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How to handle Supplier Managed Inventory / Customer Managed Inventory

  • 10 June 2021
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Hi all,

 

I have a very specific case which requires some help;

By request of the biggest customer of company X , Supplier Managed Inventory (SMI) or Vendor Managed Inventory (VMI) will be offered to the customer to a selected range of parts. In the scenarios of SMI between company X and the customer, The inventory is customer owned and located at their own warehouse. Company X receives the forecast, usage and orders frrom the customer.


My own advise was to use a dummy company where the products will theoretically be moved to and scrapped when used. Invoice will be sent to the customer and the delivery address is customer site.

 

Could anyone please advice how to handle customer owned stock?

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Best answer by Vimukthi Mahakumbura 10 June 2021, 13:59

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Vimukthi Mahakumbura
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Hi, 

This sounds interesting. However, I wonder why business wants to receive forecasts, usage and orders from the customer if ownership is Customer Owned? Even invoice for their usage? That doesn’t really make sense. 

That is the same reason why I think system stops users from delivering Customer Owned inventory on Consignment, with the error; ‘Only ownership company owned allowed for consignment stock’ at Customer Order creation. So, if the ownership is Company Owned, I think you can use the Consignment Stock functionality. But not if there is any valid reason to have the parts as Customer Owned and still receive usage and orders. 

Thanks.

https://www.linkedin.com/in/vimukthi-mahakumbura-9b2296aa/
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Hi Vimukthi,

 

It is even more difficult if i write down the whole scenario, but in general, the following functionality is needed and the prerequisites

  • Inventory value cannot be booked in Company X since the physical location is at the customer and the customer owns the stock.
  • Company X needs to maintain a minimum stock value, as well as a maximum stock value for the customer virtually; (hence the dummy company option)

 

Whether the parts are customer owned or company owned in IFS is still debatable, if it is moved to a dummy company, it is still company owned. but i would love to have functionality which does not require me to have a dummy company

 

Vimukthi Mahakumbura
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So, is the company X planning to replenish parts (supply) to the customer when they hit some point? If yes, you can totally use the Consignment functionality. This will have an impact to Inventory Value, cz until the point of consumption at Customer, ownership is Company Owned. 

So the real challenge is to have the requested possibilities without having an impact to the Inventory Value. If it is impossible to have an impact of Inventory Valuations, I think you should consider a modification or your dummy company idea. 

https://www.linkedin.com/in/vimukthi-mahakumbura-9b2296aa/
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Thank you!

I'lll discuss with the customer and let them know their options!

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