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Consignment process3,454

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Srinivasulu Algaskhanpet, Sr. SAP SD Consultant at AccentureFollow Following1 1 0 0

Published on Dec 28, 2014

This document provides overview of Consignment process and its related configuration in SAP SD

...Published in: Education

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Consignment process

1. 1. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 1Consignment goods are goods which are stored at the customer location but ownership remains with thecompany itself. The customer is not liable to pay for these goods until they removed from consignmentstock. Customers store the consignment goods at their own warehouse. The customer can access the goodsin the consignment warehouse at any time. Consignment stock is billed when they are removed from thewarehouse and only for the actual quantity taken. Generally companies will do consignment process forslow moving items or newly launched products. Whenever management decides to dump the stock onconsignment basis, company will inform to all the customers. If customer accepts then we do consignment

fill up process. Consignment process is classified into 4 types: 1. Consignment Fill Up 2. ConsignmentIssue 3. Consignment Pick Up 4. Consignment Returns We will discuss one by one now. 1. ConsignmentFill Up: Consignment fill up is all about dumping the stock at customers location without billing. Process:Consignment fill up > Delivery > Pro forma invoice CF > KBN > E1 > 631 Document type: CF

2. 2. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 2 ItemCategory: KBN From screenshot we can see that consignment fill up is not relevant for billing. In this casefor Indian scenarios we will create proforma invoice. Schedule line Category: E1 Movement type: 631

3. 3. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 3 Fromabove screenshot we can see that movement type for consignment issue is 631. The effect of movementtype 631 is it will reduce the stock from unrestricted stock and it will add the stock to consignment stock.In the above screen shot we can see the stock levels of “SMobile”. Let’s do the consignment fill upprocess: Create Order: T.Code: VA01 We can see that, as consignment fill is not relevant billing the netvalue for the order will be “ZERO”. Save the order.

4. 4. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 4 CreateDelivery: T.Code: VL01N Enter the picking quantity and do the PGI. And check the stock overview.T.Code: MMBE With the movement type 631 stock is reduced from unrestricted stock and added tocustomer consignment. In consignment fill up accounting document will not be generated. Process:Consignment fill up > Delivery > Pro forma invoice CF > KBN > E1 > 631

5. 5. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 5 2.Consignment Issue: In consignment issue our customer sells the goods to the end customer. Process:Consignment Issue > Delivery > Invoice Document type: CI Item Category: KEN

6. 6. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 6 In theabove screenshot we can see that consignment issue is relevant for billing. KEN Item category will havespecial stock indicator “W”. The special stock indicator “W” controls that while doing delivery inconsignment issue, system considers the consignment stock. Schedule line Category: C1 The effect ofmovement type 633 is it will reduce the stock from consignment stock and system generates inventoryaccounting document. The accounting document is: COGS a/c Dr. To Inventory a/c Cr. When we deliverthe goods, system deducts the stock from consignment stock with the help of special stock indicator “W”in item category “KEN”. Consignment issue is relevant for billing. We raise invoice to the customer.Consignment Fill up and consignment issue are relevant for availability check.

7. 7. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 7 CreateOrder: Create Delivery: In the above screen shot we can see that picked quantity is “ZERO”. The reason iswe already delivered goods to the customer in the Consignment Fill up itself. And click on post goodsissue. These 50 quantity are delivered to the end customer from our customer.

8. 8. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 8 Q. Why weare doing delivery again in consignment issue as we already delivered the goods to the customer inconsignment fill up? A. i. To transfer the ownership ii. To reduce the stock from consignment stock. Checkthe stock levels using t.code MMBE. After doing consignment issue we can see that stock is reduced to 50quantity as we created consignment issue for 50 quantity. Consignment is relevant for billing. CreateInvoice: This is all about the consignment issues. Next we’ll discuss about consignment returns.

9. 9. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 9 3.Consignment Returns: When end customer returns the consignment goods to our customers then we doconsignment returns. Document type: CONR Item Category: KRN

10. 10. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 10 KRNitem category will have special stock indicator “W”. The special stock indicator “W” controls that whilereturning goods stock will be added to consignment stock. Consignment returns is relevant for billing.Schedule line category: D0 The effect of movement type 634 is it will reduce the stock from consignmentstock and system generates inventory accounting document. The accounting document is: Inventory a/cDr. To COGS a/c Cr. Consignment returns is not relevant for availability check. Process: Consignmentreturn > Returns delivery > Credit for returns We’ll start with creating return order.

11. 11. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 11 CreateOrder: Create Return Order. While creating any return order we need to mention the order reason. Billingblock should always be blank. We can see that system is proposing net value as the consignment returns isrelevant for billing. Create Delivery:

12. 12. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 12 Here wecan see the picked quantity is “ZERO”. The reason is here end customer is returning to our customer. So,the stock will be added to consignment stock and not unrestricted stock. Company is not picking anymaterial in Consignment returns. After doing PGI, check with the stock overview using t.code MMBE.

Here we can see that whatever stock is returned by the end customer is added to consignment stock but notunrestricted stock. It happens with the special stock indicator “W”. Consignment returns is relevant forbilling. Create Invoice: Here we can see that we are creating credit for returns nothing but a credit memoas it is a returns process.

13. 13. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 13 4.Consignment Pickup: If there is any unsold stock with the customer, customers asks to take back theconsignment stock. Then we do consignment pick up. Document type: CP Item Category: KAN

14. 14. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 14Consignment pickup is not relevant for billing. But in Indian scenarios we are going to create proformainvoice. Schedule line category: The effect of movement type 632 is it will reduce the stock from theconsignment stock and stock will be added to unrestricted stock. And inventory accounting document willnot be generated. Process: Consignment pick up > Returns delivery > Proforma invoice Create Order:

15. 15. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 15 In theabove screen shot we can see that system is not proposing any net value as consignment pick up is notrelevant for billing. We need to mention the order reason and remove billing block if any. Create delivery:Here no need to pick remaining 75 quantity as the ownership of the stock is still with the company itself.After doing PGI, check with the stock overview with t.code MMBE. Here we can see that after doingconsignment pick up, complete consignment stock is added to unrestricted stock. This is all about theconsignment business process. Let us summarize the whole consignment process once.

16. 16. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 16Summary: Consignment goods are goods which are stored at the customer location but ownership remainswith the company itself. The customer is not liable to pay for these goods until they removed fromconsignment stock. Customers store the consignment goods at their own ware house. The customer canaccess the goods in the consignment warehouse at any time. Consignment stock is billed when they areremoved from the ware house and only for the actual quantity taken. Generally companies will doconsignment process for slow moving items or newly launched products. Whenever management decidesto dump the stock on consignment basis the company will inform to all the customers. If customer acceptsthen we do consignment fill up process. Consignment process is classified into 4 types: 1. ConsignmentFill Up 2. Consignment Issue 3. Consignment Pick Up 4. Consignment Returns 1. Consignment Fill Up:Consignment fill up is all about dumping the stock at customers location without billing. Document type:CF Item Category: KBN Schedule line category: E1 Consignment fill up process is not relevant for billing.But in Indian scenarios we will create pro forma invoice. CF > KBN > E1 > 631 Process: Consignmentfill up > Delivery > Proforma invoice The effect of movement type 631 is it will reduce the stock fromunrestricted stock and it will added to the consignment stock. Inventory accounting document will not begenerated. While creating consignment fill up we can see that system will not propose any net value as it isnot relevant for billing.

17. 17. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 17 Whenwe do delivery system deducts the stock from unrestricted stock and adds to the consignment stock withthe help of movement type 631. 2. Consignment Issue: In this step our customer sells the goods to the endcustomer. Document type: CI Item category: KEN Schedule line category: C1 Item category “KEN” willhave special stock indicator “W”. The special stock indicator “W” controls that while doing delivery inconsignment issue system considers the consignment stock. Consignment fill up process is relevant forbilling. CI > KEN > C1 > 633 Process: Consignment issue > Delivery > Billing The effect of movementtype 633 is it will reduce the stock from consignment stock and system generates inventory accountingdocument. The accounting document is: COGS a/c Dr. To Inventory a/c Cr. Q. Why we are doing deliveryagain in consignment issue as we already delivered the goods to customer in consignment fill up? A. i. Totransfer the ownership ii. To reduce the stock from consignment stock. In consignment issue we can seethat system will propose net value as it is relevant for billing. When we deliver the goods, system deductsthe stock from consignment stock with the help of special stock indicator “W” in item category “KEN”. 3.Consignment Returns: When end customer returns the consignment goods to our customers then we doconsignment returns.

18. 18. CONSIGNMENT PROCESS By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 18Document type: CONR Item category: KRN Schedule line category: D0 CONR > KRN > D0 > 634Process: Consignment returns > Return delivery > Credit for returns KRN Item category will have specialstock indicator “W”. The special stock indicator “W” controls that while returning goods stock will beadded to consignment stock and inventory accounting document will be generated. It is relevant for billing.The effect of movement type 634 is it will reduce the stock from consignment stock and system generatesinventory accounting document. The accounting document is: Inventory a/c Dr. To COGS a/c Cr. 4.

Consignment Pick up: When our customer asks to take back the consignment stock then we doconsignment pick up. Document type: CP Item category: KAN Schedule line category: F1 CP > KAN >F1 > 632 Process: Consignment pick up > Returns delivery The effect of movement type 632 is, it willreduce the stock from consignment stock and the stock will be added to unrestricted stock. Inventoryaccounting document will not be generated.

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