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Consignment Scenario 6 - Consignment with Distributor as Inventory Management Service Provider, 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:

A Component Supplier is consigning inventory to a end-customer. Inventory is in possession of a distributor who is providing inventory management and/or other value-added services to the end-customer (the distributor's customer).  A replenishment scenario is established between the distributor and the component supplier for replenishment of inventory at the the distributor's facility; the distributor's customer is referenced.  A replenishment scenario is established between the distributor and its the end-customer for replenishment of the end-customer's inventory.  The distributor reports transfer of inventory to the component supplier to trigger transfer of ownership.  Billing/payment model is established between distributor's customer and the component supplier for components. Billing/payment model is established between end-customer and the distributor for services.

See also Assumptions in the supporting documentation.


Overview (Use Case) Diagram    Narration


Narration   Overview (Use Case) Diagram

Step

Description 

1.

Replenishment Scenario - The end-customer places Blanket Orders and sends forecasts per the appropriate forecast-based, Blanket Order-based Replenishment scenario.

2.

Replenishment Scenario - The Distributor sends forecast of the end customer's requirements to the component supplier per appropriate Replenishment Scenario.  The distributor issues releases to the component supplier per appropriate Order or Forecast/Planning Business Model.

3. Shipment Scenario - The component supplier ships goods to consignment warehouse (distributor's facility).
4. Replenishment Scenario - The end-customer issues releases to the distributor.
5. Shipment Scenario - The distributor ships goods to the end-customer per appropriate Shipment Model.
6. Sales Reporting Scenario - The distributor reports transfer of inventory to trigger transfer of ownership and Billing/Payment cycle.  Reporting of inventory movement between the distributor and the end-customer does not trigger replenishment of inventory in consignment (the distributor's) warehouse (replenishment is per next release or order - Step 2 above).
7. Billing or Payment model - Ownership transfers from the component supplier to the end-customer per contractual terms.  The component supplier invoices the end-customer or payment for components is triggered.
8. Billing or Payment model - The distributor invoices the end-customer or payment for services.
9. Inventory Management Model 1 (Optional) - At any point in the process, the distributor performs inventory counts of  inventory owned by the the component supplier and allocated to the the end-customer and reports to the end-customer (scheduled, as-needed, or at the end-customer request).  See Step 10 for handling of inventory shrinkages.
10. Inventory Management Model 1  (Optional) - At any point in the process, the distributor performs inventory counts of inventory owned by the the component supplier and allocated to the the end-customer and reports to the component supplier (scheduled, as-needed, or at the component supplier request.  The Trading Partner Agreement should define how inventory shrinkage is handled.  The component supplier may bill the end-customer for the shrinkage, and the end-customer then ask the distributor for a debit to be taken from what it owes the distributor for services per Debits and Credits Model 5 (not shown).
11. Inventory Management Model 10 - The Distributor may send Inventory Adjustment Advice to the end customer to report any adjustments due to inventory counts.  If there is inventory shrinkage, the end-customer may request a debit from money owed the distributor for services,  depending on the terms of the consignment agreement.  The end customer may send Inventory Adjustment Advice to the distributor to report a variance noted, to ask the distributor to put inventory on hold or reserve it for a specific purpose, etc.  (Diagram is simplified - represents two separate instances of execution of Inventory Management Model 9).

12.

Inventory Management Model 10 - The Distributor may send Inventory Adjustment Advice to the component supplier to report any adjustments due to inventory counts.  If there is inventory shrinkage, the component supplier may invoice the end customer, and the end customer may request that the distributor allow a debit from money owed the distributor for services,  depending on the terms of the consignment agreement.  The component supplier may send Inventory Adjustment Advice to the seller to the distributor to report a variance noted to ask the warehouse to put inventory on hold or reserve it for a specific purpose, request disposal of inventory, notify of a product recall, etc.  (Diagram is simplified - represents two separate instances of execution of Inventory Management Model 9).

Last updated 24 February 2003