MODELING CUSTOMER CONSIGNED INVENTORY

IDEAS FOR A CUSTOM SOLUTION APPROACH

Table of Contents
Overview ............................................................................................................................... 1
Request/Agreement .............................................................................................................. 2
Customer Locations ............................................................................................................... 2
Replenish .............................................................................................................................. 3
Fulfill ..................................................................................................................................... 3
Receive.................................................................................................................................. 4
Consume, Ship/Decrement and Bill ........................................................................................ 4
Option 1: Create Miscellaneous Issues and a Bill-only type of sales order ........................................4
Option 2: Create a Sales Order and ship the associated Sales Order .................................................5
Option 3: Direct Sales Order Issue ...................................................................................................5
Option 4: Use Project Driven Supply Chain (PDSC) to model customer locations...............................6

Overview
Currently, Oracle Fusion Cloud SCM supports inventory consigned from a supplier (a.k.a., supplier/buy-
side consignment). See Consigned Inventory From Supplier in Oracle Supply Chain & Manufacturing >
User > Using Inventory Management documentation and Inventory Consumption Rules in Oracle
Supply Chain & Manufacturing > Implementation > Implementing Manufacturing and Supply Chain
Materials Management documentation.

Oracle Cloud SCM also supports Vendor Managed Inventory (VMI). See Vendor-Managed Inventory in
the Oracle Supply Chain & Manufacturing > Implementation > Implementing Manufacturing and
Supply Chain Materials Management documentation.

Customer, or sell-side, consignment, and customer VMI (consigned inventory to customer) in Oracle
Cloud SCM is on our product roadmap for a future release. The purpose of this document is to provide
some ideas on how you can support customer/sell-side consignment and VMI in the current release of
Oracle Cloud SCM (i.e., as of 22A).

Note: The inventory tracked at various consigned customer sites must be OWNED by the seller.
Support for seller-owned and customer-owned inventory in the same location is not currently
supported.
Copyright © 2021 Oracle and/or its affiliates. All rights reserved
1
This document is a high-level discussion on potential solution approaches that could be used to model customer consigned / sell-side VMI.
Further analysis and thorough testing would be required to determine the feasibility of implementing these ideas.

The above is intended to outline our general product direction. It is intended for information purposes only and may not be incorporated into any
contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.
The development, release, timing, and pricing of any features or functionality described for Oracle’s products may change and remains at the
sole discretion of Oracle Corporation.
 MODELING CUSTOMER CONSIGNED INVENTORY
IDEAS FOR A CUSTOM SOLUTION APPROACH

The following diagram shows the high level flow of how consigned inventory to customer can be
modeled in Oracle Cloud SCM including high-level options for modeling each of the steps in the
consigned inventory to customer flow. The remaining sections of the document correspond to the boxes
on the diagram.

Request/Agreement
This step represents the initial process of setting up an arrangement with the customers to consign
inventory at their locations and, depending on the solution approach, may also invole the customer
sending requests to replenish their sites.

Customer Locations
The customer locations can be modeled as either Organizations (ORGs) or as Subinventories (SUBs)
within an ORG. These are virtual locations used to track on-hand and usage and provide a mechanism
for replenishment.

Considerations:
• How many customer locations are needed?
• How often are new locations created or changed?

ORGs are more flexible but heavier to set-up and maintain. SUBs are less flexible and require special
handling to not be considered part of the overall on-hand in an ORG. If you choose the SUB route, it may
be good to have an additional ORG that contains all customer SUBs. The caveat to that is Option 4
documented below which uses Project-Driven Supply Chain (PDSC). Also note that if you mix seller
Copyright © 2021 Oracle and/or its affiliates. All rights reserved
2
This document is a high-level discussion on potential solution approaches that could be used to model customer consigned / sell-side VMI.
Further analysis and thorough testing would be required to determine the feasibility of implementing these ideas.

The above is intended to outline our general product direction. It is intended for information purposes only and may not be incorporated into any
contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.
The development, release, timing, and pricing of any features or functionality described for Oracle’s products may change and remains at the
sole discretion of Oracle Corporation.
 MODELING CUSTOMER CONSIGNED INVENTORY
IDEAS FOR A CUSTOM SOLUTION APPROACH
owned stockrooms or DCs in the same ORG as customer SUBs then replenishment is limited to intra-org
(i.e., SUB to SUB) transfer orders vs. inter-org or inter-company transfer orders.

These will be generically called customer locations in the remainder of the document regardless of
whether they are set up as ORGs or SUBs.

In either case, a ship-to location needs to be set-up for the actual customer location address and
assigned to the ORG or SUB.

Replenish
There are a couple of options to replenish on-hand at the customer locations. The idea being that these
replenishment requests would be modeled as transfer orders (a.k.a., Internal Material Transfers, IMTs,
TOs) to ship stock from the seller’s DC to the customer location. Using a transfer order allows you to ship
goods to the customer location and track on-hand at the virtual customer location.

• Min-Max: Set up ORG/item or SUB/item Min-Max parameters to auto replenish on-hand

balances if the customer location falls below the minimum level. Min-Max Replenishment then
generates a transfer order to ship stock from the seller’s DC to the virtual customer location
(ORG or SUB).
• A PaaS type of solution can also be used to create transfer orders directly using web-services or
FBDI loads based upon custom algorithms or feedback directly from the customer for the
replenishment requests.

Fulfill
Once the transfer orders are created, they are fulfilled by the seller’s DC.

• Transfer orders go through the normal fulfillment process, like a sales order, in the seller’s DC
o Inter-org/Inter-company transfer orders go through normal fulfillment (including all
shipping documents).
▪ SFO creates the different transactions to buy/sell between different profit
centers in the financial flow.
▪ If the profit centers are the same, it is an inter-org transfer, otherwise it is inter-
company.
o Intra-org IMTs (i.e. SUB-to-SUB) go through normal fulfillment but only provide a
packing slip.

Copyright © 2021 Oracle and/or its affiliates. All rights reserved

3
This document is a high-level discussion on potential solution approaches that could be used to model customer consigned / sell-side VMI.
Further analysis and thorough testing would be required to determine the feasibility of implementing these ideas.

The above is intended to outline our general product direction. It is intended for information purposes only and may not be incorporated into any
contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.
The development, release, timing, and pricing of any features or functionality described for Oracle’s products may change and remains at the
sole discretion of Oracle Corporation.
 MODELING CUSTOMER CONSIGNED INVENTORY
IDEAS FOR A CUSTOM SOLUTION APPROACH
Receive
You can set up the customer location to require a receipt or do an auto-receipt at the time of shipment.
This is defined on the Inter-org or the Inter-sub parameters.

If a receipt is required, the customer, or PaaS solution, needs to send a receipt confirmation back to
Oracle Inventory Management to create the transfer order receipt in Oracle Cloud SCM. These can be
entered on-line, by REST web-service, or FBDI load.

Consume, Ship/Decrement and Bill

As the customer utilizes the goods, they need to send consumption transactions to decrement inventory
in the customer location and trigger billing for the goods consumed. This can be achieved through direct
service calls to appropriate web-services, via Oracle Integration Cloud (OIC) with appropriate web-
services or via FBDI loads, or via direct communication from the customer (e.g. – phone call, e-mail,
etc.).

There are several options for decrementing inventory in the customer location and billing for
consumption:
• Option 1: Create Miscellaneous Issues and a Bill-only type of sales order
• Option 2: Create a Sales Order and ship the associated Sales Order
• Option 3: Direct Sales Order Issue (Recommended approach)
• Option 4: Use Project Driven Supply Chain to model customer locations

Option 1: Create Miscellaneous Issues and a Bill-only type of sales order

As the consumption, or usage, is reported from the customer, they are translated into a miscellaneous
inventory issue from the customer location for the appropriate ORG, SUB, Location, Lot, Serial, etc. In
addition, each of these consumption transactions need to create a bill-only type of sales order.
• Pros
o Easier to manage which subinventory, locator, lot, serial, etc. was consumed as those
fields are attributes of REST web-service or FBDI.
• Cons
o Lack of margin analysis in costing as the consumption isn’t tied to a sales order.
o More complex to track in Genealogy and Installed Base

Copyright © 2021 Oracle and/or its affiliates. All rights reserved

4
This document is a high-level discussion on potential solution approaches that could be used to model customer consigned / sell-side VMI.
Further analysis and thorough testing would be required to determine the feasibility of implementing these ideas.

The above is intended to outline our general product direction. It is intended for information purposes only and may not be incorporated into any
contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.
The development, release, timing, and pricing of any features or functionality described for Oracle’s products may change and remains at the
sole discretion of Oracle Corporation.
 MODELING CUSTOMER CONSIGNED INVENTORY
IDEAS FOR A CUSTOM SOLUTION APPROACH
Option 2: Create a Sales Order and ship the associated Sales Order
In this case, the consumption transaction simply creates a normal sales order that “ships” from the
customer location.
• Pros
o Decrement is tied to a sales order shipment so costing, genealogy, installed based and
billing are all triggered based upon the consumption
• Cons
o More complex to manage as you need to create the sales order and then manage which
subinventory, locator, lot, serial was consumed to create the shipment
▪ A PaaS-type of extension could be developed to utilize Oracle Inventory
Management’s Reservations service and create a detailed reservation (i.e., at
the ORG/Item/Sub/Loc/Lot/Serial) based upon the consumption data.
• This may be able to be done as a custom step in OM’s orchestration
process (assuming all fields are passed in on the order in flexfields).
• Alternatively, the OM order could go through the normal orchestration
flow minus the inventory reservations step and then utilize the services
in INV to do the detailed reservation along with the other steps in the
fulfillment flow
▪ Alternatively, there are web-services available to do Pick Release, Pick Confirm
and Ship Confirm.

Option 3: Direct Sales Order Issue

Direct Sales Order Issue bypasses the normal fulfillment process, pick/pack/ship, and just creates an
inventory transaction, sales order issue, similar to miscellaneous issue, but tied to the sales order for
costing/installed based/genealogy purposes. This type of order requires you to pass in all inventory
details like SUB, locator, lot, serial for the transaction to process.

This option is likely the best approach for managing the inventory decrement and bill requirements as it
is a single transaction that creates the sales order, decrements inventory, and maintains a tie to the
sales order for costing, genealogy and installed base and bills the customer.

• Pros
o Decrement is tied to a sales order shipment so that costing, genealogy, installed based
and billing are all triggered based upon the consumption
o Consumption from the customer locations is much easier compared to other options
• Cons
o None

Copyright © 2021 Oracle and/or its affiliates. All rights reserved

5
This document is a high-level discussion on potential solution approaches that could be used to model customer consigned / sell-side VMI.
Further analysis and thorough testing would be required to determine the feasibility of implementing these ideas.

The above is intended to outline our general product direction. It is intended for information purposes only and may not be incorporated into any
contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.
The development, release, timing, and pricing of any features or functionality described for Oracle’s products may change and remains at the
sole discretion of Oracle Corporation.
 MODELING CUSTOMER CONSIGNED INVENTORY
IDEAS FOR A CUSTOM SOLUTION APPROACH
Option 4: Use Project Driven Supply Chain (PDSC) to model customer locations
PDSC can be used in Oracle Cloud SCM without the Oracle PPM / project costing piece.

The idea behind this approach is that the inventory in the seller’s DC would not be striped by
project. In other words, the actual on-hand in the DC is just normal on-hand as it would be in any of
the other options.

Instead of setting up additional ORGs to represent the customer locations, you could set-up SUBs for
each customer site. You would also set-up Projects for each of the customer’s sites.

You can still use a transfer order, but it would need to be an intra-org transfer. After the transfer is
received into the customer location, you would also perform the Project Transfer transaction to
transfer the goods to a specific project that represents the customer.

On consumption, the material that is consigned to a customer would have a project associated with
it. You can then pass in the project on the sales order so that when sales order fulfillment occurs,
only the on-hand associated with the customer/project is eligible to “ship”. This, however, doesn’t
solve the Lot or Serial problem so you’d still need to do pieces of Option 2 to reserve or pick/ship
the correct lot or serial.

• Pros
o Decrement is tied to a sales order shipment so costing, genealogy, installed based and
billing are all triggered based upon the consumption
o Consumption from the customer locations is somewhat easier than Option 2.
• Cons
o More complex to manage as you need to create the sales order and then manage which
lot or serial was consumed to create the shipment
▪ A PaaS-type of extension could be developed to utilize Oracle Inventory
Management’s Reservations service and create a detailed reservation (i.e., at
the ORG/Item and Lot/Serial) based upon the consumption data.
• This may be able to be done as a custom step in OM’s orchestration
process (assuming all of those fields are passed in on the order in
flexfields).
• Alternatively, the OM order could go through the normal orchestration
flow minus the inventory reservations step and then utilize the services
in INV to do the detailed reservation along with the other steps in the
fulfillment flow
▪ Alternatively, there are web-services available to do Pick Release, Pick Confirm
and Ship Confirm.

Copyright © 2021 Oracle and/or its affiliates. All rights reserved

6
This document is a high-level discussion on potential solution approaches that could be used to model customer consigned / sell-side VMI.
Further analysis and thorough testing would be required to determine the feasibility of implementing these ideas.

The above is intended to outline our general product direction. It is intended for information purposes only and may not be incorporated into any
contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions.
The development, release, timing, and pricing of any features or functionality described for Oracle’s products may change and remains at the
sole discretion of Oracle Corporation.