Category Archives: Accounts Payable


Consignment inventory represents a common practice in many industries specifically in Retail industry but has been adopted by number of manufacturing companies.

Consignment inventory refers to the stock that is owned by a Vendor but stored at your company’s Inventory dimension e.g. Site, warehouse, location, Aisle and then the payment of such inventory takes place when the inventory ownership is shifted to the company.

The concept of the vendor consigned inventory has been newly introduced in DAX365;

Before we start exploring this functionality and do some transactions, we will start with the mandatory setups that are required to perform such transactions.

Mandatory Setup

  • Creation of Inventory owner (Create the record for the inventory owner i.e. provide legal entity name who is supposed to take the ownership of the inventory and list down the vendors who you declare to be responsible for consigned inventory)
    Navigate to : Inventory management > Setup > Inventory owner

  • Configure Tracking dimension group and activating owner dimension.
    Note: In current AX version, the owner cannot be activated along with batch and serial tracking, a customization may be required if an inventory item is associated with batch and serial number)
    Navigate to: Product and information management > Setup > Dimension and variant groups > Tracking dimension group

  • Configure Inventory model group _ only standard cost and moving average inventory models are supported, so only the released products associated with such models can be used in such transactions.
    Navigate to: Inventory management > Setup > Inventory > Item model group 
  • Configure Inventory ownership change journal
    Navigate to: Inventory management > Setup > Journal names > Inventory

  • Configuring consignment warehouse separately (the logic of having different warehouse is to differentiate consignment inventory and to better manage the stock)
    Navigate to: Inventory management > Setup > Inventory breakdown > Warehouses

    (Note : Do not consider to provide vendor account while configuring warehouse as it has nothing to do with consignment warehouse, this vendor account insertion is for Sub-contract production process in which user specify where they need to deliver to subcontracts vendors so it is used for default warehouse delivery address)

Step by Step process 

  • Create Inventory owner i.e. enter vendor 1006 and create a record for USRT _ Why we do this? Because we need to create a link between our vendor and the owner inventory dimension.
  • Create tracking dimension group for type Owner.
  • Setup/configure Item model group (if there isn’t any existing one for Standard or moving average)
  • Use an existing product that is associated with inventory model of type standard cost/moving average or create a new released product and associate it with inventory model of type standard cost/moving average.

Note: If released product belongs to standard cost inventory model, you must                     activate a purchase and cost price for the site that will later be used for storing                   consignment inventory.

  • Configure a consignment warehouse and associate with the site that is supposed to be used for consignment inventory.
  • Configure journal name for Inventory ownership change and associate a voucher series to it.
  • To create consignment inventory transaction.
    Navigate to: to Procurement and sourcing > Consignment > Consignment replenishment orders.

  1. Create new consignment replenishment order by clicking New > select Vendor i.e. 1006 (the one we configured within inventory owner)
  2. Add line, select the Product i.e. CoProd-01, enter the QTY, enter Requested delivery date and enter the warehouse i.e. CONSWAR (or the consignment warehouse)
  3. Click Generate product receipt to physically update the consignment inventory.
  4. The Order status will be change to Completed.
  5. Visit the inventory transaction to see the impact of this consignment replenishment order.
  6. If the ownership is required to be shifted to the legal entity meaning that the current legal entity would like to take the ownership of the inventory, go to Inventory management > Journal entries > Items > Inventory ownership change or go to Procurement and sourcing > Consignment > Inventory ownership change to do so.

    1- Click New to create new Journal.
    2- In the line details> click New to create a record for the item i.e. CoProd-01, enter       the QTY (if the entire QTY needs to be shifted one can enter it but if user wants to     split the QTY it can be achieved as well).
    3- Change the warehouse to CONSWAR.
    4- Click Post to post the journal.
    5- Visit the inventory transaction to see the impacts
    Note: One can notice that a purchase order has been created and the physical inventory has been updated i.e. Receipt status = Received. At this point, the ownership of the inventory is changed from Vendor 1006 to USRT (legal entity) and Invoice now can be raised to create liability, as soon as the order is invoiced inventory status will also be updated i.e Receipt status will be = Purchased.
    Moreover, as a reference, the PO header will reflect the Origin of the PO as Consginment.



Procurement & Sourcing & Accounts Payable_AX 2012- “Differentiation”.

Before I start, I would like to express that my thirst of learning AX its newly added modules, features and functionalities  is not over. A concern raised in my mind during R&D, I thought it might also be a concern that arises in every second mind who is new to MS Dynamics AX 2012 that;

“What was/is the need of having this module Procurement and sourcing when we already had Accounts Payable module, and the module was not the part of the previous versions but Accounts Payable module is  there in AX 6 and AX 5 already”.

Answer to the question is:

Apparently, Procurement and Accounts Payable seems responsible for the same Procure to Pay (P2P) process, but the major difference to be highlighted is that they both came from two different business domains (One is more operational (procure) while other is more financial (payable)). E.g. in a normal business practice within the organization at the core level, the “Procurement” department buy the goods and services for the organization while “Accounts payable” department pays for the goods which are procured.

Although, it may seem like “Procurement” and “AP” are two cooperate bodies with two separate hearts, they share the same body, pump the same blood but to understand with a better example. “Procurement” negotiate and ink the contracts with the suppliers (vendors), it is then about managing those contracts ensuring that procurement staff is buying against those contracts and delivering the promised value but after the “Procurement” effort, it is “Accounts Payable” responsibility to settle vendors/suppliers outstanding bills/payment/Invoice.

Therefore, Procure to Pay is like Procurement and sourcing module specifically designed to “Procure” and Accounts Payable module is to “Pay” against those procured goods.

In order to conclude my post, in P2P process both modules are made to represent a detailed process of:

  • Vendor Management.
  • Purchasing Quotations.
  • Purchase Requisitions.
  • Purchase order processing.
  • Invoicing.
  • Vendor Payments.
  • Printing Checks.

but are added separately with two different names for different operations to be carried and are integrated to achieve goals at enterprise level.


Hope it will clear many doubts …!!