Consignment Process in SAP SD: Overview Presentation

This document details the SAP standard consignment process, which involves storing a company’s products at a customer’s site while the company retains ownership until the goods are consumed or sold by the customer. This process is broken down into four distinct sub-processes: Consignment Fill-Up, Consignment Issue, Consignment Return, and Consignment Pick-Up.

1. Key Concepts covered in the Consignment Presentation Document

• Consignment Stock: This is a special stock location at the customer’s site where goods are held. Importantly, the company maintains ownership of these goods until they are issued to the customer. As the document notes, during a Consignment Fill-Up, “The relevant quantity is removed from regular inventory in your plant and is added to the special stock for the customer.”
• Ownership Transfer: Ownership of the goods is not transferred to the customer during the Fill-Up stage. It is only transferred during the Consignment Issue when the customer uses or sells the goods. The Consignment Return process reverses the ownership back to the company.
• Billing Relevance: Billing events only occur when the ownership of the goods transfers to the customer during the Consignment Issue process or when a customer receives a credit for goods returned during the Consignment Return process. The Consignment Fill-Up and Consignment Pick-Up stages do not create a billing event.

2. The Four Sub-Processes related to Consignment Process in SAP SD

Here’s a detailed breakdown of each sub-process:

I. Consignment Fill-Up (CF)

• Purpose: To move goods from the company’s unrestricted stock to consignment stock located at the customer’s site. The company still owns the stock at this stage.
• Document Type: Sales document type KB/CF.
• Item Category: KBN.
• Schedule Line Category: E1.

1. Process Flow:Consignment Fill-Up Order: Created via transaction VA01.
2. Outbound Delivery: A delivery is created to physically move goods to the consignment stock.
3. Goods Issue (GI): The stock is moved from the company’s unrestricted stock to the customer’s consignment stock. No ownership change occurs. Quote: “Goods issue of the appropriate stock is posted from the unrestricted-use stock to consignment stock (special stock).” Quote: “The total valuated stock for the plant remains the same.”

II. Consignment Issue (CI)

• Purpose: To record when the customer has used or sold the consignment goods, thereby transferring ownership and creating an invoice.
• Document Type: Sales document type KE/CI.
• Item Category: KEN.
• Schedule Line Category: C0/C1.
• Billing Relevance: The delivery and sales documents are relevant for billing purposes.

1. Process Flow:Consignment Issue Order: This is created based on the customer’s usage or sales information.
2. Outbound Delivery: An outbound delivery is created to reflect the goods leaving the consignment stock.
3. Goods Issue (GI): Ownership is transferred from the company to the customer.
4. Invoice: An invoice is generated for the customer. Quote: “Once the customer informed you that he used all the goods or partial goods then you will create consignment issue for used goods. Here you are invoicing the customer (because he used the goods).” Quote: “G.I from the consignment stock & goods are no longer in the property(ownership) of the company.”

III. Consignment Return (CONR)

• Purpose: To manage the return of goods from the customer back to the consignment stock (not yet back to company’s plant), usually due to damages or overstock.
• Document Type: Sales document type KR/CONR.
• Item Category: KRN.
• Schedule Line Category: D0.
• Billing Relevance: Relevant for billing, and a credit memo is created for the customer.

1. Process Flow:Consignment Return Order: Initiates the return of goods.
2. Returns Delivery: A delivery document is created for the physical movement of goods.
3. Goods Receipt (GR): Goods are moved to quality, and then to customer consignment stock. Ownership is passed back to company.
4. Credit Memo: A credit memo is issued to the customer for the returned goods. Quote: “Ownership of the goods is passed from the customer back to your company, so transaction is relevant for billing & the customer receives a credit memo for the returned goods.” Quote: “The goods are now again in the customer’s consignment stock.”

IV. Consignment Pick-Up (CP)

• Purpose: To initiate the physical return of the consignment goods from the customer’s site back to the company’s plant. Note that ownership is not changed during this step and no billing event is triggered.
• Document Type: Sales document type KA/CP.
• Item Category: KAN.
• Schedule Line Category: F0/F1.
• Billing Relevance: No billing event happens during this stage.

1. Process Flow:Consignment Pick-Up Order: This order triggers the physical movement of goods.
2. Returns Delivery: A delivery document is created for the shipment.
3. Goods Receipt (GR): Goods are moved back into the company’s plant. Quote: “Although you have created consignment return, goods are not directly arrived to plant ,here ownership is not changing so no billing.” Quote: “The consignment pick-up triggers the return of goods i.e physical movement of goods from the customer’s custody.”

4. Key Takeaways

• The SAP consignment process involves a careful tracking of goods and ownership through four distinct stages.
• Proper configuration of document types, item categories, and schedule line categories is critical to the process.
• Billing occurs only when goods are issued to the customer during the Consignment Issue process, and a credit memo is created during the Consignment Return process
• The Consignment Pick-Up process is primarily a physical goods movement event and does not trigger any billing.