Standard Vendor consignment process in SAP

Standard Vendor consignment process in SAP

Overview

In consignment processing, the vendor provides materials and stores them on your premises. The vendor remains the legal owner of the material until you withdraw materials from the consignment stores. Only then does the vendor require payment. The invoice is due at set periods of time, for example, monthly. In addition, you can also arrange with the vendor that you take over ownership of the remaining consignment material after a certain period of time.

Features

• The consignment stock is managed under the same number as your own stock. Consignment stock can, therefore, be transferred to the available stock.

• You can define consignment prices in foreign currency. The currency in which the order is placed with the vendor applies for consignment withdrawals.
• You can determine period-specific consignment prices.
• You can specify the consignment price in any unit of measure. The conversion factor is stored in the info record. (For information on consignment info records, refer to Pricing for Consignment Stocks.)
• Using consignment info records, you can make use of other condition functions used in Purchasing, such as discounts and price quantity scales.
• Consignment stocks of the same material from different vendors can be managed independently from one another and at the price of the individual vendors.

Vendor consignment cycle consist of:

Issue of Purchase Order => Goods Delivery of goods => Goods Receipt in consignment stock=>Withdrawals from consignment stock=> Liability towards vendor =>Settlement of consignment liability =>Receipt of Credit memo of withdrawal quantity.

Purchasing :

• Purchase Order is created with item category “ K”
• Purchase Order uses normal Material Master with special procurement key “ K ”  if  a material is always  procured for consignment stores  of a plant. You have opportunity to use special procurement key “ K ”. System will generate Purchase Requisition with item category “K” after every MRP run.
• Consignment purchasing info Record.
• Price is not mentioned in the PO. Conditions can not be maintained in Purchase Order ( this Tab is not available in Purchase Order ) . It will be taken directly from Purchasing Info Record.
• Material number is mandatory.
• Item category “ K “ can be used in outline agreement and Purchase Requisition

Goods Receipt:

• Is made in consignment storage location.
• It is non-valuated and Vendor is owner for the same.
• Movement Type used is 101+K- automatically
• Stocks available Un Restricted Use Stock, Quality Inspection, and Blocked stocks. Available for MRP.
•  You can display consignment stock by using transaction MB54.
• During Goods Receipt only material document is getting generated. No accounting document generated as goods receipt is non-valuated.
• Goods Receipt can be done with and w/o ref to Purchase Order .

Withdrawal or Goods Issue

• A material withdrawn from consignment stock is valuated at price mentioned in consignment info record. Use Movement 411+K. Only Un Restricted Use Stock to Un Restricted Use Stock transfer posting allowed. Withdrawal for samples and scrapping using special stock indictor “ K “
• Goods issue is using to cost center using movement with special stock indicator “K” e.g. Goods Issue to cost center 201+K.
• During the withdrawal or Goods Issue own stock is debited. No Goods Receipt/IR posting done.
• During goods issue or transfer posting to own stock an accounting document is getting generated along with material document. 
• Transfer posting from stock to stock : NO FI posting done. Use special stock indicator for posting . e.g. 301+K.

Settlement of liabilities.

• Withdrawal of material from consignment stores or transferring material to your company’s own stock results in liabilities towards the vendor. You should settle these liabilities at regular intervals by using Transaction MRKO
• A possible criteria includes Company, plant, vendor, material doc date and posting date of withdrawal.
• Consignment materials are settled without the vendor issuing an invoice, as the vendor company is unable to track withdrawals directly. The vendor can only manage its consignment stock by taking deliveries and payments into account. During statement price is used from consignment info record.
• During the settlement vendor liability account is getting credited.
• Vendor informed about settled withdrawals and credit memo amount. The system creates message type KONS in addition to settlement document.

Transfer Posting allowed are

• Stock to Stock Transfer.
• Storage Location to Storage Location.
• Plant to Plant stock transfers.
• Also you can post w/o ref to Purchase Order ( 501+K,503+K,505+K )
• Initial entry (561+K,563+K, 565+K )