Inventory ownership in Warehouse Management

When the ownership of an item changes, payment is due and invoicing is initiated.

In traditional, non-VMI business scenarios, the ownership of an item changes from the supplier to the customer after the customer has received the item from the supplier. The customer must pay for the item on receipt of the goods.

In various subcontracting scenarios, ownership will not change during any of the inbound or outbound warehousing processes. In such cases, the ownership is customer owned. For further information on subcontracting scenarios, see Overview of subcontracting.

In vendor managed inventory (VMI) scenarios, the ownership can be consigned. If the ownership is consigned, the ownership change is either time based or consumption based.

• Consumption based

  The ownership changes if the customer issues the goods to sell them or to consume them.

• Time based

  The ownership changes some time after:

  • The customer receives the goods.
  • The last issue or receipt of the goods.

If a supplier delivers various items to a customer, a separate agreement or separate legal requirements may apply to each type of item. For time-based ownership change, the period of time is laid down in the terms and conditions of the contract between the customer and the supplier.

For further information, see:

• Consumption-based ownership change
• Time-based ownership change