Clickable Business Models eBusiness Education Acronyms Cross References
B2B Content Standards EC Technology Standards Glossary Implementation Guidelines
Implementation Options General Recommendations References Methodology/Legends
 Home | Copyright Notice and Legal Disclaimers | Navigation Help | Tour! | Downloads | Contact Us | Site Index | Search
 Consignment Scenarios Index | Supporting Documentation | Downloads | FAQs |
Consignment Scenario 5 - Consignment, Third-Party Warehouse,
Seller-Contracted, Version 1.0

Status:  Provisional Ratification by Committee August 2002. Created as part of recast of original Inventory Models, Pre-2000 Version A (Balloted and Ratified by Membership, August 1998)

Business Overview

Special Notes:

The seller has inventory deposited in a Third-Party warehouse contracted by the seller (seller is depositor).  The inventory remains on the seller's books and warehouse does not take ownership at any time.   To the buyer, the Third-Party Warehouse is just another location of the seller's.  Legal terms for liability established between seller and warehouse, and between buyer and seller. Replenishment takes place per appropriate two-party Consignment Inventory Management Model.  When a buyer orders from the seller, the seller sends a shipment order to warehouse. Warehouse ships directly to buyer, and notifies the seller of the event.  Seller sends a shipment notification to the buyer per appropriate Shipment Model; the buyer may optionally send receipt advice. The warehouse performs inventory counts and sends inventory reports and adjustment notices used to keep inventory levels and status in synch with the seller.

See also Assumptions in the supporting documentation.


Overview (Use Case) Diagram    Narration


Narration   Overview (Use Case) Diagram

Step

Description

1. Inventory Management Model 8 - The seller may produce goods that are stored in the third-party warehouse, or may buy goods for resale that are stored in the warehouse.  The seller transfers goods to the warehouse or has goods drop-shipped from its (the seller's) supplier to the warehouse.

The seller notifies the Warehouse that product is being transferred or shipped to that location.

The warehouse notifies the seller when the transferred or shipped goods have been received.

2. Inventory Management Model 1 - (Optional) Inventory is physically located at the warehouse facility.  The warehouse performs inventory counts and reports to seller (scheduled, as-needed, or at seller request). Seller may invoice for inventory shrinkage depending on the terms of the consignment agreement.
3. Debits and Credits Model 5 - If inventory shrinkage is reported, the seller may request a debit from the next payment to the warehouse.

4.

Two-Party Consignment Scenarios and Replenishment Scenarios- The the buyer (the seller's customer) may or may not have products on a consignment program between the buyer and seller.  If there is a consignment program between buyer and seller, the buyer and seller establish the appropriate two-party consignment process, including appropriate replenishment (Order and Forecast) models, and reporting of inventory balances. 

For parts that will not be on a consignment program with the buyer, the buyer and seller establish the appropriate two-party replenishment process.

5.

Inventory Management Model 9 - Seller sends Shipping Order to Warehouse when parts need to be shipped to the Buyer.

Warehouse ships parts to buyer.   Warehouse sends Warehouse Shipping Advice to let seller know parts have been shipped.

6.

Seller sends Ship Notice to buyer per appropriate Logistics Scenario.

7.

Seller invoices buyer or payment is triggered per appropriate Financial Scenario.

8. The warehouse invoices the seller for services or payment for services is triggered per appropriate Financial Scenario.

9.

Inventory Management Model 10 - The Warehouse sends Inventory Adjustment Advice to the seller to report any adjustments due to inventory counts.  If there is inventory shrinkage, the seller may request a debit from money owed the warehouse for services,  depending on the terms of the consignment agreement.

10.

Inventory Management Model 10 - The seller may send Inventory Adjustment Advice to the seller to the warehouse to report a variance noted, to ask the warehouse to put inventory on hold or reserve it for a specific customer, notify of a product recall, etc.

Last updated 01 February 2003