Consignment Stock Handling 
Purpose
Consignment handling is for processing consignment goods, that is, goods that are stored in the customer’s warehouse but that still belong to your company. The customer does not have to pay for the goods until they are withdrawn from the consignment stock. Consignment goods which are not needed can, as a rule, be returned. Because the consignment stock is still part of your evaluated stock, you have to keep stock records for it in your system. Consignment stocks must:
- Record the consignment stock separately from other stocks, in order to keep an overview of what is in the customer’s warehouse.
- Record separate stock levels for different customers.
The relevant Quality Management processes in this scenario are described in detail in
QM in Sales and Distribution.
Prerequisites
The following R/3 components are integrated in the scenario for consignment processing:
SAP Component |
Functions |
Sales |
Quotation and sales order processing |
Credit and risk management |
Credit limit checks, guarantees for open receivables |
Shipping |
Deliveries, picking, packing, goods issue |
Warehouse Management |
Stock placement and removal |
Transportation |
Transportation planning and processing |
Billing |
Invoice verification |
Information system |
Planning, forecasts, and statistics |
Process Flow
Use for a sales order
Three different types of sales order are relevant for consignment processing:
- The customer fill-up is for replenishing the customer consignment stores.
- The consignment issue is for recording when a customer withdraws goods from the consignment stock for consumption or sales.
- The consignment pick-up is for returning the consignment stock to your warehouse.
The following standard functions are available for consignment processing:
- Costing and pricing
- Availability check
- Delivery scheduling
- Transfer of requirements to demand management
- Credit limit check
- Export control
Credit and risk management
In credit management you can run static or dynamic checks on credit limits at different stages in sales order processing (for example, in the order, the delivery or at goods issue).
Risk Management provides additional procedures for guaranteeing against credit risk, such as documentary payments, payment cards or export credit insurance.
Shipping
You trigger shipping processing by creating deliveries from orders that are due to be shipped. The system checks both the availability of the product and the validity of the shipping deadlines.
In picking, you remove goods from the warehouse and prepare them in the picking area. These functions are also supported by the Warehouse Management system.
Delivery items are packed by assigning shipping units that can be composed of materials and packing, or just the delivery item.
Goods issue is the final step in shipping and varies according to the underlying order type:
- Consignment fill-up: The appropriate quantity is posted from the standard stock and added to the customer special stock. The total valuated stock in your warehouse remains unchanged.
- Consignment issue: When you post goods issue, the quantity is taken both from the customer special stock and your own valuated stock.
- Consignment pick-up: When goods issue is posted, the quantity is posted from the customer special stock and posted to the normal stock of the plant, to which it is being returned. The total valuated stock remains the same because the returned goods have always remained part of your stock, even while at the customer.
Warehouse Management
Picking links warehouse management (WM) with sales order processing. The system differentiates between picking in warehouses with fixed bin locations, or in warehouses with random storage (using transfer orders).
Transportation
You can use transportation planning to group together the deliveries that are due to be transported. Essential planning activities are determining shipping deadlines and means of transport, and assigning routes.
Transportation processing also allows you to follow the transportation activities that take place after planning.
The shipment costs determined in transportation are forwarded to Financial Accounting, settled with the carrier and billed to the customer.
Billing
Invoices are created using deliveries for products, or orders for services. Once a billing document has been created, the values are posted to the relevant financial and cost accounting accounts. In consignment processing, only the consignment issue is relevant for billing because this is when property actually changes hands.
You can use an invoice list to send a list of billing documents due on one date to the payer.
Information system
The information system helps you in planning, forecasts, and analyses. It uses master data and any transaction data that may result from the business processes for its evaluations.
Result
The following scenarios may also be of use to you with consignment processing:
Presales Handling
Returnables/Empties Handling
Foreign Trade Handling
Complaints Handling