Processing Transfer Hold Purchase Orders

Transfer and Hold Purchase Orders (or orders on consignment) are used when processing an order with a Vendor who holds the inventory at their site. This is useful in situations where Vendors keep inventory on hand for companies that operate a just-in-time inventory system. A typical scenario might be a company telling their Vendor they will buy 100,000 pounds of a raw material, but want it delivered in 10,000 pound increments as needed over the next 3 months. See the Purchase Order Types encyclopedia page for information on how the system processes Transfer and Hold orders.

Notes on the Transfer and Hold Purchase Order Process:

  • Certain Item Master properties are not taken into account during the receiving of material into the hold Facility, such as purchasing QC Groups and the "Require User Lot on Receipt" flag. These properties will instead be taken into account when the materials are received from the holding Facility into the Facility that will utilize them.
  • The system does not make any GL postings during the purchase and receipt of Vendor inventory to the holding Facility step of this process since the material is still in a holding Facility and not in the Facility where the material will be consumed. Therefore, the lot costs and values will be zero.

Configuration

A hold Facility must be setup via Inventory > Maintenance > Facilities. The hold Facility defines which Facility will receive the inventory from the Vendor. The hold Facility must then be defined on a purchasing Ship to Location.

  • Note: It is important to ensure the "Default" check box is not checked, since the Vendor Hold Location would never be the default receiving Location for all purchase orders.

The Vendor record for the Transfer Hold Purchase Order must have the "Accept Backorders" flag set to "Yes". This is necessary since the concept of Transfer and Hold assumes that inventory will be moved from the hold Facility to the production Facility in increments based on demand. For information on Vendor setup, refer to Managing Vendors.

If companies will be enforcing strict lot control for items or using Purchase Order QC Testing, the "Transfer Hold Lot Control" flag must be checked on the Facility record for the final receiving Facility as defined on the "General" tab of the Transfer Hold Purchase Order.

Process

The Transfer and Hold process is comprised of two sub-processes: (1) the purchase and receipt of Vendor inventory to the holding Facility and (2) the receipt of material from the hold Facility to the Facility on the Purchase Order, where it will be consumed in the production process.

Purchase and receipt of Vendor inventory

The purchase and receipt of Vendor inventory to the holding Facility is completed through the following steps:

  1. Navigate to Purchasing > Order Entry. Select an Order Type of "Transfer Hold" and then the appropriate Vendor and production Facility that will eventually receive the material from the hold Facility. On the Misc 1 tab, select the Ship to Location.
  2. Add the line items. When finished, save the order and record the order number. Fore more information on entering new orders, refer to the Entering Purchase Orders Best Practice page.
  3. Navigate to Purchasing > Receive. Enter the appropriate order number and click the "Continue" button. Notice that the Facility on the Receiving form is the hold Facility and not the production Facility. Receive the total amount for all line items.
    1. Note: Back ordering is not supported in this step of the transfer hold process. When receiving material from the Vendor to the hold Facility, all ordered material needs to be received. For more information on the receipt process, refer to the Receiving Purchase Orders Best Practice page.

Note: Companies may use the "Lot # Expression" field in Purchasing > Options to have the system automatically generate the lot number when receiving into the holding facility. To use this option, the following three conditions must be set:

  • The Facility on the purchase order must have the "Transfer Hold Lot Control" flag checked on the General tab of the Facility record.
  • The item(s) on the purchase order must have the "Require User Lot On Receipt" property flag checked. Similarly to the vendor, item(s) should have the “Allow Backorders When Receiving” flag checked.
  • The "Lot # Expression" field Purchasing > Options must contain the appropriate lot expression.
  • Beginning in version 16.04.037, if the holding Facility has the "Transfer Hold Lot Control" flag checked, catch weight values may be entered when initially receiving lots on a Transfer and Hold Purchase Order.

Receipt of material from the hold Facility

The receipt of material from the hold Facility to the Facility on the Purchase Order, where it will be consumed in the production process, is completed through the following steps:

  1. Navigate to Purchasing > Receive. Enter the Transfer Order number from step one of the process and click the "Continue" button. Notice that the Facility on the Receiving form is now set to reflect the Facility that was originally entered on the Transfer Hold order and not the holding Facility.
  2. At this point, item quantities are modified and the desired amounts are received based on demand. Quantities not received will be placed on back order Purchase Orders so that the process of receiving the required amounts from the hold Facility to the manufacturing Facility may continue.

Notes:

  • The lot cost for material received during step two of the transfer hold process will be based on the PO price type from the Item Master for all materials on the order.
  • Users are only allowed to receive the system /user lot numbers that were created on the receipt into the vendor hold Facility. This applies to both the main DEACOM application and the Warehouse Management System. If a user attempts to receive a lot number that wasn't initially received on the first receipt; the following prompt is displayed: "This lot number was not on the initial receipt of this PO."