Consignment Stock ProcessingPurposeConsignment goods are goods which are stored at the customer locationbut which are owned by yourcompany. The customer is not obliged to pay for these goods until they remove them from consignmentstock. Otherwise, the customer can usually return consignment goods which are not required.Consignment processing offers the participating partners several advantages. Customers store theconsignment goods at their own warehouses. The customer can access the goods in the consignmentwarehouse at any time. They are only billed for the goods when they are removed from the warehouseand only for the actual quantity taken.Since consignment stocks still form part of your valuated stock, you must manage this stock in yoursystem.However, consignment stock must be Managed separately from the rest of your stock so that you know exactly what stock is stored at the customer location Managed separately for each customerIn inventory management, the consignment stock is managed as special stock in your inventory and isassigned to specific customers. This enables you to keep track of returnable packaging stock bycustomer.
If the consignment stocks are not managed by the sold-to party but by a central office, you can use thepartner function for special stock partner.PrerequisitesSpecial Stock PartnerThe special stock partner has been defined for carrying out consignment stock processing by means of athird party rather than the customer. This means you can manage all special stock under one partner. Itmakes sense to use the special stock partner if your customer is using decentralized order processing butmanages consignment stock centrally.Inventory Management Using the Special Stock PartnerIf you want to process your consignment goods using a special stock partner, proceed as follows: 1. Create a customer master record for the special stock partner (account groups 0001 and DEBI are defined for this purpose in the standard system). 2. Enter the special stock partner in the relevant customer master record on the partner screen using the partner function SB.When you create an order for this customer, the system automatically proposes the partner function SB inthe document header and the document items. Consignment goods which have been entered in aconsignment fill-up are always posted to the stock of the special stock partner when goods issue iscarried out. You can also enter the partner function SB manually in the document header or in therelevant items if a special stock partner is required and is not proposed from the customer master record.If a special stock partner does not exist in the document header, inventory management is carried outusing the sold-to party.Process FlowThere are four main transactions for processing consignment stock in the R/3 System, all of whichsupport separate management of stock: Creating a Consignment Fill-Up Creating Consignment Issue Creating a Consignment Pick-Up Displaying Consignment ReturnsConsignment fill-upConsignment fill up is used to supplement the customer’s consignment stock.Goods issue of the appropriate stock is posted from the unrestricted-use stock to consignment stock(special stock). The goods remain in the possession of the vendor.When you ship consignment stock to the customer, you record the transaction by creating a consignmentfill-up order (order type KB). As a result, the system carries out the following actions:
If special stock does not yet exist in your inventory for the customer (or special stock partner), the system creates it when goods issue is posted The relevant quantity is removed from regular inventory in your plant and is added to the special stock for the customer. The total valuated stock for the plant remains the same. The transaction is not relevant for pricing since the consignment stock remains the property of your company.Consignment pick-upConsignment issue enables the customer to take consignment goods from the special stock for their useor to sell.Consignment issue involves removing the goods from the special stock and making it the property of thecustomer.When the customer removes consignment stock to use or sell, you record the transaction in the systemby creating a consignment issue order (order type KE). As a result, the system carries out the followingactions: When goods issue is posted, the relevant quantity is deducted from both the customer’s special stock and your own total valuated stock. The transaction is relevant for pricing since the goods now become the property of the customer.Consignment issueAny consignment goods stored at the customer’s warehouse that haven’t been used can be reposted toyour company’s warehouse with a consignment pick-up.
If the customer returns consignment stock to you, you record the transaction in the system by creating aconsignment pick-up order (order type KA). As a result, the system carries out the following actions: When goods issue is posted, the relevant quantity is deducted from the customer’s special stock and is added back into your regular stock at the plant where the goods are returned. Your total valuated stock remains the same since the returned stock was regarded as part of your own inventory even while it was at the customer’s premises. This transaction is not relevant for billing.Consignment returnConsignment returns are used for when your customer wants to return goods to the consignment stock.If the customer wishes to claim on consignment goods which have already been issued, you can recordthis transaction by creating a consignment return order (order type KR). As a result, the system carriesout the following actions: When goods issue is posted, the relevant quantity is added to the customer’s special stock at the plant where the goods are returned Since the ownership of the goods is passed from the customer back to your company, the transaction is relevant for billing. In this case, the customer receives a credit memo for the returned goods.Depending on the settings in Customizing for Sales, you can create consignment returns with directreference to a consignment issue. The consignment issue appears in the document flow for theconsignment return. This function is not supported in the standard version of the SAP R/3 System. When you create consignment returns in the standard version of the SAP R/3 System, the system automatically sets a billing block. To credit a return, you must first approve the request for a credit memo by removing the billing block in the return header. You can control the automatic setting of a billing block in Customizing for Sales.
The following table provides an overview of the order types used in the standard system for processingconsignments:Transaction Sales order typeConsignment fill-up KBConsignment issue KEConsignment pick-up KAConsignment return KRPricing and Availability CheckWhether pricing is carried out for the individual transactions depends on the item category. The scheduleline category controls the availability check and the transfer of requirements in each of the transactions.The schedule line category itself is determined by the item category and the MRP type of the material.The order types KE and KA check against the consignment stock for the customer involved and ordertype KB checks against your own plant stock. Requirement records for consignment stock are stored asindividual requirements, independently of the setting in the material master record.