Physical Inventory Adjustments for Consigned Items

You can have positive or negative physical inventory adjustments for consigned items.

When a negative adjustment happens for the consigned on-hand quantity, first an implicit Transfer to Owned transaction takes place for the item. Then, the cycle count adjustment occurs on the owned material. Basically, you’re consuming the consigned item so there’s a consumption advice created.

When a positive cycle count adjustment happens for the consigned on-hand quantity, first a cycle count adjustment takes place on the owned material. Then, an implicit Transfer to Consigned transaction occurs. This results in the reverse of a consumption advice.

Note that positive adjustments for consigned material are much more restrictive because the final quantity after the positive adjustment can’t exceed the total quantity received from the supplier for the consigned item.