Consignment Process is the period during which a product is stored at the customer’s location, but the ownership of the product still belongs to the company. The customer stores consignment stock in their own warehouse. The customer can consume the product from the warehouse at any time, and the product is invoiced based on the actual quantity consumed by the customer.
In the SAP system, products supplied on consignment enter the warehouse as consignment stock. This allows consignment stocks to be separately reported through the system. Settlement with the seller occurs at predetermined intervals (e.g., end of each month) based on the quantity consumed or withdrawn as agreed upon. Businesses can return unused consignment stock or, after a certain period, negotiate with the seller to take ownership of the remaining consignment items.
In Consignment Stock Processing in the SAP system, there are four main processes that support the separate management of the entire stock.
Consignment Fill-Up (Filling Stock in the Warehouse)
- Consignment fill-up is used to replenish the customer’s consignment stock. The goods are sent from the unlimited-use stock to the consignment stock for the relevant material. The goods remain the property of the seller.
Consignment Issue (Stock Withdrawal from the Warehouse)
- Consignment issue allows the customer to take consignment goods from the special stock for their use or for selling. Consignment issue involves the withdrawal of goods from the special stock and making them the property of the customer. When the customer removes consignment stock for use or sale, you record the transaction in the system by creating a consignment issue order.
Consignment Pick-Up (Stock Return from the Customer)
- All consignment goods stored in the customer’s warehouse and not used can be returned to your company’s warehouse through a consignment return. If a customer returns consignment stock to you, you record the transaction in the system by creating a consignment return order (order type KA). As a result, the system performs the following actions: When the goods return is declared, the relevant quantity is deducted from the customer’s special stock, and the returned goods are added back to your regular stock at the facility where the goods were returned. Since the returned stock is considered part of your inventory even when it is at the customer’s facility, your total valuated stock remains the same.
Consignment Return (Return of Goods to Production)
- The consignment return process involves the return of consignment goods to your company. The customer can return consignment stock for various reasons, such as product defects or the stock not being sold. When the customer returns consignment goods to your warehouse without using them, it results in a decrease in your consignment stock and an increase in your warehouse stock.
Consignment Fill-Up (KB)
- Consignment Fill-up is a process where the company stores its product at customer sites, and the ownership of this product still belongs to the company. This process is referred to as consignment fill-up.
- Inventory control is performed.
- A purchase order is created.
- A delivery document is created.
- The stock control of the delivered goods is performed. It is observed that the goods are allocated to the customer’s consignment stock.
Consignment Issue (KE)
Consignment stock withdrawal involves removing the goods from the special stock and transferring ownership to the customer.
When a customer takes out consignment stock for use or sale, you record the transaction in the system by creating a consignment issue order. As a result, the system performs the following actions:
- When the goods issue is recorded, the relevant quantity is deducted both from the customer’s special stock and from your total valuated stock.
- As the goods are now the property of the customer, the transaction is associated with invoicing.
- An order document is created
- A delivery document is created
- The stock control of the delivered goods is checked through MMBE. The withdrawal from the customer’s consignment stock is viewed.
Consignment Return (KA)
Consignee returns are used when your customer wants to return consigned goods to consignment stock. If the customer wishes to return consigned goods that were previously issued, you can record this transaction by creating a consignment return order. When the goods exit the inventory, the corresponding quantity is added to the customer’s specific stock in the factory where the goods are returned.
- Perform consignment stock control for the material.
- An order document is created.
- A delivery document is generated.
- When the customer returns consigned products, the operation conducted through inventory control is carefully observed and recorded.
Consignment Pick-Up (KR)
If the customer returns the product due to reasons such as damage, poor quality, or expiration date, this process is called consignment return. Consignment return occurs after the consignment dispatch. In other words, the customer can return the consignment product, and the product is given to the customer through the consignment editing process. The sales order type for consignment dispatch is- KA.
- Perform consignment stock control for the material.
- Create the order document.
- Generate the delivery document.
- The operation conducted through stock control for the material is checked.
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