers to the customer or the subcontractor, and VMI warehouse refers to the customer's or the subcontractor's warehouse from which the customer or the subcontractor consumes goods supplied by the supplier or manufacturer.

Consumption master data

To record inventory consumptions in the supplier's administrative warehouse, to update the inventory levels, and initiate invoicing:

  1. In the Implemented Software Components (tccom0100s000) session, select:

    • The VMI (supplier side) check box to maintain consumptions in VMI environments.
    • The Subcontracting with Material Flow and Service Subcontracting with Material Flow check boxes to maintain consumptions in subcontracting environments.
  2. In the Terms and Conditions (tctrm1100m000) session, specify terms and conditions for the relevant business partners, warehouses, and items.
  3. In the Schedule Terms and Conditions (tctrm1131m000) session, select the External Packing Slip is Mandatory check box if the consumption line must include an external packing slip for a schedule. If the Duplicate External Packing Slip Allowed check box is selected for a combination of sold-to business partner, ship-to business partner, and item, an external packing slip can be used that is already used.

  4. To create consumptions for subcontracting scenarios in the Inventory Consumptions (tdsls4140m000) session, you can set the values in the Method of Inventory Update field of the Logistics Terms and Conditions (tctrm1140m000) session to:

    • Receipts and Consumptions
    • Receipts, Consumptions and Inv. Balance
    • Inventory Balance as Consumption
    If, for VMI scenarios, you do not specify this optional field, received quantities are not displayed in the Inventory Consumptions (tdsls4140m000) session; material consumptions are updated through backflushing.

For further information on how to set up the VMI functionality, see VMI customer role - setup and VMI supplier forecast - setup. For information on subcontracting, see Overview of subcontracting.

Consumptions

Consumption records are generated or manually created. They show the received quantities provided by the supplier and the subsequent consumptions by the customer.

A consumption record includes a header and one or more lines.

  • Consumption header
    When the VMI warehouse is replenished, LN generates a consumption header. Headers of consumption records contain the name of the customer, the VMI warehouse, and the aggregated received and consumed item quantities. You can view and maintain these headers in the Inventory Consumptions (tdsls4140m000) session.
  • Consumption line(s)
    When the customer consumes material, a consumption line is created. You can view and maintain details of individual consumptions in the Inventory Consumption Lines (tdsls4141m000) session.
  • Consumption lines are generated after receiving the LoadInventoryConsumption Business Object Document (BOD), or you can manually create them based on an e-mail or phone call from the customer.

After the consumption is specified, it must be processed to:

  • Invoice the customer for the consumed quantities, if invoicing is applicable.
  • Decrease the inventory levels of the administrative warehouse.

For more information, refer to Processing consumptions.

Note

In the customer's LN system, consumptions are generated in the Consigned Consumptions (whwmd2551m000) and Inventory Consumptions (whina1514m000) sessions. For more information, refer to Consumption records.

Prices and discounts
  • Sales order
    LN determines prices and discounts based on the values of the originating sales order line, using the consumption or replenishment date. This calculation is based on the Price Determination Based on parameter setting in the Order Terms and Conditions (tctrm1130m000) session.
  • Sales schedule
    LN checks the Link Consumption Invoice Lines To field in the Sales Schedule Parameters (tdsls0100s500) session, which can be set to Schedule Header or Schedule Requirement Line.

    Depending on the value of the Link Consumption Invoice Lines To field, prices and discounts are retrieved from these lines:

    • Schedule Header
      The first schedule line of the sales schedule to which the consumption is linked. Information from successive schedule lines is not considered.
    • Schedule Requirement Line
      The schedule line or planned warehouse order line to which the consumption is linked.
Note
Pay on Use sales order/schedule lines

Sales order/schedule lines for which the payment type is Pay on Use and the activity Release to Invoicing is part of the order procedure, can:

  • Register consumptions.
  • Be invoiced, that is, invoicing lines are created for the consumption lines to which they are linked.
  • Have the Self Billing check box selected.
Note

This is applicable in an extended consignment setup, in which you directly link the invoicing for a consumption of consignment inventory to the replenishment order or schedule.

In a basic consignment setup, in which the order and schedule procedures are split into a replenishment and invoicing part, these rules apply:

  • Invoicing is not available for consignment replenishment orders, which are sales orders for which the Consignment Replenishment check box is selected in the Sales Order Types (tdsls0594m000) session.
  • Because for consignment replenishment orders Release to Invoicing is not part of the order procedure, consumptions can be invoiced using a Consignment Invoicing sales order. These are sales orders for which the Consignment Invoicing check box is selected in the Sales Order Types (tdsls0594m000) session.

For more information, refer to Consignment in Sales and Procurement.

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