1. Quovera Confidential 1 ManagingCustomerConsignmentInventory

2. 2 Agenda  Consignment scenarios  Benefits of consignment programs  Determine products for consignment and agreements  Internal controls for consignment  Managing customer consigned inventory in Oracle – Bill Only, Inventory Interface Workflow  Oracle Set Ups  Manual Consignment Pull Order Process  Processing Errors  Customizations to Improve Process  Questions and Answers Managing Customer Consignment

3. Quovera Confidential 3 Consignment Scenario Managing Customer Consignment

4. Quovera Confidential 4 Consignment Scenarios  Customer consigned inventory at customer warehouse  Customer consigned inventory at 3 rd party warehouse Consignment Scenarios

5. Quovera Confidential 5 Customer Consigned Inventory is a practice where you place and maintain goods belonging to you at your customer locations. Customer does not take ownership of product until used (pulled). Consignment Definition

6. Quovera Confidential 6 Benefits of Consignment Program Managing Customer Consignment

7. Quovera Confidential 7 Benefits of Consignment Program  Customer Customer Satisfaction Reduced time to Market for new product Shorter lead times Competitor edge Service parts for critical equipment Save expedite freight costs Benefits of Consignment Program

8. Quovera Confidential 8 Downside of Consignment Inventory management ( scraps, cycle counts, replenishment) Managing of obsolete parts Timely Pull notifications Shipment notice (3 rd Party Warehouse) Customer forecast and supplier production schedule conflicts Invoice and payment Benefits of Consignment Program

9. Quovera Confidential 9 Consignment Products Managing Customer Consignment

10. Quovera Confidential 10 Determine products for Consignment  Customer  Products with high-degree of demand uncertainty  Supplier  Products with high-degree of sales potential but demand is not reasonably known or stable New unproven products The introduction of existing product lines into new sales channels. Very expensive products where sales are questionable. Consignment Products

11. Quovera Confidential 11 Consignment product characteristic Transparent to the user Requires no special handling in Shipping and Receiving Viewable as available in inventory Non-nettable and not available for planning Can be cycle counted Consignment Products

12. Quovera Confidential 12 Consignment Agreements Managing Customer Consignment

13. Quovera Confidential 13 Consignment Agreements Establish min/max inventory levels with a periodic review Determine criteria for consigned item Establish point of transfer of ownership Frequency and means of communication for consumption advice Consumption policy (eg. FIFO) Modified payment terms and agreed payment process Address stolen, lost, damaged, removal or destroyed consigned material Means to share and review customer forecast and schedule Determine who’s responsible for consignment material overhead cost (taxes, insurance…) Consigned item return policy Determine responsibility for the physical security of the consigned item storage location. Inspection and cycle counting Delivery performance measurements (Based on stock outs) Consignment Agreements

14. Quovera Confidential 14 Internal controls For Consignment Managing Customer Consignment

15. Quovera Confidential 15 Internal control for consignment Establish procedure to account for consigned goods movement Establish billing, shipping and receiving procedure with necessary approval Record adjustment for shrinkage and lost Segregate consigned and non-consigned goods Supplier agreement must be approved by company lawyers and does not violate any government regulations Reconciliation and confirmation of consigned goods by consignee Internal Controls for Consignment

16. Quovera Confidential 16 Oracle setups for Customer Consigned Inventory Managing Customer Consignment

17. Quovera Confidential 17 Consignment Workflow Run min/max planning for consignment subinventory with restock = ‘Yes’ Create internal sales order via order import Generate invoice for billings Send consumption advice to supplier Pick release and ship goods to consignment location CustomerSupplier Create consignment sales order for consignment customer Billing workflow Replenishment workflow Import and create internal requisition

18. Quovera Confidential 18 Define Location Inventory and Item Setups

19. Quovera Confidential 19 Define Consignment Organization and Assign Location Inventory and Item Setups

20. Quovera Confidential 20 Define Consignment Sub-Inventory Inventory and Item Setups

21. Quovera Confidential 21 Enable Item in Consignment Org Inventory and Item Setups

22. Quovera Confidential 22 Set Min/Max value for consigned Item Inventory and Item Setups

23. Quovera Confidential 23 Move Inventory into Consignment Sub- Inventory Inventory and Item Setups

24. Quovera Confidential 24 Define Consign Customer Price List and Assign Items Price List Setups

25. Quovera Confidential 25 Define Order Type Order Management Setups

26. Quovera Confidential 26 Assign Line Flow - Bill Only with Inventory Interface (Generic) Order Management Setups

27. Quovera Confidential 27 Workflow Diagram (Generic) Order Management Setups

28. Quovera Confidential 28 Assign Document Sequence to Order Type Order Management Setups

29. Quovera Confidential 29 Enable Valid Ship Method to Consignment Org Order Management Setups

30. Quovera Confidential 30 Assign Order Type, Price List, Consignment Org and Valid Ship Method Customer Master Setups

31. Quovera Confidential 31 Order process for Customer Consigned Inventory Managing Customer Consignment Order Process

32. Quovera Confidential 32 Enter Order Header Details Order Process

33. Quovera Confidential 33 Verify Consignment Warehouse Defaults Order Process

34. Quovera Confidential 34 Enter Line Details Order Process

35. Quovera Confidential 35 Enter Consignment Sub-Inventory on Line Order Process

36. Quovera Confidential 36 Schedule Line Order Process

37. Quovera Confidential 37 Book Order Order Process

38. Quovera Confidential 38 Line Status Goes to Fulfilled Order Process

39. Quovera Confidential 39 Workflow Proceeds to Invoice Interface Order Process

40. Quovera Confidential 40 Line Status Goes to Closed Order Process

41. Quovera Confidential 41 Invoice process for Customer Consigned Inventory Managing Customer Consignment Invoice Process

42. Quovera Confidential 42 Run Autoinvoice Invoice Process

43. Quovera Confidential 43 View Invoice Invoice Process

44. Quovera Confidential 44 View Material Transaction Verify Inventory Decrement

45. Quovera Confidential 45 Replenishment process for Customer Consigned Inventory Managing Customer Consignment

46. Quovera Confidential 46 Run Min-Max planning report Replenishment Process

47. Quovera Confidential 47 Create and approve internal requisition Replenishment Process

48. Quovera Confidential 48 Create internal sales orders Replenishment Process

49. Quovera Confidential 49 Order import Replenishment Process

50. Quovera Confidential 50 Pick and Ship Confirm Replenishment Inventory Replenishment Process

51. Quovera Confidential 51 View Material Transaction Verify Inventory Increment

52. Quovera Confidential 52 Process Errors/Issues Booking Order with No Sub-Inventory

53. Quovera Confidential 53 Process Errors/Issues Line Will Go to Booked without Sub- Inventory – Workflow Stops

54. Quovera Confidential 54 Process Errors/Issues Order Status Remains Booked-must re- enter

55. Quovera Confidential 55 Process Errors/Issues Workflow Error – No Sub-inventory or Inventory with Custom WF

56. Quovera Confidential 56 Process Errors/Issues Booking Order with Not Enough Inventory – Line Status will Proceed to Fulfilled

57. Quovera Confidential 57 Process Errors/Issues Line Status will Proceed to Closed and Order is Eligible for Invoice

58. Quovera Confidential 58 Process Errors/Issues If you have No for Allow Negative, Inventory Transaction will get stuck in Transaction Interface

59. Quovera Confidential 59 Process Errors/Issues Reconcile Inventory and Resubmit

60. Quovera Confidential 60 Process Errors/Issues Other Standard Types of Error Messages –Invalid Item –Invalid Shipment Method (OK for Manual Generic WF, errors in Order Import) –Item not found on Price List –Item not found on Secondary Price List

61. Quovera Confidential 61 Possible Customizations Add quantity check in WF Added a second check in WF to flag over consumption of consignment inventory levels Customize Sales Order Workflow Report Create Custom WF Error Report Create Table to Store Customer and Sub-Inventory Details for Automatic Processing Create Order Import Error Messages for EDI

62. Quovera Confidential 62 Possible Customizations Bill Only with Inventory Interface Workflow Customization

63. Quovera Confidential 63 Possible Customizations Flow Stops if No Qty On Hand

64. Quovera Confidential 64 Possible Customizations Status on Line Remains Booked until Inventory is Reconciled

65. Quovera Confidential 65 Possible Customization Sales Order Workflow Report – Order lines Booked but not Fulfilled

66. Quovera Confidential 66 Possible Customization Table to Store Customer and Sub- Inventory Details for Automatic Processing of EDI/Imported Orders

67. Quovera Confidential 67 Conclusion Standard Bill Only with Inventory Interface Workflow will work for Manual Order Entry without customization. Must understand: –Flow will fulfill and go to Invoice Interface and Closed with or without enough inventory –Need to manage Negative Inventory conditions –If user fails to enter Sub-inventory at time of booking – Order is stuck in Booked –Will not work for imported Orders – need to custom

68. Quovera Confidential 68 Conclusion Q & A