Consignment SD MM

FORTALEZA 2º
SAP Inside Track

Fortaleza #SitFOR
Lecture:
1º Process in SAP (S/4HANA 2020)

Consignment
Isabel Sánchez
SAP MM Consultant
www.linkedin.com/in/isabel-
sánchez-405812b4
Consignment Process in SAP
ABOUT ME
• Currently working as an SAP MM consultant, within the DevOps team, for an automobile manufacturer
company.
• Two certifications: Controlling (SAP ERP EhP7) and Finance (SAP S/4HANA 1809)
• Starting using SAP in 2015, and professionally as a trainer in 2018, in charge of training for SAP users within a
purchasing, logistics, contracting and economic-finance system.
• Background: +15 years in Finance/Accounting departments
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AGENDA
1 INTRODUCTION
2 VENDOR CONSIGNMENT PROCESS IN SAP
3 CUSTOMER CONSIGNMENT PROCESS IN SAP

4 CONSIGNMENT IN FIORI
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1 INTRODUCTION
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What is consignment?
Consignment is an arrangement in which goods are left in the possession of an authorized third party to sell.
In this supply chain management strategy, the consignor retains legal ownership of the merchandise, and the
consignee is not required to pay for the goods until after they have been sold.
To consign means to place goods or stock in the inventory of another party but retaining ownership until the products
are sold. Parties Involved in a consignment deal:
1. Consignor: An individual or party that brings a good to be sold on their behalf by another party, which is called the
consignee.
2. Consignee: A person who is designated as the receiver of goods. It is the individual that buys or retains the goods
and passes them along to a third party or the final buyer. The consignee pays for the goods only when they sell.
PROCESSES:
Vendor Consignment
Customer Consignment
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How Does Consignment Work?

An item is placed in the care of a consignee until it’s purchased by a buyer. Until the item is sold, the owner
(consignor) is still responsible for anything that may happen to the item while it is in the care of the consignee.
Example: Consignor sends 100 ítems, with the agreement of selling them during the month of January. The consignee
sells 95 and on 1st Febr, returns 5 units. There is a commission of a % between them.
Company A Sends 100 units (01/01) Company B

Consignor Consignee
Sells 95 units (during January)

Returns 5 units (01/02)
Buyer
01/01: Consignor recognizes consignment inventory for 100.
During Jan: Consignee recognizes cash and liability to consignor (sold items) and commission income.
01/02: Consignor recognizes 95 ítems sold, COGS for 100 and the commission expense.
Consignee clears the liability to consignor.
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2 VENDOR CONSIGNMENT
PROCESS IN SAP
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VENDOR CONSIGNMENT PROCESS (SAP MM)

Consignment Process in SAP for a vendor is used when a vendor provides the company materials on loan.
The materials of the company are kept in the warehouse until you withdraw the said materials for processing. So then,
liability is created for the vendor and payment is done on agreed intervals, for example, weekly or monthly.
In this vendor consignment process, you first need to agree on the pricing with the vendor.
The prices are kept in consignment info records in the SAP system.
In that case, the prices can be automatically copied to purchase orders from info records in SAP System.
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VENDOR CONSIGNMENT
SAP EASY ACCESS FIORI
Apps under Purchases

Apps under Inventory management
Data of Vendors – Apps under Accounts Receivable
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USE CASE FOR VENDOR CONSIGNMENT PROCESS

Company code 0001
Vendor 130988 10 units in consignment
Material 750-STO test Withdrawal of 5 units
Plant 3030 Reversal of withdrawal and re-settlement.
Purchasing organization 3030
Purchasing group 303
Sends 10 units
Vendor Own company
Consignor Consignee
Withdraws 5 units
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PROCESS FLOW - STEPS Own company Vendor

(Consignee) (Consignor)
Info record Receives purchase order
A) PURCHASING Purchase order for consignment
material
Goods receipt of Delivers material

Consignment stock (without placing it in
consignment material
invoice)
B) INVENTORY MANAGEMENT
Withdrawal
Liability
Receives credit
C) INVOICE VERIFICATION Settlement of memo about
consignment liabilities quantity withdrawn
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PROCESS IN SAP
A) PURCHASING
Consignment Info record
Purchase order
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PURCHASING
Creation of Consignment Info Record (ME11)
After filling the required

fields (Net Price is the
most important) and
clicking on Save
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PURCHASING
Creation of Purchase
Order (ME21N)
After filling the required

fields (header and item)
and clicking on Save
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PROCESS IN SAP
A) PURCHASING
Goods receipt of consignment material / Effect in stock
Withdrawal (transfer Consignment goods to regular stock) / Effect in stock
Liability (Display settlement)
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INVENTORY MANAGEMENT
Goods receipt of Consignment material (MIGO/MIGO_GR: Mvmt type 101K): No financial postings are made in this point.
Enter storage location

Click OK to item
Clic check
Post
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Material Document List (MB51)
Accounting document → there is not accounting document
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Display Consignment stocks (MB54)
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Withdrawal: Transfer consignment stock to regular stock owned by the company (5 units).
Tcode: MIGO_TR
Mvtm type: 411 k
Example of transfer already filled.
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Stock overview after MIGO (MMBE) Stock overview after withdrawal (MMBE)
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Liability (Display Settlement) - MRKO
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PROCESS IN SAP
A) PURCHASING
C) INVOICE VERIFICATION
Settlement of consignment liabilities
What to do if there is a mistake?
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INVOICE VERIFICATION
Settlement of consignment liabilities (MRKO): Moment when the invoice is created.
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Financial documents (seen from Tcode INVOICE VERIFICATION

MB51-material document list)
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What to do in case of mistake?

There is not option to cancel the settlement.
The process is as follows:

• Reverse the withdrawal, mvmt type 411 K (MIGO).
• Settle again the combination company code, material and supplier (MRKO).
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After a correction, there are different document numbers (seen in Display Settlemeny)
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Document numbers
Initial document number Reversal and settlement
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New material document list
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CONSIGNMENT FILL-UP
VIDEO 1 / DEMO
Steps:
1. Create purchase order using ME21N
2. Post goods receipt of consignment material (MIGO/MIGO_GR)
3. Post Withdrawal (transfer Consignment goods to regular stock) (MIGO_TR)
4. Display settlement (MRKO)
5. Settlement of consignment liabilities
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PROCESS IN SAP
A) PURCHASING
C) INVOICE VERIFICATION
ANNEX: CUSTOMIZING
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BEFORE THE PURCHASING: PRICING PROCEDURE

SPRO: Materials Management/Purchasing/Conditions/Define Price Determination Process
STEPS TRANSACTION FUNCTIONALITY
1 Condition table M/04 Table where the system saves all the fields with combination for
individual condition record.
2 Access sequence SPRO it searches condition record for condition type from condition table.
3 Condition type M/06 Gross Price, discounts, etc.
4 Condition record M/06 For combinations condition types/Access sequence.
5 Schema group OMFN Define Schema group for suppliers
Define Schema group for Purchasing organizations
Assign Schema group to Purchasing Organizations
6 Calculation schema SPRO ZSASIN, for this use case.
7 Schema determination OMFO Mapping of Schema group for Purchasing Organizations, Schema
group for suppliers and Calculation Schema.
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BEFORE THE PURCHASING: QUANTITY/VALUE UPDATE

Material must be valued based → material type (ROH) must admit value updating in the valuation area (3030)
Tcode: OMS2
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OTHER CUSTOMIZING (1/2)
Before creating the purchase order: Assignment

purchasing organization to plant. Tcode: OMKI.
Before the settlement: Message control OMRM.
Maintain the tax information of the supplier (BP)/GL account (FS00).

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Tcode FTXP (tax codes)
Before the settlement (Finance posting/vendor invoice)
Tcode OB40 (automatic posts-account determination)
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3 CUSTOMER CONSIGNMENT
PROCESS IN SAP
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CUSTOMER CONSIGNMENT PROCESS (SAP SD)

In Consignment Process the products are stored at the customer location, but the owner of this product is still company.
Customer stores the consignment stock at their own warehouse. Customer can consume product from warehouse at any
time and customer billed for product for quantity consumes.
In Customer Consignment Process, there are four main steps within the SAP System, all of which support separate
management of stock:
1. Consignment Fill-Up (Stock Fill up at warehouse)
2. Consignment Issue (Stock issue from warehouse)
3. Consignment Return (Stock return from customer)
4. Consignment Pickup (Stock return to manufacture)
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CUSTOMER CONSIGNMENT
SAP EASY ACCESS FIORI
Data of customers – Apps under Accounts Payable
Apps under Sales

Outbound Delivery Creation-Processing
Apps under Sales - Billing
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USE CASE FOR CUSTOMER CONSIGNMENT PROCESS
Company code 0001

Customer 60001100 - Test 10 units for fill-up and issue
Customer returns 5 units due to damage in material
Material 1988 – Test mat (Return and pick up)
Plant 9090
Sales Organization 2000
Customer 10 units
Distribution Channel 10 Own company
Consignee Consignor
Division 00
Shipping point 0001 5 units
Storage location 9090
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PROCESS FLOW
Customer Own company
(Consignee) (Consignor)
A) FILL UP Fill up Consignment

stock B) ISSUE C) RETURN
Issued stock at
Unrestricted customer
Pick up
D) PICK UP
stock
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CUSTOMER CONSIGNMENT – SCREENSHOT SUMMARY FOR ANY STEP

Steps:
1- Create sales order using VA01 2- Confirm quantity delivered VA02
4- Perform picking, packing and Goods issue using VL02N

3-Outbound Delivery using VL01N
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PROCESS IN SAP
A) CONSIGNMENT FILL UP
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CONSIGNMENT FILL-UP
It is a process in which products are filling up at the customer site from company warehouse, but the owner of the
stock is the company itself.
In this step, you are not invoicing the customer. It will not be relevant for billing and pricing because you are not
charging money for these goods in this step.
Sales document type KB, movement type 631, item category KBN.
Effects: Customer consignment stock increases.
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CONSIGNMENT FILL-UP
VIDEO 2 / DEMO
Steps:
1. Create Consignment fill up using VA01
2. Confirm quantity delivered VA02
3. Outbound Delivery using VL01N
4. Perform picking, packing and Goods issue using VL02N
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PROCESS IN SAP
B) CONSIGNMENT ISSUE
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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.
The customer can sell or utilize the product at any time and company will issue the invoice for the used product. This
invoice is called as consignment issue. The following are the steps to perform consignment issue in SAP.
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 relevant for billing, pricing, special stock.
Sales document type KE, movement type 633, item category KEN.
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CONSIGNMENT ISSUE
VIDEO 3 / DEMO
STEPS :
1. Create Consignment Issue (KE) using VA01
2. Confirm quantity delivered VA02
3. Outbound Delivery using VL01N
4. Goods issue using VL02N
5. Create Commercial invoice using VF01
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CONSIGNMENT ISSUE
Effects after consignment issue Accounting document
Stock (MMBE): No changes. The same that after

Consignment fill-up.
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PROCESS IN SAP
C) CONSIGNMENT RETURN
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CONSIGNMENT RETURN
Customer found that some goods are damaged or because of not being able to sold the goods he wanted to send them
back.
You will assign delivery document and billing to sales document. You will create return order, return delivery, return
billing.
Sales document type KR, movement type 634, item category KRN.
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CONSIGNMENT RETURN
VIDEO 4 / DEMO
STEPS:
1. Create Consignment Return (KR) using VA01 (Reason: Damaged in transit)
2. Confirm quantity delivered VA02.
3. Outbound Delivery using VL01N.
4. Perform picking, packing and Post Goods Receipt using VL02N.
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CONSIGNMENT RETURN
Effects after Consignment Return
Stock Accounting document
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PROCESS IN SAP
D) CONSIGNMENT PICK UP
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CONSIGNMENT PICK UP
When a customer requests the company to take back the damaged or poor-quality products, then the company will take
back the products from customer warehouse. Even if you create the consignment return the goods are not come directly
to your plant. For that you need to create consignment pick up.
The stock will increase.
Upon consignment pick up remaining stock from the customer consignment (W) will be posted back to unrestricted
stock.
Sales document type KA, movement type 632, item category KAN.
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CONSIGNMENT RETURN
VIDEO 5 / DEMO
STEPS:
• Create Consignment Pick Up (KA) using VA01
• Confirm quantity delivered using VA02
• Outbound Delivery using VL01N
• Perform picking, packing and Post Goods Receipt using VL02N
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CONSIGNMENT PICK UP
Effects after consignment pick up
Stock
There is not invoice issued to

customer
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SUMMARY
Sales Process Sales Document Type Item Category Movement Type Accounting Document
Consignment Fill Up KB KBN 631 No

Consignment Issue KE KEN 633 Yes
Consignment Return KR KRN 634 Yes
Consignment Pick Up KA KAN 632 No
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Material Document List (MB51)
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PROCESS IN SAP
D) CONSIGNMENT PICK UP
ANNEX: CUSTOMIZING Fortaleza #SitFOR 58
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BEFORE THE CUSTOMER CONSIGNMENT PROCESS: PRICING PROCEDURE

SPRO: Sales and Distribution/Basic functions/Pricing/Pricing control
STEPS TRANSACTION FUNCTIONALITY

1 Condition table V/05 Table where the system saves all the fields with combination for
individual condition record.
2 Access sequence V/07 it searches condition record for condition type from condition table.
3 Condition type V/06 Gross Price, discounts, etc.
4 Assign Access Sequence V/06 For combinations condition types/Access sequence.
to Condition type
5 Pricing procedure V/08 Create Pricing Procedure, assign condition types to pricing
procedures (RVAA01)
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Combine sales organizations (OVAO):
Combine distributions channels (OVAM)
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Combine divisions (OVAN)
Assign permitted order types to sales area (OVAZ) – Do this for all the order types of the process
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OTHER T-CODES
VOPAN – maintain partner determination

VK12 - Conditions records (for customers)
MEK2- conditions records (for suppliers)
OVL2 – shipping point determination
VOV4 – Assign item categories
ITEM CATEGORIES: Sales and Distribution -> Sales -> Sales Documents -> Sales Document Item -> Assign Item
categories
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4 CONSIGNMENT IN FIORI
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VENDOR CONSIGNMENT CUSTOMER CONSIGNMENT
Data of Vendors – Apps under Accounts Receivable Data of customers – Apps under Accounts Payable
Apps under Sales

Apps under Purchases
Outbound Delivery Creation-Processing
Apps under Inventory management
Apps under Sales - Billing
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Thanks !
Sponsors
DONGKUKSYSTEMS
https://www.linkedin.com/company/dongkuksystemsbrasil/ https://www.linkedin.com/company/make-value-s-a/
https://www.linkedin.com/company/gfx-consultoria/ https://www.linkedin.com/company/hvar-consulting/
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FORTALEZA 2º

SAP Inside Track

1º Process in SAP (S/4HANA 2020)

• Background: +15 years in Finance/Accounting departments

3 CUSTOMER CONSIGNMENT PROCESS IN SAP

How Does Consignment Work?

Company A Sends 100 units (01/01) Company B

Sells 95 units (during January)

VENDOR CONSIGNMENT PROCESS (SAP MM)

Apps under Purchases

Data of Vendors – Apps under Accounts Receivable

USE CASE FOR VENDOR CONSIGNMENT PROCESS

PROCESS FLOW - STEPS Own company Vendor

Goods receipt of Delivers material

After filling the required

After filling the required

Enter storage location

Accounting document → there is not accounting document

Display Consignment stocks (MB54)

Financial documents (seen from Tcode INVOICE VERIFICATION

What to do in case of mistake?

The process is as follows:

Initial document number Reversal and settlement

BEFORE THE PURCHASING: PRICING PROCEDURE

BEFORE THE PURCHASING: QUANTITY/VALUE UPDATE

OTHER CUSTOMIZING (1/2)

Before creating the purchase order: Assignment

Before the settlement: Message control OMRM.

Maintain the tax information of the supplier (BP)/GL account (FS00).

OTHER CUSTOMIZING (2/2)

Tcode OB40 (automatic posts-account determination)

CUSTOMER CONSIGNMENT PROCESS (SAP SD)

Data of customers – Apps under Accounts Payable

Apps under Sales

USE CASE FOR CUSTOMER CONSIGNMENT PROCESS

Company code 0001

A) FILL UP Fill up Consignment

CUSTOMER CONSIGNMENT – SCREENSHOT SUMMARY FOR ANY STEP

4- Perform picking, packing and Goods issue using VL02N

Effects: Customer consignment stock increases.

Stock (MMBE): No changes. The same that after

Stock Accounting document

There is not invoice issued to

Consignment Fill Up KB KBN 631 No

Consignment Return KR KRN 634 Yes

Consignment Pick Up KA KAN 632 No

Material Document List (MB51)

BEFORE THE CUSTOMER CONSIGNMENT PROCESS: PRICING PROCEDURE

STEPS TRANSACTION FUNCTIONALITY

OTHER CUSTOMIZING (1/2)

Combine distributions channels (OVAM)

OTHER CUSTOMIZING (1/2)

VOPAN – maintain partner determination

VENDOR CONSIGNMENT CUSTOMER CONSIGNMENT

Apps under Sales

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