Senior Functional Consultant
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Consignment inventory management plays a crucial role in modern supply chains, enabling businesses to reduce upfront costs, maintain optimal stock levels, and respond swiftly to market demands. In the first part of this blog series, we explored how Microsoft Dynamics 365 simplifies consignment inventory management, turning it into a streamlined, efficient, and highly flexible process.
Building on that foundation, the second part of the series delves deeper into the receiving and consuming consignment inventory. By mastering the receiving and consuming aspects of consignment inventory in Dynamics 365 Finance & Operations, businesses can unlock their full potential while maintaining better control and visibility across their supply chain.
Let’s explore how Dynamics 365 facilitates the receiving and consumption of consignment inventory, ensuring your business stays agile and efficient in a changing market landscape.
Receiving consignment inventory: A step-by-step process
In Dynamics 365, receiving inventory on consignment is straightforward but different from a typical purchase order process. The following sections will provide a detailed walkthrough of the entire process, including:
- Consignment replenishment order
- Receipt processing
- Vendor-owned tracking
Stage 1: Consignment replenishment order
To receive consignment inventory, we will go to the consignment replenishment orders form. Navigation is as follows:
After landing on the consignment replenishment orders form, click on the “New” button to create a new order.
Add details of vendor, site and warehouse and select OK. Remember that the selected warehouse should not be advance warehouse (this feature is currently not provided by Microsoft) but simple warehouse.
Add item and quantity in “Replenishment order lines” section.
Stage 2: Receipt processing
Once the consignment replenishment order is created, the product receipt process will be initiated. Click on Product Receipt to start recording vendor-owned product receiving in the system.
Put external product receipt number and click on OK to post the product receipt journal.
The consignment of inventory is recorded as received and tracked in your system, but it doesn’t reflect as an owned asset. It remains vendor-owned until consumed.
Stage 3: Vendor-owned tracking
Go the inventory transactions form to track Vendor-Owned Inventory. Navigation of the form is as follows:
Here, we can verify the inventory transactions are created in the system with the Consignment replenishment order reference.
This inventory is tagged in Dynamics 365 as belonging to the vendor, providing clear visibility of available consignment stock and its location within your warehouse.
By managing this within Dynamics 365, businesses ensure their consignment on inventory is visible and available for operational use while minimizing any balance sheet impact.
Managing consignment inventory: How to consume it effectively
When you’re ready to use or sell stock consignment, Dynamics 365 simplifies the process of transferring inventory ownership from vendor-owned to company-owned. The consignment inventory consumption process involves the following stages.
Stage 1: Ownership transfer
Using an ownership change journal, you can record the consumption of consignment stock. This transfer updates inventory records and converts the ownership of the inventory from the vendor to the company by creating a new purchase order. Inventory ownership change journal form’s navigation is as follows:
Click on the new button, add the journal name, and press OK to proceed.
Add the following details in Journal line section and then post the journal. The ownership of inventory will be changed.
After the journal posting, a new purchase will be created by the system. Product receipt is also posted automatically. Details of purchase orders will be shared by the system as information.
Inventory can also be tracked from inventory transactions form.
Stage 2: Automated accounting
Dynamics 365 generates financial postings automatically, ensuring a smooth transition of inventory costs and ownership on the books. This process gives businesses the flexibility to handle stock efficiently and maintain clear, up-to-date records.
Heads up: Advance Warehouse Management doesn’t support consignment orders
Another important point to note is that Advanced Warehouse Management cannot be used for consignment orders, as this feature is currently not supported by Microsoft. Please refer to the attached screenshot for clarification.
Conclusion
The consignment process in Dynamics 365 empowers businesses to optimize inventory management by reducing carrying costs, improving flexibility, and maintaining up-to-date tracking and reporting. With the right setup and best practices, Dynamics 365 can transform how you handle consignment inventory, making it an invaluable tool for operational efficiency.
Have you implemented consignment in Dynamics 365, or are you considering it? Reach out to marketing@confiz.com to explore how our experts can help you optimize your consignment inventory processes for maximum efficiency and business growth.
