Managing inventory at customer locations is a time-consuming activity for any business that deals with consigned inventory or vendor-managed inventory (VMI). Tracking what item should ship when, and where, demands a well-constructed framework of logistical planning and execution. VMI is a complex web of moving inventory: If not managed correctly, any issues can cause the system to spiral out of control, leaving customers dissatisfied and profits unrealized.
Why is Outbound Inventory Management Difficult?
Creating a well-functioning system to manage consigned or vendor-managed inventory is easier said than done, however, due to several operational challenges:
- Tracking ownership of inventory, increased stock-outs, need for buffer stock, inventory holding/handling costs
- Inefficient tracking of inventory
- Replenishment at the right time and proper levels • Inefficient planning (demand/availability and consumption)
- Lack of automation and lack of agility with systems/processes
Joseph E. Joseph, principal product manager at Oracle JD Edwards EnterpriseOne, says that these challenges occur because “suppliers who are using consigned or vendor-managed inventory business processes do not know enough about the inventory at their customers’ locations. They need this knowledge to keep optimal stock levels at customers’ locations, thus reducing stock-outs or the need to keep buffer stock.”
What Makes the JD Edwards Approach Special?
Until recently, JD Edwards EnterpriseOne did not have a solution to support consigned or vendor-managed inventory business processes. Now, Outbound Inventory Management is the ideal tool to solve the business challenges that companies face when managing physical inventory.
As this product was being developed, customers who were going to use the product helped JD Edwards by providing input and validation. “A customer focus group was formed during the initial phase of product development with customers from the life sciences, medical device, manufacturing, and wholesale and distribution industries,” according to Joseph. “A thorough demonstration of the product was provided to the customer focus group at every stage of development, and the feedback received was incorporated in the software.”
In addition, Wipro formed a partnership with Oracle to co-develop JD Edwards EnterpriseOne Outbound Inventory Management. This partnership underscores Oracle’s vision of investing in next-generation solutions that help provide better service and unmatched expertise to our customers globally. This strategic investment reflects Wipro’s commitment to be the Outbound Inventory Management partner of choice among JD Edwards’s service provider partners.
How Does JD Edwards Outbound Inventory Management Help?
Outbound Inventory Management supports the order-to-cash process and accommodates both consigned inventory — inventory owned by the supplier that is in the customer’s possession — and vendor-managed inventory — inventory owned either by the supplier or by the customer. The new Outbound Inventory Management product is ideal for companies that want to increase their profit margin through inventory automation in manufacturing, consumer goods, life sciences, wholesale distribution, food and beverages, and the paper and pulp products industries.
JD Edwards Outbound Inventory Management achieves this outcome through several methods:
- Consigned or VMI Agreements: Specify agreement conditions and replenishment methods, revise agreements and track all changes, set up target inventory levels to be maintained at customers’ locations, track historical agreement information, and monitor and measure agreement terms against actual activity.
- Order Entry: Enter outbound inventory shipment orders that contain consigned, vendor-managed inventory and other order detail lines, automatically associate outbound inventory agreements with order lines, and select outbound inventory agreement upon sales order entry.
- Acknowledgement: Acknowledge receipt of outbound inventory shipment orders, track in-transit inventory, acknowledge the receipt of orders after they arrive at a customer’s location, acknowledge outbound orders in batch, and hold damaged goods in a designated location.
- Damaged Goods/Returns: Maintain damaged or repairable inventory in a held location, move repaired inventory to a customer’s location, return inventory directly from a held location, return damaged inventory through credit orders, and automatically update agreement and inventory balances.
- Invoicing: Generate invoices for consumed items that were originally shipped on consignment and for replenishment orders for non-consignment shipments.
- Inventory Consumption: Update inventory balances when customers consume items, generate invoices or replenishment orders, report lot-level consumption, and prevent non-consumable inventory from being consumed.
- Replenishment: Re-stock product at a customer’s location using one-to-one replenishment (where the supplier replaces the exact quantity consumed) or reorder point replenishment (where replenishment occurs only when a defined reorder point is reached).
- One View Reporting: Make informed, timely business decisions and take action with real-time visibility into outbound inventory data and negotiate better agreement terms based on data analytics. According to Joseph, the intuitive interface of One View Reporting, “empowers business users to access and personalize outbound inventory transaction data into lists, charts, graphs and tables without any support from IT department. This enables them to make informed business decisions.”
JD Edwards EnterpriseOne Outbound Inventory Management has a number of real-world applications. For example, a supplier in the Life Sciences industry wants to store and manage goods on consignment at various customer sites, in this case, hospitals. The supplier starts this process by creating an outbound inventory agreement with hospitals to ship goods as consigned inventory. Once sales orders are created in the system, goods are sent to the hospitals without transferring ownership. Using the Outbound Order Acknowledgement application, the hospitals can acknowledge the receipt of goods at their locations. Hospitals can consume the items from their warehouse and report the consumption details back to the supplier. Once consumption quantities are updated in the system, an invoice is generated and sent back to the hospitals. The system also generates a replenishment order to refill the consumed inventory at the hospital sites based on agreement terms and conditions. The solution can be used to solve similar business problems that exist in food and beverage, and wholesale and distribution industries.
Suppliers who are using consigned or vendor-managed inventory business processes and are currently on releases 9.1 or 9.2 of JD Edwards EnterpriseOne can take advantage of the new module, Joseph said. JD Edwards EnterpriseOne Sales Order Management is a prerequisite for Outbound Inventory Management.
More resources for you learn more about Outbound Inventory Management
- Add these sessions to your agenda at COLLABORATE 17.
- Improve Customer Loyalty with Sell Side Vendor Managed Inventory and JD Edwards
- Vendor Managed Inventory of Maintenance Parts using JD Edwards
- Conference Presentations (Conference presentations are a paid member benefit – contact [email protected] for more information)
- Get involved with the JD Edwards EnterpriseOne Manufacturing and Distribution SIG to share knowledge and network with other users.
- Watch for even more education at INFOCUS 17!