Knowledge Management

Question:
Hi Experts,
We find reconciling the vendor accoung difficult for a vendor with Consignment stock and various other type of orders and this is delaying payments.
If we open two Vendor codes, one for consignment and another for all other type of orders, what are the implications? Whether there are any major problems which you can think because of this?
Thanks in advance for your response.
Regards
Guest
Answer:
Hi,
This is the non-standard resolution and I would strongly recommend not to look at as far as business operations are concerned. These disadvantages can be well highlighted as follows:
1) Poor Vendor Master Data due to duplication. In this case, let assume that if the same approach will be applied for the other commodities and/or vendors, what will be the consequence. Of course, no optimal vendor master data is anticipated.
2) Wrong purchasing document entry. I would assume that you have had your own purchasing department which is handling the procurement of materials. What will be happening to them if there will be two vendor numbers for the same supplier. Of course, numerous wrong entry of purchasing document will be expected since they will be confusing on which exact vendor number will be used for each and every PO. Whether vendor number A will be used for standard PO or vendor number B. The outcome of such confusion will be that PO will be generated with wrong vendor number and therefore, it is impossible for you to control it.
3) Wrong total spend analysis report. Since you have had two vendor numbers for the same supplier, how are you going to report on the total spend. Of course, it is very hard for the sourcing guy to understand and remember that for a particular supplier, he/she has to consolidate the total spend that your company has settled for vendor A and B. It is only understood and remembered by A/P.
4) Less power in dealing with the supplier. Of course, with the wrong total spend analysis report, how can the sourcing staff have strong negotiation power to make the best contract for your company because the figure he has got is totally incorrect.
5) Difficulty encountered by A/P in monitoring and controlling the outstanding balance as well as debit or credit note. Since there will be two vendor number in the system, how can A/P remember that for a certain vendor number payment, it has to be offset by the outstanding amount of another vendor since they are actually the same supplier.
Of course, there will be more and more evidences to prove how adverse the consequences will be.
Cheers,
HT