Vendor Consignment Inventory in Dynamics 365 for Finance & Operations

Vendor consignment inventory is the newly added functionality in Dynamics 365 Finance & Operations that empowers manufacturing businesses to take control of entire inventory. Microsoft has added this functionality, understanding the supply chain model that businesses have been following, which is consignment inventor. So, before moving forward, let’s understand this model.

Consignment Inventory

It is a popular supply chain model among manufacturers, suppliers, and retailers where suppliers retain the ownership rights of the product until it gets sold by the retailer. Once a retailer sells the product to the customer, the payment is released to the supplier or the manufacturer.

In the entire process, the retailer doesn’t purchase the inventory. If the retailer is unable to sell the product, it gets redirected to the supplier or manufacturer itself. This supply chain model is good for both the retailer and the supplier because it offers product visibility, no investment from the retailer, less financial risk to the retailer, and the supplier gets the insight, like which products are not selling and where to divert them to increase sales.

Vendor Consignment in Dynamics 365 F&O

This functionality is built on the core concept of consignment inventory. This functionality tracks all inventory sent by the supplier or the manufacturer. Like tracking inventory, calculating products, building reports, analysing data, tracking sales, optimising inventory, and releasing payments to vendors. Also, it changes the ownership of the products from being stored in the inventory to sold to the customer.

Microsoft Dynamics AX 2012, the previous version of Dynamics 365 F&O, doesn’t contain this feature, and you will need a virtual warehouse to track consignment inventory.

However, with D365 F&O, the entire supply chain of consignment inventory can be managed with ease, along with holistic inventory visibility across the different milestones of the chain.

Setting up Vendor Consignment Inventory in Dynamics 365 F&O

In this section, we are going to discuss different steps to set up the vendor consignment inventory in Microsoft Dynamics 365 F&O. The detailed procedure is discussed next:

• Open the Microsoft Finance and Operations application and open All Vendor setup screen.
• Now, click on the Vendor Collaboration drop-down menu and click on Active (PO is not confirmed). Also, if you want to generate automat PO, click on the respected option.
• Open the Inventory Management screen to create inventory owners. To do this, you need to select the Dimensions option followed by Setup option.
• It will create your existing legal entity automatically in the Inventory owners screen.
  
• Now, you need to activate the tracking so that vendor and the business can track the consignment in real-time.
• To do so, open the Tracking Dimension Groups followed by Dimensions and Variant Groups followed by Setup under Product Information Management.
• To create Tracking Dimension group, you need to activate the “Owner” dimension from the screen. Once activating, you can set up the owner details.
  
• Now, create Inventory Journal name and assign it in the inventory and warehouse management.
  

The above steps will activate the vendor consignment capability in Dynamics 365 Finance and Operation.

Key Features of Vendor Consignment

Here are some of the major features that can help you understand more about vendor consignment facilities.

Vendor Management

Dynamics 365 F&O offers extensive vendor management tools. Organise all of your vendor data in one location, including contracts, phone numbers, and performance metrics. Watch vendor compliance, delivery dates, and quality standards to ensure optimal performance. Simplify the process of adding new suppliers, including contract negotiation and establishment.

Consignment Agreement

Offer editable templates for agreements to ensure uniformity and expedite the creation process. A reminder system for contract renewals and expiration dates can be set up. Maintain an open audit trail by monitoring changes to the agreement over time.

Delivery Receipts

Barcode scanners ought to be incorporated for precise and prompt receipt of consigned items. To ensure that the goods meet specifications, quality inspection methods should be included in consignment receipts. To strengthen recall and traceability protocols, keep an eye on certain committed product lots or batches.

Inventory Consignment:

Find out in real time the whereabouts, conditions, and stock levels of consignment inventory. To strengthen recall and traceability protocols, keep an eye on certain committed product lots or batches. Set up warnings for impending expiration dates or low inventory levels to avoid stockouts and product losses.

Consignment-based Sales:

The existing order management and sales processes should be easily integrated with consignment sales. Commissions can be automatically calculated by factoring in product categories, sales volume, and many parameters. Analyse sales data to identify top-selling products, customer preferences, and sales trends.

Vendor payments:

The payment processing process can be made simpler with automated invoicing and payment creation. Verify vendor payments against sales data and consignment agreements to ensure accuracy.

Dynamics Square: Your Trusted Partner for Vendor Consignment

Dynamics Square, a leading partner for Microsoft Dynamics 365, offers businesses unparalleled expertise and solutions to effectively implement and oversee vendor consignment processes. Because of our extensive knowledge of the platform and our proficiency in the related field, we are able to provide tailored solutions that are tailored to your individual requirements.

How we can help you:

• Comprehensive Assessment: We provide extensive assessments to identify any issues, gain an understanding of your current processes, and determine the best course of action for vendor consignment.
• Tailored Solutions: Based on your specific business goals and requirements, our team of experts will design and implement a vendor consignment plan.
• Guidance on Industry Best Practices: To ensure that your implementation meets the strictest standards, we provide guidance on industry best practices.
• Training and Support: Our comprehensive training programs give your employees the skills they need to use the vendor consignment capabilities effectively, and our ongoing support ensures a seamless transfer.

Working with Dynamics Square can help you implement and manage vendor consignment in an efficient manner, which can improve your supply chain, strengthen your relationships with vendors, and promote business expansion.

In case of need, feel free to write us an email at info@dynamicssquare.co.uk or you can call us directly at  0203 514 1057 for more information.