7/30/2019 SAP SD Consignment

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Consignment

In SAP consignment is one the special procurement type. Under consignment whengoods are procured from the vendor, these are physically stored in company’s premises

 but these goods are not the property of the company. These goods still belong to the

supplier. This is the nature of ownership of the stocks which differentiate it fromcompany’s other stock. All this stock is widely known as consignment stock in SAP.

Here it also important to high light that consignment stock in Material Management istotally different from the consignment stock in Sales and Distribution. In MM, vendor 

goods are stored at company’s premises whereas in SD company goods are stored at

customer’s premises.

Customer Consignment:

In SD, it is known as Customer Consignment. Since these special stocks are located at

customer premises and not at company own premises hence, these are managed at plantlevel and not at storage location level.

Vendor Consignment:

In Material Management it is widely known as Vendor consignment. Since these special

stocks are located at company’s premises hence, these are managed at storage locationlevel. It is not the valuated stock.

Ownership of Goods:

In consignment processing, the vendor remains the legal owner of the material untilmaterials is not withdrawn from the consignment stores or it is not transferred tocompany’s own stock. Once it is withdrawn or transferred to company’s own stock, the

ownership also got transferred to the tune of quantity withdrawn or transferred.

Allocation of stock:

Like standard material, a vendor consignment material can also be allocated to one of 

three stock types:

Unrestricted-use stock 

Quality inspection stock Blocked stock 

This stock can be transferred by means of transfer postings from one stock type to any

other stock types. But withdrawals are only possible from unrestricted stock type.When the material is withdrawn from the unrestricted stock types it is valuated at the

 price of the respective vendor.

Consignment Liabilities:

7/30/2019 SAP SD Consignment

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In the standard SAP, consignment liabilities arise in the case of withdrawals from

consignment stock or when consignment stock is transferred to own stock. Depending on

the settings for the posting rules for the transaction/event key (KON), it is possible towork with or without account modification. Necessary configuration setting is required in

SPRO under automatic posting for transaction/event key for Consignment payables

(KON). This setting will be a combination of General Modification, valuation class andGeneral Ledger account.

In subsequent articles, you will find more details on the topic realted to procurement of 

consignment materials, maintenance of consignment stock, withdrawal and transfer fromconsignment stock. consignment settlement and intimation to the consignment vendor 

regarding these settlement.