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Consignment goods are goods which are stored at the customer location, but which are owned
by your company. The customer is not obliged to pay for these goods until they remove them
from consignment stock. Otherwise, the customer can usually return consignment goods which
are not required.
Consignment processing offers the participating partners several advantages. Customers store
the consignment goods at their own warehouses. The customer can access the goods in the
consignment warehouse at any time. They are only billed for the goods when they are removed
from the warehouse and only for the actual quantity taken.
Since consignment stocks still form part of your valuated stock, you must manage this stock in
your system.
However, consignment stock must be
• Managed separately from the rest of your stock so that you know exactly what stock is
stored at the customer location
• Managed separately for each customer
In inventory management, the consignment stock is managed as special stock in your inventory
and is assigned to specific customers. This enables you to keep track of returnable packaging
stock by customer.
If the consignment stocks are not managed by the sold-to party but by a central office, you can
use the partner function for special stock partner.
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Consignment Process is where product is stored at the customer location, but the owner of this
product is still company. Customer stores the consignment stock at their own a warehouse.
Customer can consume product from warehouse at any time and customer billed for product
for quantity consumes. In Consignment Stock Processing, there are four main transactions in
the SAP System, all of which support separate management of stock:
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Step 2)
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1. Enter PO number.
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2. Enter PO Date.
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Step 3)
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Create a delivery as the subsequent document for this sales order and, after picking has been
completed successfully, post goods issue.
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The underlying goods movement type is a stock transfer. This ensures that when goods issue is
posted, consignment special stock is created for the customer concerned. If special stock of this
kind already exists in the delivering plant for this customer, the goods are posted to this special
stock.
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Consignment issue enables the customer to take consignment goods from the special stock for
their use or to sell.
Consignment issue involves removing the goods from the special stock and making it the
property of the customer.
When the customer removes consignment stock to use or sell, you record the transaction in
the system by creating a consignment issue order (order type KE). As a result, the system carries
out the following actions:
• When goods issue is posted, the relevant quantity is deducted from both the customer’s
special stock and your own total valuated stock.
• The transaction is relevant for pricing since the goods now become the property of the
customer.
Step 1)
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2. Create a delivery as the subsequent document for this sales order and, after picking has
been completed successfully, post goods issue.
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3. The goods are then reduced by the relevant quantity in the special stock assigned to the
customer. This goods issue also reduces your total stock.
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Consignment returns are used for when your customer wants to return goods to the
consignment stock.
If the customer wishes to claim on consignment goods which have already been issued, you
can record this transaction by creating a consignment return order (order type KR). As a result,
the system carries out the following actions:
• When goods issue is posted, the relevant quantity is added to the customer’s special stock
at the plant where the goods are returned
• Since the ownership of the goods is passed from the customer back to your company, the
transaction is relevant for billing. In this case, the customer receives a credit memo for the
returned goods.
Depending on the settings in Customizing for Sales, you can create consignment returns with
direct reference to a consignment issue. The consignment issue appears in the document flow
for the consignment return. This function is not supported in the standard version of the SAP
System.
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Step 2)
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Step 3)
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Create a returns delivery for the sales order (the system automatically chooses delivery
type LR ). The goods issue posting cancels the goods issue posting which was carried out when
the consignment goods were issued. This posting records the return of the goods to the plant
where goods receipt was carried out.
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Create a credit memo for the consignment return you created in Step 1.
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