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Consignment Process in SAP
Vendor consignment process in SAP is used when a vendor provides your
company materials on loan. The materials are kept in the warehouse of your
company until you withdraw the said materials for processing. Then, the
liability is created for the vendor and a payment is done to the vendor on
agreed intervals, e.g. weekly or monthly.
After maintaining consignment info records, a consignment purchase order
is created in SAP and handed over to the vendor. The vendor provides your
company with materials according to the purchase order (PO). The
warehouse of your company performs goods receipt of the materials
against the purchase order and the materials are stored as consignment
stock in the SAP system.
Later, when materials are required for processing, you withdraw the
material from the warehouse and a liability is created for the vendor which
is settled through a special payment process (i.e., MRKO transaction).
A visual illustration of the steps of the vendor consignment process in SAP
is presented on the picture below.
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Vendor Consignment Process in SAP Diagram
Steps of Vendor Consignment Process in SAP
The step-by-step process of working with vendor consignments goes as
explained below.
1. Consignment Info Record
You first create a Consignment Info Record through transaction ME11. The
screenshot below is for the transaction ME12 that can be used to change an
existing Info Record in SAP. We use ME12 because we have already created
an Info Record as a preparation for this tutorial.
Start Transaction ME12
You need to select Consignment and enter Vendor, Material, Pur.Org, Plant
as shown on the picture below then hit Enter button.
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Transaction ME12 – Initial Screen
Provide the price in highlighted box in Purchasing Organization view and
then save the info record.
Transaction ME12 – Enter Price
2. Consignment Purchase Order
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Now, start transaction ME21n in the dialog box to create a consignment
purchase order (PO).
Start ME21N Transaction
In the new purchase order, enter Vendor, Item Category: K, Material,
Quantity, Plant, Storage location as highlighted on the screenshot below
and hit Enter button on your keyboard.
ME21N Transaction – Create a Purchase Order
Next, enter Purchasing Organization, Purchasing Group, Company Code
under Org. Data tab as show below.
ME21N – Enter Organizational Data
Then, click on Check button, to check for errors in the document.
Check Purchase Order for Errors
Finally, click the Save button to save the document and the SAP system will
display a message that a PO was created.
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A Purchase Order was Created
3. Goods Receipt
Now, to do Goods Receipt against the Purchase Order you need to use the
transaction MIGO.
Start MIGO Transaction
In below screen, choose Goods Receipt against Purchase Order and enter
the number of the purchase order created earlier. Then, hit Enter button.
Goods Receipt against a Purchase Order
Data is pulled in MIGO by the SAP system from the Purchase Order. Next,
you should click on OK check boxes for all the items.
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Set OK Indicator for Items to Perform Goods Receipt
Then, click on Check button to check for possible errors.
Check Goods Receipt for Errors
Finally, click on Post button to save the document. The system will display a
message that a material document was posted.
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Use Post Button to Save Goods Receipt. Goods Receipt of Consignment
Stock was Posted.
4. Goods Issue
Now, when goods are required, you can perform Goods Issue to, for
example, a cost center. To do this you use the transaction MIGO where it is
necessary to choose Goods Issue against Other with the movement
type 201 and a special indicator K for consignment as highlighted on the
screenshot below.
Goods Issue against a Cost Center
In the Material tab of MIGO transaction, enter the material number that you
would like to issue from the warehouse.
Material Number in MIGO Transaction
In the Quantity tab of MIGO transaction, enter quantity required for issue.
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Quantity in MIGO Transaction
In the Where tab of MIGO transaction, enter Plant and Storage Location
(from where you would like to issue the materials).
Plant and Storage Location in MIGO Transaction
In Partner tab of MIGO transaction, enter the vendor number.
Vendor in MIGO Transaction
In Account Assignment tab of MIGO transaction, enter a cost center (the
cost of the materials will be allocated to the specified cost center).
Cost Center in MIGO Transaction
Click on Check button to check for possible errors.
Check for Errors with Goods Issue
Finally, click on Post button to save the goods issue document. The SAP
system will display the number of posted material document.
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Click Post Button to Save Goods Issue
Goods Issue was Successfully Posted
5. Settle Liabilities
Finally, the last step of vendor consignment process in SAP is to settle the
liabilities that our company has for the vendor. It is necessary to use the
transaction MRKO for settling liabilities created against the vendor.
Start MRKO Transaction
In the first screen of MRKO transaction, you should enter Company Code,
Material and choose Settle radio button as shown on the screenshot below.
Consignment Settlement
Next, click on Execute button.
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Click Execute Button
The system will show a list of the consignment materials that can be settled.
Double click on the line item which requires settlement and finally save the
document. This step will end the vendor consignment process in SAP.
Consig
nment Items for Settlement
