Consigned Inventory Aging
Consigned inventory aging is an agreed upon period of time where at the end of the aging period, the ownership of the inventory transfers from the supplier to the buyer.
These aspects are important regarding consigned inventory aging:
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Aging process
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Aging period
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Aging onset point
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Transfer to Owned transaction
Aging Process
When a buyer and supplier enter into a consignment agreement, they agree to a specified aging period and aging onset point. When the aging period expires, the buyer takes ownership of the consigned inventory. The inventory manager performs a manual Transfer to Owned transaction (ownership change) that transfers the material from supplier owned to buyer owned.
Now that the consigned inventory has been consumed, a consumption advice is generated based upon the frequency agreed upon between the buyer and supplier. The consumption advice communicates to the supplier the consumption transactions that occurred within a given period of time and it also serves as the document to initiate financial settlement for the consumed goods.
Aging Period
The aging period indicates the maximum number of days the material may be on consignment. You specify the aging period on the consignment agreement. Oracle Inventory Management uses this value to determine if consigned inventory has aged and what appropriate action should be taken. Once the buyer takes ownership of the consigned material, the aging period is no longer tracked since the material is no longer consigned.
The Aging Period Days field is available on the header and line level for a consignment agreement. The line-level value takes precedence over the header value. For example, if the value in the Aging Period Days field is 1 at the header level and 180 at the line level, then the aging period is 180.
Aging Onset Point
The aging onset point indicates the mutually agreed event point at which consigned material begins to age. Values can be Receipt or Shipment. You specify the aging onset point on the consignment agreement. Oracle Inventory Management uses this term to determine whether to begin aging when the consigned goods are shipped by the supplier or when they're received at the buying organization.
If the aging onset point value is Receipt, then the date of receipt is used to start the aging period calculation. If the aging onset point is defined as Shipment, then the application uses the ship date specified on the advance shipment notice (ASN) to start the aging period calculation.
Transfer to Owned Transactions
The change in ownership (Transfer to Owned transaction) typically occurs when the buyer uses the product or when the aging period has expired.