Consignment inventory

Consignment inventory refers to inventory items that are owned by one party, but held by another. The owner agrees to bill the party holding the items when those items are sold or used. As such, consignment inventory is not counted as owned inventory. Because you do not own the consignment items, you cannot transfer them to another location.

Typically, the consignment process consists of the following:

• Create a receipt transaction for the initial consignment item quantity

• Create a requisition for the consignment items

• Create and process the issue transactions

• Complete the replenishment process and create a purchase order for the consignment items only

• Receive the replenished items (so the stock on hand goes back to the agreed upon consignment level)

• Match the invoice for the replenishment purchase order and pay the owner for the consignment items used

• Post inventory transactions to the General Ledger application

With consignment items, you need to set up general ledger categories by location. For more information, see Setting up consignment items.