Use this activity to indicate use of the consignment stock feature. You will also specify whether or not you will be using the VMI (Vendor Managed Inventory) feature.
Having consignment stock means that you have access to products which are still owned by the supplier. You will not be charged until the products are used or sold, i.e., moved out from the consignment stock. This functionality is used preferably when the relationship between the customer and supplier is close and the consumption of material is frequent.
To use the consignment stock handling function, you must set Ownership to Consignment. This is done on Supplier for Purchase Part page on the General tab.
The VMI option on Inventory Part page, Main tab, specifies whether the responsibility for the refill process regarding consignment stocks is handled by your company or by the supplier, i.e., this option indicates whether the system should automatically create purchase requisitions or not.
When Consignment is indicated in the Ownership field, it tells the system that the receipt is managed as consignment stock handled when receiving these parts from this specific supplier.
When the VMI option is enabled on the inventory part, the system does not create any purchase requisitions for the demands. That is, the vendor knows the inventory balance of the part and sends you the needed parts without notification from you. All the sources of automatically created requisitions such as MRP, order point runs, and customer order are affected. If the option is disabled, the responsibility for the refill is yours, i.e., your system creates purchase requisitions and/or purchase orders. Since this option is placed on the inventory part, this indicates that the handling of the part is done this way, regardless of the suppliers from whom you are buying.