CONSIGNMENT PROCESS Consignment goods are goods which are stored at the customer location but ownership remains with the company itself. The customer is not liable to pay for these goods until they removed from consignment stock. Customers store the consignment goods at their own warehouse. The customer can access the goods in the consignment warehouse at any time. Consignment stock s billed when they are removed from the warehouse and only for the actual quantity taken. Generally companies will do consignment process for slow moving items or newly launched products. Whenever management decides to dump the stock on consignment basis, company ill inform to all the customers. If customer accepts then we do consignment fill up process. Consignment process is classified into 4 types: Consignment Fill Up Consignment Issue Consignment Pick Up Consignment Returns We will discuss one by one now. 1. Consignment Fill Up: Consignment fill up is all about dumping the stock at customers location without billing. Process: Consignment fill up > Delivery > Pro forma invoice CF > KBN>E1>631 Document type: F DP new cree BO BB ener contol Reference mandatory Materalenty ee robabaty 300) (eed eo record By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 1CONSIGNMENT PROCESS Item Category: KBN wanes, Mew, :etntntekn Thom Categories Dott F wees DOG aE em category [fe] [Consignment Fitup | Busness Data a) ipusness tem Wisched.ine Alowed (tem Reley-fr Di (Oretums (i wightyvobRelevant cred active [etermne cost General Control (Rounding permeted order aty= 1 From screenshot we can see that consignment fill up is not relevant for billing. In this case for Indian scenarios we will create pro-forma invoice. ‘Schedule line Category: E1 Movement type: 631 Change view “Maintain Schedule Line Categories": Decaite Pwo Bae ne — as San nes ; ereasetached thew noe coe o Specie wat 7 | rena tow a eoretoreces. 3] By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 2CONSIGNMENT PROCESS Create Delivery: T.Code: VLOIN Enter the picking quantity and do the PGI. And check the stock overview. T.Code: MMBE With the movement type 631 stock is reduced from un-restricted stock and added to customer consignment. In consignment fill up accounting document will not be generated. Process: Consignment fill up > Delivery > Pro forma invoice CF > KBN > E1 > 631 By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 4CONSIGNMENT PROCESS 2. Consignment Issue: In consignment issue our customer sells the goods to the end customer. Process: Consignment Issue > Delivery > Invoice Document type: Cl vyaag Reference mandatory") materi enty te] Check diveion o Diem disor Provabity (i00) Dead nfo record Greckcwst me |) Oreck purchorder no] ‘credit group im Dlenter Po number ‘Output appication ] ‘commement date o tem Category: KEN F towers BED EB em ctecoy (aT) oie] us ot tem Type ] |Business Item Completion Rule n [W)Sched..ne Alowed ‘Speceal Stock TW (item Retev.for Dl Bling Relevance fal CiReturns ng Pan Type (Zwohe tReet ‘Bling Block TC) Vicrede active Pricing fy (W)Determne Cost ‘Stabstcal vale 0 revenue Recoonen [1] Delrit. Start Date 0 oneal contol (JAutom.batch determ. [Rounding permitted ClOrder aty = 1 By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page SCONSIGNMENT PROCESS In the above screenshot we can see that consignment issue is relevant for billing, KEN Item category will have special stock indicator “W". The special stock indicator “W” controls that while doing delivery in consignment issue, system considers the consignment stock. Schedule line Category: C1 Change View "Maintain Schedule Line Categories": Details DO renee 1 BO OO Schodne ct FE) (oneptenae. At ovement vine ttay. ovement Type Ftp concer Te Preqdetsched Rem Cateno9 Oy eee Age Ca Specs. al ST “Tansacton flow (keg /asery Rima ‘The effect of movement type 633 is it will reduce the stock from consignment stock and system generates inventory accounting document. ‘The accounting document is: COGS a/c Dr. To Inventory a/c Cr. When we deliver the goods, system deducts the stock from consignment stock with the help of special stock indicator "W" in item category “KEN”. Consignment issue is relevant for billing. We raise invoice to the customer. Consignment Fill up and consignment issue are relevant for availability check. By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 6CONSIGNMENT PROCESS Create Order: 000 Tow B impsevaee 2 Ean) Crea “FO OFA orden Pe Bh Create Delivery: 70 Fiasvse cvtendéin[—) runes Sooty GE) satnbs/ 96s stots me nsmeetm cian) owas —_[) raion, waste |) ommvgms |) wie et et Pe fo. Sup Bre aL a a [2 su om» af po] zamune sensi . In the above screen shot we can see that picked quantity is “ZERO”. The reason is we already delivered goods to the customer in the Consignment Fill up itself. ‘And click on post goods issue. These 50 quantity are delivered to the end customer from our customer. By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 7CONSIGNMENT PROCESS Q. Why we are doing delivery again in consignment issue as we already delivered the goods to the customer in consignment fill up? A.i.To transfer the ownership To reduce the stock from consignment stack. Check the stock levels using t.code MMBE, ‘After doing consignment issue we can see that stock is reduced to 50 quantity as we created consignment issue for 50 quantity. Consignment is relevant for billing. Create Invoice: otra docunerts @ [Ree vYenooon] netvaue 75008 am Faye fz Sra Nobis 1965 Saehabd | D-S0004 Hy. fing Date (rats.20 Blten descpton ‘Mee quantty (SU Netvabe ‘water “Tacanoutt 10 So Mobi sare) S05 20.5000 s-acomiz 0,00 * This is all about the consignment issues. Next we'll discuss about consignment returns. By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page &CONSIGNMENT PROCESS 3. Consignment Retums; When end customer retums the consignment goods to our customers then we do consignment returns. Document type: CONR iaChhan Maw, ite intte ote, Onvier Irena tale ieee P Nene OE OGRE ‘aie Dscmane Tyee (Sam [Consorment eto —] sD éocrment ten, =) Sales docoment oc Cohutombatch determ ——[IRounding pemeted oder aty = 1 By Srinivasulu Algaskhanpet (Sr. SAPSD Consultant) PageCONSIGNMENT PROCESS KRN item category will have special stock indicator “W". The special stock indicator “W” controls that while retuming goods stock will be added to consignment stock. Consignment returns is relevant for billing, Schedule line category: DO PO ewer DEO ED Sched.ine cat. 156] [Consignment Returns (Bumessdata SY Delvery block TI (mam i SS roe aes ear aee ae ‘Transaction flow: selsch Incomplproced. [30] DelwReLsched.une 1Rea./Asserbhy Coavatbiey CPred.atocation ‘The effect of movement type 634 is it will reduce the stock from consignment stock and system generates inventory accounting document. ‘The accounting document is: Inventory a/c Dr. To COGS a/c Cr. Consignment returns snot relevant for availability check. Proce: Consignment return > Returns delivery > Credit for returns We'll start with creating return order. By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 10CONSIGNMENT PROCESS Create Order: Create Return Order. te ort § tent a terme ofrate pe tee tytn 7 serio 500) bonsai =: While creating any return order we need to mention the order reason. Billing block should always be blank. We can see that system is proposing net value as the consignment returns is relevant for billing. Create Delivery: 2S0 FLGCVEOE racobtean ovat, eamatone RHA Seat ti 136 sa 5 ae pecoreme [ais Te) oases) ea 0d vaeaeeta mwas () we tt om pend Seca infty [uae GAYS HT Dacrn o ‘um Ph WD) iain, seme sien By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 11CONSIGNMENT PROCESS Here we can see the picked quantity is “ZERO”. The reason is here end customer is returning to our customer. So, the stock will be added to consignment stock and not un-restricted stock. Company is not picking any material in Consignment returns. ‘After doing PGI, check with the stock overview using t.code MMBE. OO I aa seeton taal Sere] Sok Sa) tena Te ret Fred poact umeofieanre su ee & ‘sack (Gh) Blow oe ‘etiConar Cadets Lctin/tcSoec ck Qa spect | Urea te Reed Ratretten | Oni Stick Cn. MOA Sra ane: nd 1 pasescon bys so ra om Regret 750 SS Sage RS 0 Here we can see that whatever stock is returned by the end customer is added to consignment stock but not un-restricted stock. It happens with the special stock indicator “W”. Consignment returns is relevant for billing, Create Invoice: GBloirg douments © rie we Pay Sat Meo 965 Saba DSO Biing Date [12.09.2014] (2) Bem Deabben ‘md garty 9 eave ae Tacoma i Soule (see) BB senseo0 amar ayo - Here we can see that we are creating credit for returns nothing but a credit memo as it is a returns process. By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 12CONSIGNMENT PROCESS 4, Consignment Pickup: If there is any unsold stock with the customer, customers asks to ‘take back the consignment stock. Then we do consignment pick up. Document typ: Proms DEOGaS Pp ‘Sales Document Type _ [EF] [Consignment Pickup] q Sales document bce _["] a3] Remnowncrement [30 No. range ext. 2589. [14] Subitaminerement Matera entry type 0 (Zinem dvson (Bead fo record Chace purch.oe Cente Po nunber conmerene cae |) Item Category: KAN sa Giinaes, Yew siete tts Stary Crt or see DOIN P twee BO Gao em cateoo [iar] [Consignment Pkcup | ‘Item Type 0 ‘YiBusness Item Completion Rule 0 [viSched.Lune Allowed ‘Spec Stock 0 (Ctem Relev.for Dv onan St = ‘Biting Block ) \Credit active: Pricing 0 O)etermine Cost By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 13,CONSIGNMENT PROCESS Consignment pickup is not relevant for billing. But in Indian scenarios we are going to create pro-forma invoice. ‘Schedule line category: es | ek ic [eer Se “Movement type Ustep | _7 Order Type ty Purea.detsches em csenoy q parent o tereevasr Secmmvasr (Leanewctgon ow Income. proced. [30] Dene schec.ine: naadhovesiy Sencetomy Gredateeon ‘The effect of movement type 632 is it will reduce the stock from the consignment stock and stock will be added to unrestricted stock. ‘And inventory accounting document will not be generated Process: Consignment pick up > Returns delivery > Proforma invoice By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 14CONSIGNMENT PROCESS In the above screen shot we can see that system is not proposing any net value as consignment pick up is not relevant for billing. We need to mention the order reason and remove billing block if any. Create delivery: ven os Se Somme TE) GE senate) eee si mses, eT raceme [ETE HE) owas [mete bin twee] eavenns[) mio wet metre Saco feo Sn Ben a Tw Sue Here no need to pick remal 12 75 quantity as the ownership of the stock is still with the company itself. ‘After doing PGI, check with the stock overview with t.code MMBE. Here we can see that after doing consignment pick up, complete consignment stock is added to un-restricted stock. This is all about the consignment business process. Let us summarize the whole consignment process once. By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 15CONSIGNMENT PROCESS Summary: Consignment goods are goods which are stored at the customer location but ownership remains with the company itself. The customer is not liable to pay for these goods until they removed from consignment stock. Customers store the consignment goods at their own ware house. The customer can access the goods in the consignment warehouse at any time. Consignment stock is billed when they are removed from the ware house and only for the actual quantity taken. Generally companies will do consignment process for slow moving items or newly launched products. Whenever management decides to dump the stock on consignment basis the company will inform to all the customers. If customer accepts then we do consignment fill up process. Consignment process is classified into 4 types: Consignment Fill Up Consignment Issue Consignment Pick Up Consignment Returns 1. Consignment Fill Up: Consignment fill up is all about dumping the stock at customers location without billing. Document type: CF Item Category: KBN Schedule line category: E1 Consignment fill up process is not relevant for billing. But in Indian scenarios we will create pro- forma invoice. CF> KBN > E1> 631 Proces: Consignment fill up > Delivery > Pro-forma invoice ‘The effect of movement type 631 is it will reduce the stock from un-restricted stock and it will added to the consignment stock. Inventory accounting document will not be generated. While creating consignment fll up we can see that system will not propose any net value asitis not relevant for billing. By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 16CONSIGNMENT PROCESS When we do delivery system deducts the stock from un-restricted stock and adds to the consignment stock with the help of movement type 631. 2. Consignment issue: In this step our customer sells the goods to the end customer. Document type: Cl Item category: KEN Schedule line category: C1 Item category “KEN” will have special stock indicator “W". The special stack indicator “W” controls that while doing delivery in consignment issue system considers the consignment stock. Consignment fill up process is relevant for billing. Cl>KEN> C1 > 633 Process: Consignment issue > Delivery > Billing ‘The effect of movement type 633 is it will reduce the stock from consignment stock and system generates inventory accounting document. ‘The accounting document is: COGS a/c Dr. To Inventory a/c Cr. . Why we are doing delivery again in consignment issue as we already delivered the goods to customer in consignment fill up? A.i.To transfer the ownership ii, To reduce the stock from consignment stock. In consignment issue we can see that system will propose net value as itis relevant for billing. When we deliver the goods, system deducts the stock from consignment stock with the help of special stock indicator "W" in item category “KEN”. 3. Consignment Returns: When end customer returns the consignment goods to our customers then we do consignment retums. By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 17CONSIGNMENT PROCESS Document type: CONR Item category: KRN Schedule line category: 00 CONR> KRN > D0> 634 Process: Consignment returns > Return delivery > Credit for returns KRN item category will have special stock indicator “W". The special stock indicator “W” controls that while returning goods stock will be added to consignment stock and inventory accounting document will be generated. Its relevant for billing. ‘The effect of movement type 634 is it will reduce the stock from consignment stock and system generates inventory accounting document. ‘The accounting document is: Inventory a/c Dr. To COGS a/e Cr. 4, Consignment Pick up: When our customer asks to take back the consignment stock then 'we do consignment pick up. Document type: CP Item category: KAN Schedule line category: FL CP > KAN> Fi >632 Process: Consignment pick up > Returns delivery ‘The effect of movement type 622 Js, it will reduce the stock from consignment stock and the stock will be added to un-restricted stock. Inventory accounting document will not be generated. By Srinivasulu Algaskhanpet (Sr. SAP SD Consultant) Page 18