Accounting for Sales of Consignment Inventory

cpalumbo

Member
Has anyone encountered the business process scenario below? If so, how did you account for it in JDE? (We are on 8.10.)

Inventory is shipped to a reseller who stores it onsite (consignment) and then sells it to customers over the internet, collecting $ via credit card sales. Note of complexity: Reseller also may sell accompanying product that we partner with in the same sale (we suspect we will buy/own therein)...and all funds are directed to one merchant account (ours)...so there will be a "commission" to pay our partner to account for as well. We also are wondering how to handle any returns and any sales tax issues/level of customer detail we may have to maintain in JDE?
 
You may want to review Agreement Management: "The purpose of agreements is to record all transactions, track balances for stock items to make sure that the partner is in compliance with the contract terms." SO based Consignement Agreements might help.
 
You may consider setting up your consignment activities into a separate
branch plant. This provides distinct transactions for consignment sales,
inventory, demand, finances and return activities. Set up is moderate,
maintenance is moderate to moderately high. Accuracy is good. I may not have
understood your scenario correctly and you might want to clarify: Regarding
your part A consignment- part B non-consignment, sales order nicely handles
multi-branch orders. Documentation is the challenge. I wouldn't recommend
more than one consignment BP until some legal or business constraint (I.E.
bonded warehouse) requires more than one. Lastly, a separate BP will give
you good BI for that element of your business while still allowing your
consignment business to be part of your corporate rollups. I'm sure there
are several ways to meet your criteria- something to think about while next
solution is promoted.



Regards,



Steve Langley PMP

[email protected]
 
Re: RE: Accounting for Sales of Consignment Inventory

Oh yes, thank you both for the responses - I should have clarified that we were assuming to use a different branch plant.

What we are struggling with is we ship the orders to the reseller (and receive them into our consignment location in JDE), and then they need to provide us with information (i.e. orders) of what sold so we can effectively relieve our consignment inventory. In addition, we'll have to seperately track the charges for shipping/handling and any sales tax as part of the end user sales - and we plan to do this just via different line types from the reseller's orders they send us. We also were wondering if we need to maintain customer information as to who ultimately ordered the products from the reseller's website - or if we can just set up a generic Bill To/Ship To in JDE as we are ultimately just working with the reseller with cash exchange? (And the reseller maintains the sales history?)

I did confirm we plan to just buy our partner's product and place it with the reseller so we eliminate any cross-sales concerns with the partner...albeit we take risk of ownership of their product.

Is there a better way to do this than what we are thinking? We are hoping to electronically receive the reseller's orders to help alleviate administrative burden - just auto advance a new order type to recognize the sale/relieve the inventory/post the receivable. I'm not close to the details of how Acctg reconciles the cash accounts for the orders received in JDE...
 
Re: RE: Accounting for Sales of Consignment Inventory

At my previous company we had the same type of scenario. We took the information that they sent for consignment sales and loaded them into the EDI Sales order Z tables F47011 and F47012 via table conversion. We used R47011 to create sales orders. These orders were a different order type than normal orders since they didn't follow our typical pick pack and ship process. We set up that order type with different order activity rules.

I hope this helps.

Steven
 
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