Consignment Inventory

Four common scenarios of consignment inventory:

1. Inventory at a Customer - use for handle the consignment sale to consignee
2. Inventory at a Vendor - use for handling the subcontracting process where a vendor performs operation for the parts of finished product
3. Customer Owned Inventory - use for handling the case if the product is owned by the customer and there is no inventory value in your company.
4. Vendor Owned Inventory - use for handle the consignment sale for consignor 

Inventory at a Customer

1) Create Location for represent inventory replenished to the customer

2) Create a G/L account for the customer location.  It can have a specific consignment inventory account in the balance sheet,

3) Setup Inventory Posting group for the mapping for the Location/Product and the G/L account

4) Transactions

4.1 Replenish inventory to customer.

When you replenish inventory to the consignment customer by Transfer Order (e.g. Transfer from MAIN to CONG)

In the Balance Sheet, you can find the Inventory is moved from your Inventory Account to the Consignment Inventory Account

4.2 Report from customer for the consignment sales invoice

When you received the invoice from customer for the items at the consignment location is sold, post the shipment and invoice by Sales Order.  The item to be ship from the Consignment Location

Vendor owned Inventory

1) Create Location for separate the inventory that belongs to vendors

2) Create a G/L account for the location.  It can have a specific consignment inventory account in the balance sheet,

    Inventory Account / Inventory Account (Interim) / Inventory Accrual Account

3) The inventory posting setup is then defined to have the expected inventory value on a separate consignment inventory account in the balance sheet.

For Example:

Balance Sheet Account (Setup in Inventory Posting Setup) - G/L Account 2160 Consign-In, 2161 Consign-In (Interim)

P&L Account (Setup In General Posting Setup) - The Invt. Accrual Account (Interim) to be same as the Inventory Account for Consign-In (Interim).  

4) Transactions

4.1 Goods received from Vendor

Create Purchase Order and post the Receipt for the quantity.

The G/L to be posted as below, there are not affected on the Balance Sheet.

4.2 Post Purchase Invoice to the Vendor when you sold the item.  (i.e. Post Purchase Invoice for the sales quantity.)