To update the administrative warehouse

In various VMI scenarios, the party who manages the VMI warehouse or consignment warehouse defines the warehouse as a regular warehouse in his system. The other party, who owns the inventory in the warehouse or is responsible for supply planning, does not require registering every single activity involved in warehouse handling. For supply planning or invoicing purposes, this party is satisfied with a mere overview of the inventory levels and therefore defines the warehouse as an administrative warehouse in his ERP system.

If the customer manages the warehouse, the warehouse is defined as an administrative warehouse in the supplier's ERP system. If the supplier manages the warehouse, the warehouse is defined as an administrative warehouse in the customer's ERP system.

The administrative warehouse must be updated with the inventory levels of the "real" warehouse on a regular basis. The frequency and the required accuracy level of these updates depends on the applicable VMI scenario. For more information, refer to Overview of VMI business scenarios.

In the supplier's administrative warehouse, receipts are usually registered by means of transfer orders or receipt delivery messages after the receipts in the real warehouse are performed.

Consumptions are registered through consumption records triggered by consumption messages from the customer. When you process the consumption records, LN initiates invoicing, if applicable, and reduces the inventory of the administrative warehouse. To register the inventory reduction, LN creates a sales order of type Sales (Manual) and a shipment, which you can view in the Item - Warehouse - Inventory Transactions (whinr1510m000) and the Inventory Consumptions (whina1514m000) session. For more information, refer to Inventory consumption handling.

The customer's administrative warehouse is updated by automatic receipts triggered by receipt delivery messages after the receipts in the real warehouse are performed. Consumptions are registered through issues for outbound order lines based on the customer's originating production order or sales order. For more information, refer to Method of Inventory Update and Consumption records.

Method of Inventory Update

In the Method of Inventory Update field of the Logistics Terms and Conditions (tctrm1140m000) session, the following methods to update the VMI warehouse are available:

  • Receipts and Consumptions
  • Inventory Balance
  • Receipts, Consumptions and Inv. Balance
  • Inventory Balance as Consumption

Receipts and Consumptions

Selecting this option enables the following fields, which control how receipts and consumptions in the VMI warehouse update the inventory levels of the administrative warehouse:

  • Receiving Process
  • Inventory Consumption Message Interval
  • Inventory Consumption Aggregation Level

Also, in the supplier's ERP system, a consumption record is created when the VMI warehouse is replenished. For more information, refer to Inventory consumption handling.

Receiving Process

The options of the Receiving Process field determine how receipts in the VMI warehouse are updated in the administrative warehouse:

  • Communication

    The inventory of the customer's or supplier's administrative warehouse is updated after incoming messages, for example, the ReceiveDelivery message or the InventoryConsumption message. These are OAGIS based XML messages. Receiving these messages in LN can trigger the creation of a receipt, or an issue, respectively, in the administrative warehouse.

    For more information, refer to

    • Receipt delivery messages
    • InventoryConsumption message
    • Overview of VMI business scenarios
    .

  • Automatic (Delivery Moments)

    LN creates and automatically confirms receipts into the customer's administrative warehouse. For more information, refer to Automatic receipts and Setting up automatic receipts.

  • Automatic (Received is Shipped)

    The supplier's administrative warehouse is updated by means of transfer orders. For more information, refer to Automatic receipts

Inventory Balance

Not used in the current version.

Receipts, Consumptions and Inv. Balance

Inventory levels are updated based on the completed receipts and consumptions and on an inventory report. The latter is mainly used for reconciliation purposes. Note that the inventory balance message is not used in the current version.

Also, in the supplier's ERP system, a consumption record is created when the VMI warehouse is replenished. For more information, refer to Inventory consumption handling.

Inventory Balance as Consumption

Not used in the current version.