Explaining the Consignment Collaboration Scenario

Objectives

After completing this lesson, you will be able to:

  • Explain a more complex example of the Consignment Collaboration process

Consignment Collaboration Process Example

Step 1: Nicole Creates a Consignment Purchase Order

I need to order another 40 cubic yards of gravel and my Supplier has agreed to send it to me on consignment. This is preferable for this project because I will need to use it over a long period of time. I can avoid multiple shipping charges by receiving it all at once and then notifying the Supplier as I use it and paying for it as I use it.

I will create a Consignment Purchase Order for the 40 cubic yards of gravel and send it to my gravel Supplier.

Step 2: Jeremy Receives the Consignment Purchase Order and Sends an Order Confirmation

I received the Consignment Purchase Order for 40 cubic yards of gravel. I have agreed to send this to our Buyer on consignment and have them pay for it as they use it. I will send an Order Confirmation to confirm receipt of the Consignment Purchase Order.

Step 3: Jeremy Sends the Advance Ship Notices

My trucks only hold a maximum of 20 cubic yards of gravel, so I will prepare two separate Advance Ship Notices--each one for 20 cubic yards.

Step 4: Jeremy Ships the Gravel to the Buyer

I will send two truckloads of gravel to the Buyer. The Buyer's consignment stock is increased.

Step 5: Nicole Receives the Shipments and Sends the Goods Receipts

I received both shipments of gravel from my Supplier. I will send a Goods Receipt for each shipment.

Step 6: Nicole Consumes 20 Cubic Yards of Gravel

We used 20 cubic yards of gravel this week so I will move that amount from consignment stock to my own stock and issue a Transfer Posting.

Step 7: Nicole Sends a Settlement Invoice for the 20 Cubic Yards of Gravel Consumed

We agreed with the Supplier that we would create the Settlement Invoice based on the stock movement.

Step 8: Nicole Consumes Another 20 Cubic Yards of Gravel

We used another 20 cubic yards of gravel this week so I will move that amount from consignment stock to my own stock and issue a Transfer Posting.

Step 9: Nicole Sends Another Settlement Invoice for the 20 Cubic Yards of Gravel Consumed

As part of our agreement with the Supplier, we create another Settlement Invoice based on the most recent stock movement.

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