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Vendor Consignment

Applies to:
SAP ECC 6.0. For more information, visit the Supply Chain Management homepage.

Summary
This document helps the P2P consultants to understand the Vendor Consignment scenario in SAP. It explains how the master data to be maintained and process to be followed for the Vendor Consignment business. Any suggestions and improvements towards this document will be always welcome.

Author:

Dipak Kadam

Company: Larsen & Toubro InfoTech Ltd Created on: 18 March 2011

Author Bio
Dipak Kadam is now an employee of Larsen & Toubro InfoTech Ltd. He has total 15+ years of experience out of which near about 3 years experience in the area of SAP consulting in procure to pay (P2P) process. He has worked in OTIS Elevator company in areas like Manufacturing, Production Planning and Procurement as part of domain experience.

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Vendor Consignment

Table of Contents
Vendor Consignment .......................................................................................................................................... 3 Advantages ......................................................................................................................................................... 3 Process ............................................................................................................................................................... 3 Vendor Consignment in Inventory Management ................................................................................................ 6 Vendor Consignment Stock ............................................................................................................................ 6 Goods Receipt to Vendor Consignment Stock ............................................................................................... 7 Transfer Postings ............................................................................................................................................ 8 Goods Issue from Consignment Stock ........................................................................................................... 8 Vendor Consignment in Invoice Verification ..................................................................................................... 10 Cancelling Consignment Documents ............................................................................................................... 11 Related Content ................................................................................................................................................ 12 Disclaimer and Liability Notice .......................................................................................................................... 13

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Vendor Consignment

Vendor Consignment
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.

Advantages
The use of consignment settlement reduces the cost of stockholding in the company by: Reducing the flow of paper and administration work Minimizing transport costs by using collective transports

And, for a modest capital tie-up, increased security of supply is guaranteed with minimal inventory levels and short lead times.

Process
To manage material in the consignment stores, you need the following master data: Material master record: When you manage the affected material as your own material, it is not necessary to create a new material master record for the consignment material. By using the same material number, the consignment stock can be included in the unrestricted-use stock of a material. Vendor master record for the vendor of the consignment material. Purchasing information record of the Consignment infotype.

To request consignment goods from vendors, create a purchase order with a special consignment item. This consignment item is then posted directly to the consignment stock of the affected vendor during the goods receipt(GR). It is also possible to post another goods receipt into the consignment stock. The system does not valuate the consignment stock during the goods receipt. If material is withdrawn from the consignment stock, for example, for production, the withdrawals are valuated with the price of the vendor that is defined in the consignment info record. For the settlement of withdrawals, there is a special report. Consignment Info Record Before you can order consignment material at a vendor or post a goods receipt into consignment stock, you have to maintain the price of the material for the particular vendor in a purchasing info record. The price is necessary for the valuation and settlement of material withdrawals. If you procure consignment material from several vendors, you must create a consignment info record for each vendor. The consignment stock is managed separately for each vendor. To create the info record, choose, from the Purchasing menu, Master DataInfo Record Create. Enter the vendor, material, plant, and the standard purchasing organization of the plant. As the infotype, choose Consignment.

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Vendor Consignment

Transaction: ME11

Further data maintenance corresponds with that of a normal purchasing info record. Enter information on the General Data

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Vendor Consignment

Enter information on the Purchase Org data 1

Consignment prices can be determined in foreign currency, period-based, and in any unit of measure. You can also take advantage of the Purchasing condition technique, including the definition of discounts and price/quantity scales.

Consignment Order To determine that a material is procured for consignment stores, enter the item category K (Consignment) in a purchase order. This item category has the following effects: You must enter a material number. You cannot enter a purchase order price or conditions for the item. You require a goods receipt for the item. The goods receipt is posted in the vendor consignment stock, and is non-valuated. You cannot enter an invoice for the consignment item. Item category K can also be used in outline agreements and purchase requisitions.

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Vendor Consignment

Transaction: ME21N

If a material is always procured for the consignment stores of a plant, you have the opportunity to consider this with MRP using a special procurement key in the material master record. This special procurement key means that a purchase requisition with item category K is created during the planning run for a demand for this material.

Vendor Consignment in Inventory Management


Inventory Management supports the following functions within vendor consignment: Special stock type vendor consignment Goods receipt in vendor consignment stock with and without reference to a purchase order Transfer postings within the vendor consignment stock and transfer postings from vendor consignment stock to your own stock Goods issues from vendor consignment stock Vendor Consignment Stock Material that you procure using vendor consignment is managed in a vendor-related special stock, K (consignment vendor). This special stock is updated at storage location level, as the material is actually in your own company. The consignment stock is then not actually valuated because is still belongs to the vendor. For consignment stock, the stock types are unrestricted-use, in quality inspection, and blocked. The consignment stock is considered when you determine the available stock of a material. Explain that consignment stock is available for planning and can be addressed in Inventory Management. If you have consignment stock for a material, it is displayed in the stock overview (transaction MMBE). At storage location level, there is a list of totals of all consignment stocks. With a double-click on this special stock level, you can see an exact overview of how this consignment stock is distributed to the individual consignment vendors.

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Vendor Consignment

Unlike the stock overview, with the Display consignment stocks function, you can display consignment stocks for several materials at the same time. From the Inventory Management menu, choose Environment Consignment Consignment from Vendor Stock (transaction MB54).

Goods Receipt to Vendor Consignment Stock You can enter goods receipts in your consignment stores with and without purchase order reference. If you enter a goods receipt to a consignment order, the system posts the delivered quantity automatically into the consignment stock of the vendor. As the movement type, choose 101; the system sets the special stock indicator K automatically. As for a normal goods receipt to a purchase order, you can post to all three stock types. You can also post another goods receipt without purchase order and make an initial entry of stock balances in the three stock types for consignment. In addition to the known movement types for these goods movements (501, 503, 505 for GR without purchase order; 561, 563, 565 for initial entry of stock balances), you must specify the special stock indicator K and the vendor of the consignment material. All goods receipts in the consignment stock are non-valuated.

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Vendor Consignment

Transfer Postings For consignment stocks, you can also execute transfer postings and stock transfers. For these goods movements, in addition to the movement types for stock material, you must also specify the special stock indicator K and the vendor of the consignment material. These goods movements are also non-valuated. These are the possible stock transfers and transfer postings for consignment stock: Stock-to-stock transfer posting Storage-location-to-storage-location stock transfers Plant-to-plant stock transfers Goods Issue from Consignment Stock You can only post a goods issue from unrestricted-use consignment stock for consumption. If the consignment material is in stock in quality inspection or in blocked stock, you must first post the consignment material to unrestricted-use stock. It is possible to make withdrawals for samples and scrapping from all three stock types. When entering goods issues, you must specify the special stock indicator K and the consignment vendor, in addition to the movement type in all goods movements. You also have the option of adopting consignment stocks into own stock. To do this, post a transfer posting with movement type 411, and special stock indicator K. Unlike the goods issue for consumption, this transfer posting causes an increase in the valuated stock and no consumption posting. For both goods issues from consignment stock and transfer postings to own stock, there is a liability towards the consignment vendor. The withdrawal is valuated with the price from the consignment info record.

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Vendor Consignment

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Vendor Consignment

Vendor Consignment in Invoice Verification


You should regularly clear liabilities towards the vendor that exist because of the issues from the vendor consignment stock. The consignment goods are settled without invoice receipt, as the vendor cannot trace the goods withdrawal directly. The vendor can only manage the consignment stock To settle consignment withdrawals, from the Inventory Management menu, choose Environment Consignment Consignment from Vendor Liability (transaction MRKO). With this report, you can display settled and non-settled consignment withdrawals and settle non-settled withdrawals. Possible selection criteria include company code, plant, vendor, material, document date and posting date of the withdrawal, and the material document number. So that you can inform the vendor about the settled withdrawals and the credit memo amount, the system creates a message with message type KONS in addition to the settlement document. Transaction: MRKO

You do not expect an invoice from the vendor for goods withdrawals from consignment stocks or a pipeline. Instead you settle posted withdrawals and return deliveries yourself and send the vendor a statement of the settlement. You can perform this settlement periodically in the background. The following documents can be involved: Invoices Credit memos

Consignment settlement is connected to message determination. As a result, you can define a form in Customizing. A message record is created during each settlement. This message record completes the form. Depending on the system settings, you can send this form to the vendor immediately on posting or at a later time.

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Vendor Consignment

Cancelling Consignment Documents


Cancel the documents in Inventory Management and start consignment settlement. The system generates a credit memo for the returned document. If the consignment prices have changed since the original goods receipt, post the credit memo in Financial Accounting. Clear the invoice and the credit memo in Financial Accounting. Consignment settlement is not connected to the purchasing information system, because the purchase order history is not updated during consignment settlements. You cannot make any net postings during consignment settlement. This means that you cannot calculate any cash discounts. To take cash discounts into account, you must include these in the consignment price. This ensures that the cash discount is implicitly posted during the goods withdrawal and settlement. You cannot settle delivery costs. Note, that consignment settlement cannot be performed simultaneously by several users. The material documents are not blocked during settlement, which means that duplicate settlement documents can be created. The liabilities account for consignment settlement must not be flagged as Post automatically only, and must not be defined as a reconciliation account.

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Vendor Consignment

Related Content
http://help.sap.com www.sap.com For more information, visit the Supply Chain Management homepage

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Vendor Consignment

Disclaimer and Liability Notice


This document may discuss sample coding or other information that does not include SAP official interfaces and therefore is not supported by SAP. Changes made based on this information are not supported and can be overwritten during an upgrade. SAP will not be held liable for any damages caused by using or misusing the information, code or methods suggested in this document, and anyone using these methods does so at his/her own risk. SAP offers no guarantees and assumes no responsibility or liability of any type with respect to the content of this technical article or code sample, including any liability resulting from incompatibility between the content within this document and the materials and services offered by SAP. You agree that you will not hold, or seek to hold, SAP responsible or liable with respect to the content of this document.

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