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Consignment items in inventory

ii Consignment items in inventory
Contents
Consignment items in inventory . . . . 1 Creating consignment suspense accounts for item
Consignment items in inventory accounts . . . . 1 vendors . . . . . . . . . . . . . . . . 2

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iv Consignment items in inventory
Consignment items in inventory
Consignment items are inventory items that are kept in a storeroom on-site and
owned by an external vendor. The vendor retains financial ownership of the
consignment items until they are used by the organization that is storing them.

Consignment items are not included in the inventory valuation of an organization.

Consignment items have a financial impact only when they are consumed, at
which point, payment must be made to the vendor.

Rotating items and condition-enabled items cannot be flagged as consignment

items.

Example

A factory uses plant machinery that is critical for production. The factory stocks
certain service parts as consignment items, either because their budget is restrictive
or demand for such items is irregular.

The vendor who supplies the parts benefits from this arrangement by providing a
ready supply of parts and thus saving on expedited freight costs. The vendor can
also be certain that the customer does not procure the replacement parts from a
competitor.

Consignment items in inventory accounts

Consignment items are not handled in the same way that standard inventory items
are handled in inventory accounts. Organizations that store consignment items for
use on demand must account for the items in a consignment vendor suspense
account.
Acquiring consignment items
To purchase or receive consignment items, you must set up a consignment
vendor suspense account. This account must be specified as the inventory
control account to track the consignment items from a specific vendor.
The standard accounting rules of Maximo Asset Management purchasing
applications apply. However, the consignment vendor suspense account
acts as the debit account for purchase and receipt transactions. The
consignment vendor suspense account tracks the value of consignment
items until they are consumed and financial liability is incurred.
Consuming consignment items
Consignment items are paid for at the time of use, not at the time of
receipt. Therefore, you cannot create an invoice for a purchase order that
contains a consignment item. When consignment items are issued from a
storeroom, the consignment vendor suspense account is credited.
Consignment items can be included in inventory processes, such as issues
and returns, transfers of items, and adjustments of item records.
Settling the consignment vendor suspense account

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 To settle the consignment transactions, you create invoices. You can create
invoices manually, automatically, based on frequency, or based on each
instance of consumption.

Creating consignment suspense accounts for item vendors

To store and consume consignment items in your organization, you must set up a
consignment vendor suspense account for the consignment vendors. You must also
create item records for the consignment items that are supplied by the vendor.

About this task

Three-letter codes represent consignment suspense accounts in the COMPANIES

table of the database.

Procedure
1. Go to the Chart of Accounts application:
a. Select your organization.
b. From the GL Accounts table window, click New Row.
c. In the Type field, specify a code for consignment suspense accounts in your
organization.
d. Save the GL account.
2. Go to the Companies application:
a. Click New Company and create a company record for the vendor who
supplies the consignment items.
b. In the Payment Details table window, enter the consignment suspense
account number that you created earlier.
c. Specify the company details and save the record.
3. Go to the Item Master application:
a. Click New Item.
b. Specify the item details and the vendor information.
c. Save the item.
4. Go to the Inventory Usage application:
a. Click New Inventory Usage.
b. Specify the storeroom and the consignment item details.
c. Save the transaction.

2 Consignment items in inventory