"Consignment" stands for a process in which a vendor makes a material available to you, that you then keep in one of your storage facilities. The vendor remains the legal owner of the material until such time as you take it out of the consignment stores to use. Payment is not due to the vendor until you do so. The quantity of material withdrawn from consignment stores for use in this way is invoiced at previously agreed intervals (e.g. monthly). You can also agree with the vendor that any remaining consignment stock is taken over into your own stock after a certain period of time.

The SAP R/3 System satisfies the following prerequisites for the management of consignment stocks:

• Consignment stock is managed under the same material number as your own stock. In this way, you can make consignment stock part of the available stock of a material.
• Consignment stocks of the same material supplied by different vendors are managed separately from each other, at the price charged by the relevant vendor in each case.
• Consignment stocks are not valuated. When the material is withdrawn from storage, it is valuated at the price charged by the vendor in question.
• A consignment material can be managed as one of three stock types:

You can make transfer postings between all three types of stock. However, you can only make withdrawals from unrestricted stock.