Consignment Process in Oracle Fusion Cloud: Consignment Orders & Receipts (Step‑by‑Step)
1. What is Consignment Inventory?
Consignment inventory is a model where the supplier retains legal ownership of goods stored at the buyer’s site until the buyer consumes them. In Oracle Fusion Cloud, consigned goods are received into inventory but remain on the supplier’s books until consumption triggers ownership transfer and invoicing.
2. Consignment Orders (Purchase Order Behavior)
A consignment order is essentially a purchase order line flagged as Consignment. It records the intent to hold supplier-owned stock at buyer locations.
Lifecycle — at a glance
- Create a consignment agreement with supplier (procurement contract).
- Create a Purchase Order with consignment lines or a dedicated consignment PO type.
- Supplier ships and you perform a consignment receipt.
- Inventory is available as Consigned on‑hand.
System behavior
| Action | Result |
|---|---|
| Create consignment PO | No immediate payable; PO lines marked as consigned |
| Receive consigned goods | On-hand increases (consigned), no ownership/accounting change |
| Consume items | Ownership transfers; create consumption advice; invoice posted |
3. Consignment Receipts (Receiving Without Ownership Transfer)
Consignment receipt is the inventory receipt transaction that puts supplier-owned stock into a receiving locator or bin while preserving supplier ownership.
How to receive (short)
- Inventory → Receipts → Receive Expected Shipments or Manage Receiving.
- Select the consignment PO/ASN and perform the receipt.
- Confirm quantities and complete the receipt; items become Consigned on-hand.
Tip: Use locator/bin controls to segregate consigned stock for easier reporting and cycle counting.
4. Consumption, Consumption Advice & Accounting
Consumption occurs when a consigned item is issued to production, a sales order, or an internal use. That event triggers the transfer of ownership, the creation of a consumption advice, and eventually supplier invoicing.
Accounting flow (simplified)
// When consigned goods are received
No accounting entry (supplier still owns stock)
// When consumed by buyer
Debit: Inventory (or COGS) — buyer
Credit: Consignment Liability (or Supplier Liability)
// When supplier invoice is received
Debit: Consignment Liability
Credit: Accounts Payable
Consumption advice
Oracle can generate consumption advice documents that list consumed items and quantities. These can be sent to the supplier automatically or manually depending on integration setup (B2B, EDI, or email).
5. Required Setup in Oracle Fusion Cloud
- Enable consigned inventory functionality in Inventory Management (feature availability depends on your Fusion release and configuration).
- Define supplier and consignment contract terms in Procurement Contracts.
- Create consignment PO lines (set Consignment flag) or use a specific PO type for consignment.
- Configure inventory locators/bins and choose an accounting treatment for consigned stock.
- Set up integrations for consumption advice / invoicing (B2B/EDI or manual process).
If your implementation team needs help, coordinate Procurement, Inventory, and Finance to align accounting and operational controls.
6. Best Practices & FAQs
Best practices
- Keep consignment stock in dedicated locators and enable cycle counting for visibility.
- Agree on clear consumption reporting cadence with suppliers (daily/weekly/monthly).
- Automate consumption advice where possible to avoid invoice disputes.
- Track unit prices and valuation method to ensure correct accounting at the time of consumption.
- Q: Does receiving consigned stock create a payable?
- A: No — payables are created only after consumption or when an agreed billing event occurs.
- Q: Can I return consigned stock to the supplier?
- A: Yes — treat it like an inventory transfer back to the supplier and follow your receiving/returns process.
- Q: How is consigned stock valued?
- A: Valuation typically occurs at consumption by applying the agreed unit price. Ensure your accounting rules and item costing setup reflect this behavior.
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