Posted on: January 17, 2019 | By: Jarrod Kraemer | Microsoft Dynamics AX/365
Authored by: RoseyMcAdams
A great new feature rolled out with Dynamics 365 for Finance and Operations is the vendor consignment functionality. In prior versions of Dynamics AX handling vendor consignment was not supported without some clunky work arounds or customization. With that said, if your company does have vendor consigned inventory it wouldn’t be a bad idea to upgrade to Dynamics 365 soon. For those of you who are already on Dynamics 365 and currently do or are considering supporting vendor consignment, we are going to demonstrate the simple steps to setup and utilize vendor consignment in Dynamics 365 right now!
The first step in setting up your D365 environment for vendorconsignment is to setup your items to be tracked by owner. The owner dimension is a tracking dimensionjust like batch number or serial number and therefore is configured in Product Information Management > Setup> Dimensions and variant groups > Tracking dimension groups. Just likewith batch and serial number tracking if the owner dimension is turned on andan item is assigned to the tracking dimension group with this setup the ownerdimension will be mandatory on all inventory transactions.
The second step in setting up vendor consignment isconfiguring which vendors you will be supporting vendor consignment for. Tocomplete this set up navigate to: InventoryManagement > Setup > Dimensions > Inventory Owners
From this screen you not only setup which vendors you willbe supporting vendor consignment for, but also assign the Owner dimension forthat vendor. The owner dimension gets automaticallygets setup as the vendor account number, additionally an owner dimension willget setup by default for your company with the same code as the legal entityyou are in – this dimension would indicate that you are the owner.
Next, we must setup an item to be used in vendorconsignment, the two critical pieces of setup for an item to be used for vendorconsignment are as follows:
- Tracking dimension group must be a trackingdimension group with Owner dimensionactive
- Item group must be an item group that useseither Standard Cost or Moving Average
The final mandatory setup for supporting vendor consignmentis configuration of the Ownership Change journal name so we can start to dovendor consignment transactions. This is setup where all other inventoryjournals are setup in InventoryManagement > Setup > Journal Names > Inventory
We must make sure a journal is setup with Journal Type Ownership change to be able to changethe owner on a piece of inventory between us and the vendor – for example, onewe want to buy a piece of inventory from the vendor, we would want to do theownership change from the vendor dimension to our legal entity dimension.
Now that we have all the necessary setup complete, let’s seeit in action!
To receive in consignment inventory from a vendor we mustcreate a consignment replenishment order, which is essentially a purchase orderwithout any financial transactions ($0).To create a consignment replenishment order, navigate to Procurement and Sourcing > Consignment> Consignment replenishment orders
Select new, pick your consignment vendor and click OK. Then add your lines, this will now allow youto receive product in from the vendor.
As mentioned above, when product is received against areplenishment order no physical or financial vouchers happen, only theinventory subledger is affected. Youwill show on hand as many as you physically received in your warehouse, but allat $0 and no effect on your inventory GL.The inventory owner dimension for this inventory on hand will be thevendor that you received the inventory from, until you but it from that vendor.
Finally, once you decide that you want to use the inventoryand buy it from the vendor you will need to do an ownership transfer journal tochange the ownership dimension on your inventory from the vendor to yourcompany, once it is owned by your company you can use it to fulfill sales orders. To do an ownership transfer journal navigateto Inventory Management > JournalEntries > Inventory ownership change.
An inventory ownership change journal looks very similar toan inventory transfer journal, except instead of from and towarehouses/locations we have from and to owners on the lines of thejournal. You will select the vendor asthe “From owner” and your legal entity as the “To owner”.
Once this journal posts it will also simultaneously create areceived PO (since the inventory has already been received), with a physicalreceipt voucher, at the PO price setup on the item, trade agreement, or thecosting version. This PO is now ready tobe invoiced by the vendor at any time.
You now have all the tools to be able to utilize vendorconsignment functionality in Dynamics 365 for Finance and Operations. Hope this post helps to get started onautomating your vendor consignment processes!For additional information please feel free to reach out to us [email protected] or (312) 345-8817.
All the best!
Logan Consulting
www.loganconsulting.com
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