SAP MM vendor Consignment (Purchase) & SD Customer consignment Process (sales)

SAP MM vendor Consignment (Purchase) & SD Customer consignment Process (sales) RAMBABU.NAMAMULA

SAP MM vendor Consignment (Purchase) & SD Customer Consignment Process in MM and SDConsignment Sales processConsignment Sales process is keeping the STOCK in customers premises, but until the customer consumes or sell it, it will be a part of the company. (It is not mandatory that we should STOCK the consignment STOCK in the customers premises, we can store it in the company premises too).

The consignment processes in SAP standard consist of four small processes:

Consignment fillup (send materials to customer consignment).

Here you have a consignment fillup order and a consignment fillup delivery.

Consignment issue (issue materials from customer consignment to the customer).

Here you have a consignment issue order, consignment issue delivery and a consignment issue invoice. (the flow is very similar to a normal OR flow, but the materials are issued from the consignment STOCK instead of plant stock unrestricted).

Consignment return (return materials from customer ownership to customer consignment).

Here you have a consignment return order, consignment return delivery and a consignment return invoice. (the flow is very similar to a normal RE flow, but the materials are returned to the consignment stock instead of plant stock returns).

Consignment pickup (pickup consignment stock and move it to plant stock).

Here you have a consignment pickup order and a consignment pickup delivery.

Note: In consignment fillup and consignment pickup there are no invoices since there is no change of ownership for the materials.

How to perform a consignment order?

In consignment orders you are allowing the stock to sit in your customer location. Once he informs that he used the stock you will invoice him. If he returns the stock you will accept the stock to take it back.It is defined in 4 steps.1. Consignment fill up:

Sales document type is CFItem category KBN

shedule line category E1

In this step, you are not invoicing the customer. document flow is sales order ---- delivery item category. It will not be relevent for billing and pricing because you are not charging money for these goods in this step.

In schedule line category, you will set movement type 631 & set for availability check and TOR.2. Consignment Issue.

Once the customer informed you that he used all the goods or partial goods then you will create consignment issue for used goods.

Sales document: CIItem category: KEN

shedule line category: C0 or C1

Here you are invoicing the customer(because he used the goods). you are assigning the delivery document and billing document to the sales document.

In item category, you are setting relevent for billing, pricing, special STOCK.

In schedule line category, your setting is 633 movement type, relevent for availability check & TOR.3. Consignment Return:

Customer found that some goods are damaged or is not able to sell the goods he would to send it back. Then we need to created the following document to accepts those goods.

Sales document type: CONRItem category: KRN

Shedule line category: D0

Assign delivery document and billing to sales document.

Create return order, return delivery, return billing.

The settings of item category is relevant for billing, returns, pricing, special STOCK.

The settings of schedule line item category:- 634 movement type, NO availability NO TOR.4. Consignment Pick up:

Even if you create the consignment return the goods are not come to direct to your plant. For that you need to create consignment pick up. here the owner ship is not changing so you do not need to create billing.

Assign retrun delivery to sales document type.

Sales document: CPItem category: KAN

schedule line category: F0 & F1

The settings for item category relevant for returns.

The settings for schedule line category :- 632 movement type, relevant for MRP, availability check and delivery.

Check your plant STOCK. Stock will increase. Here I tried to cover all the four process by using test cycle created in ECC 5.0 version. Not having major screen difference from ECC 6.0. SD experts please point out if any correction requiredItem category in orderIMG _ Sales and Distribution _ Sales _ Sales Document Item _ Define Item

Categories

Item category in delivery

IMG _ Logistics Execution _ Shipping _ Deliveries _ Define Item Categories

for Deliveries

Data used for running the cycle

Order type CF , CP , CI & CONR

Sales organization 1000

Distribution channel 12

Division 00

Sold-to party 1001

Material L-40F

Shipping point 1200

Plant 1200

Warehouse number 012Transaction codes Details

Creating SALES order VA01

Creating Delivery (outbound) VL01N

Change Outbound delivery VL02N (Also for posting PGI)Display VL03N

Creating Invoice VF01 (billing document) same for credit memoStock Overview MMBE

Creating transfer order in WM LT03

Return delivery (same transaction) VL01NDocument flow VL03N (Display view)

Consignment fill-up

Consignment pick-up

Consignment issue

Select acc.doc. no. then click on button

Note: It appears that the standard price of the matl is much higher than the sales price(248,10 against 89).

This is a test system so it does not matter.

Display the new consignment stock level at customer

Consignment return

Note that there is a billing block by default which will need to be cleared first before billing is done.

Also note that this time an order reason is required to be entered for information purpose.

What is MM Vendor Consignment?

Vendor Consignment is a process wherein the supplier provides materials and STOCKS them in the purchasers premises. The material remains in the books of the supplier (vendor) until the same is withdrawn from the STOCK of the consignment and put to use. The inventory gets transferred to the books of the purchaser only when the same is removed from the consignment STOCK. The supplier (vendor) would not invoice the purchaser initially when they come into the premises of the purchaser. The purchaser is liable to pay the supplier (Vendor) only when the STOCK is withdrawn (consumed).

Key Process Design for the Consignment process for Vendors in SAP

-

- Consignment has been designed as a special procurement type in SAP

- - The consignment STOCK is not valuated till the time it is consumed or withdrawn, since theoretically, it lies in the books of the supplier (Vendor)

- - The consignment material number is the same as that of a material in unrestricted stock in the purchasers books

- - Since the sourcing of a material can happen from multiple parties, the consignment stock is maintained at the level of each supplier or vendor.

- - The price of the consignment is maintained in the purchasing info records (PIR) of the info category, Consignment

- - When the withdrawal happens from the consignment stock of a supplier, the goods receipt in the purchasers books happens at the price maintained in the purchasing info records of type consignment for that vendor and material combination.

- - The goods receipt against a consignment purchase order is always non valuated

Basic Configuration Steps for Vendor Consignment Process in SAP

1. Activate Purchasing Info Record for Info category as Consignment. The Configuration transaction code for the same is OMEV.2. Configure the special procurement type 10. This is done in IMG Node:

IMG>Production>Material Requirement Planning>Master Data>Define Special Procurement Type

3. Assign the special procurement type in the material master. The Master Data transaction code for the same is MM02. This is done in MRP2 view of the material master.

4. Create a purchasing info record (PIR) of the category, Consignment. This is done using the transaction code ME11.

5. Maintain the automatic account assignment for material posting. The below transaction need to be maintained in the configuration transaction code OBYC

- a. Consignment Payables: KON

- b. Expense/Revenue from Consignment Material Consumption: AKO

- c. Offsetting entry for Inventory Posting: GBB VBR

6. The consignment process steps in SAP are fairly simple.

It involves creating a purchase order, doing a good receipt and a withdrawal of the STOCK from Vendors books.

The last step in the consignment process for a vendor is the settlement of the vendors liability. The steps are highlighted as:

Procurement - A standard purchase order is created with item category as K using the transaction code ME21N.

There is no price which is applicable for a consignment purchase order and hence should not be entered at the time of creation of purchase order.

The goods receipt is done using the standard transaction code MIGO. The STOCK is posted as consignment STOCK without value. The same would reflect as a special stock for the vendor. Since the material lies in the purchasers premises, the same would be reflected in terms of quantity at a storage location as well till the time the same is consumed for use. The same can be checked in the standard stock reports in transaction code like MMBE. There is no accounting document which is created when the GRN is done in case of a consumption purchase order.Advantages

The use of consignment settlement reduces the cost of stockholding in the company by:

Reducing the flow of paper and administration work

Minimizing transport costs by using collective transports and, for a modest capital tie-up, increased security of supply is guaranteed with minimal inventory levels and short lead times.

Further data maintenance corresponds with that of a normal purchasing info record.

Enter information on the General Data

Enter information on the Purchase Org data 1

Consignment prices can be determined in foreign currency, period-based, and in any unit of measure. You can also take advantage of the Purchasing condition technique, including the definition of discounts and price/quantity scales.

Consignment Order

To determine that a material is procured for consignment stores, enter the item category K (Consignment) in a purchase order. This item category has the following effects:

We must enter a material number.

We cannot enter a purchase order price or conditions for the item.

We require a goods receipt for the item. The goods receipt is posted in the vendor consignment stock, and is non-valuated.

We cannot enter an invoice for the consignment item.

Item category K can also be used in outline agreements and purchase requisitions.Creating PO in ME21n

Vendor Consignment in Inventory Management

Inventory Management supports the following functions within vendor consignment:

Special stock type vendor consignment

Goods receipt in vendor consignment stock with and without reference to a purchase order

Transfer postings within the vendor consignment stock and transfer postings from vendor consignment stock to your own stock

Goods issues from vendor consignment stock

Vendor Consignment Stock

Material that you procure using vendor consignment is managed in a vendor-related special stock, K (consignment vendor). This special stock is updated at storage location level, as the material is actually in your own company. The consignment stock is then not actually valuated because is still belongs to the vendor. For consignment stock, the stock types are unrestricted-use, in quality inspection, and blocked. The consignment stock is considered when you determine the available stock of a material. Explain that consignment stock is available for planning and can be addressed in Inventory Management.

If you have consignment stock for a material, it is displayed in the stock overview (transaction MMBE). At storage location level, there is a list of totals of all consignment stocks. With a double-click on this special stock level, you can see an exact overview of how this consignment stock is distributed to the individual consignment vendors.

Goods Receipt to Vendor Consignment Stock

You can enter goods receipts in your consignment stores with and without purchase order reference. If you enter a goods receipt to a consignment order, the system posts the delivered quantity automatically into the consignment stock of the vendor. As the movement type, choose 101; the system sets the special stock indicator K automatically. As for a normal goods receipt to a purchase order, you can post to all three stock types.

You can also post another goods receipt without purchase order and make an initial entry of stock balances in the three stock types for consignment. In addition to the known movement types for these goods movements (501, 503, 505 for GR without purchase order; 561, 563, 565 for initial entry of stock balances), you must specify the special stock indicator K and the vendor of the consignment material. All goods receipts in the consignment stock are non-valuated.

Transfer Postings

For consignment stocks, you can also execute transfer postings and stock transfers. For these goods movements, in addition to the movement types for stock material, you must also specify the special stock indicator K and the vendor of the consignment material. These goods movements are also non-valuated.

These are the possible stock transfers and transfer postings for consignment stock:

Stock-to-stock transfer posting

Storage-location-to-storage-location stock transfers

Plant-to-plant stock transfers

Goods Issue from Consignment Stock

You can only post a goods issue from unrestricted-use consignment stock for consumption. If the consignment material is in stock in quality inspection or in blocked stock, you must first post the consignment material to unrestricted-use stock. It is possible to make withdrawals for samples and scrapping from all three stock types. When entering goods issues, you must specify the special stock indicator K and the consignment vendor, in addition to the movement type in all goods movements. You also have the option of adopting consignment stocks into own stock. To do this, post a transfer posting with movement type 411, and special stock indicator K. Unlike the goods issue for consumption, this transfer posting causes an increase in the valuated stock and no consumption posting.

For both goods issues from consignment stock and transfer postings to own stock, there is a liability towards the consignment vendor. The withdrawal is valuated with the price from the consignment info record.

Vendor Consignment in Invoice Verification

You should regularly clear liabilities towards the vendor that exist because of the issues from the vendor consignment stock. The consignment goods are settled without invoice receipt, as the vendor cannot trace the goods withdrawal directly. The vendor can only manage the consignment stock

To settle consignment withdrawals, from the Inventory Management menu, choose Environment Consignment Consignment from Vendor Liability (transaction MRKO). With this report, you can display settled and non-settled consignment withdrawals and settle non-settled withdrawals.

Possible selection criteria include company code, plant, vendor, material, document date and posting date of the withdrawal, and the material document number. So that you can inform the vendor about the settled withdrawals and the credit memo amount, the system creates a message with message type KONS in addition to the settlement document.Transaction: MRKO

We do not expect an invoice from the vendor for goods withdrawals from consignment stocks or a pipeline. Instead you settle posted withdrawals and return deliveries yourself and send the vendor a statement of the settlement. You can perform this settlement periodically in the background. The following documents can be involved:

Invoices

Credit memos

Consignment settlement is connected to message determination. As a result, you can define a form in Customizing. A message record is created during each settlement. This message record completes the form. Depending on the system settings, you can send this form to the vendor immediately on posting or at a later time.Dear Friends,

Hope this document covers entire consignment process in MM and SD.

Thanks for the continuous support. Also one request the document here I have created not meant for sale. I got mails that fake account was created in my name and email and some persons are selling it. Here I like to stress that the documents are free of usage in order to avoid entry of money in knowledge industry (IT). I like to share my knowledge and experience so I thought my knowledge will also get improved. Thanks again. Regards,

G.V.SHIVAKKUMAR

venkatesansivakumar@yahoo.co.in NAMAMULA RAMBABU WWW.STRIVEERP.COM