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Consignment process
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SrinivasuluAlgaskhanpet
, Sr. SAP SD Consultantat Accenture

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Published on Dec 28, 2014

This document provides overview of Consignment process and its related configuration in SAP
SD
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Published in: Education
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Consignment process
1. 1. CONSIGNMENT PROCESS BySrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 1 Consignment goods are goods which are stored at the customer location but
ownership remains with the company itself. The customer is not liable to pay for these
goods until they removed from consignment stock. Customers store the consignment
goods at their own warehouse. The customer can access the goods in the consignment
warehouse at any time. Consignment stock is billed when they are removed from the
warehouse and only for the actual quantity taken. Generally companies will do
consignment process for slow moving items or newly launched products. Whenever
management decides to dump the stock on consignment basis, company will inform to all
the customers. If customer accepts then we do consignment fill up process. Consignment
process is classified into 4 types: 1. Consignment Fill Up 2. Consignment Issue 3.
Consignment Pick Up 4. Consignment Returns We will discuss one by one now. 1.
Consignment Fill Up: Consignment fill up is all about dumping the stock at customers
location without billing. Process: Consignment fill up > Delivery > Pro forma invoice CF
> KBN > E1 > 631 Document type: CF
2. 2. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 2 Item Category: KBN From screenshot we can see that consignment fill up is not
relevant for billing. In this case for Indian scenarios we will create pro-forma invoice.
Schedule line Category: E1 Movement type: 631
3. 3. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 3 From above screenshot we can see that movement type for consignment issue is
631. The effect of movement type 631 is it will reduce the stock from un-restricted stock
and it will add the stock to consignment stock. In the above screen shot we can see the
stock levels of S-Mobile. Lets do the consignment fill up process: Create Order:
T.Code: VA01 We can see that, as consignment fill is not relevant billing the net value for
the order will be ZERO. Save the order.
4. 4. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 4 Create Delivery: T.Code: VL01N Enter the picking quantity and do the PGI. And
check the stock overview. T.Code: MMBE With the movement type 631 stock is reduced

from un-restricted stock and added to customer consignment. In consignment fill up

accounting document will not be generated. Process: Consignment fill up > Delivery >
Pro forma invoice CF > KBN > E1 > 631
5. 5. CONSIGNMENT PROCESS BySrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 5 2. Consignment Issue: In consignment issue our customer sells the goods to the
end customer. Process: Consignment Issue > Delivery > Invoice Document type: CI Item
Category: KEN
6. 6. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 6 In the above screenshot we can see that consignment issue is relevant for billing.
KEN Item category will have special stock indicator W. The special stock indicator
W controls that while doing delivery in consignment issue, system considers the
consignment stock. Schedule line Category: C1 The effect of movement type 633 is it
will reduce the stock from consignment stock and system generates inventory accounting
document. The accounting document is: COGS a/c Dr. To Inventory a/c Cr. When we
deliver the goods, system deducts the stock from consignment stock with the help of
special stock indicator W in item category KEN. Consignment issue is relevant for
billing. We raise invoice to the customer. Consignment Fill up and consignment issue are
relevant for availability check.
7. 7. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 7 Create Order: Create Delivery: In the above screen shot we can see that picked
quantity is ZERO. The reason is we already delivered goods to the customer in the
Consignment Fill up itself. And click on post goods issue. These 50 quantity are delivered
to the end customer from our customer.
8. 8. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 8 Q. Why we are doing delivery again in consignment issue as we already delivered
the goods to the customer in consignment fill up? A. i. To transfer the ownership ii. To
reduce the stock from consignment stock. Check the stock levels using t.code MMBE.
After doing consignment issue we can see that stock is reduced to 50 quantity as we
created consignment issue for 50 quantity. Consignment is relevant for billing. Create
Invoice: This is all about the consignment issues. Next well discuss about consignment
returns.
9. 9. CONSIGNMENT PROCESS BySrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 9 3. Consignment Returns: When end customer returns the consignment goods to
our customers then we do consignment returns. Document type: CONR Item Category:
KRN
10. 10. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 10 KRN item category will have special stock indicator W. The special stock
indicator W controls that while returning goods stock will be added to consignment
stock. Consignment returns is relevant for billing. Schedule line category: D0 The effect
of movement type 634 is it will reduce the stock from consignment stock and system

generates inventory accounting document. The accounting document is: Inventory a/c Dr.
To COGS a/c Cr. Consignment returns is not relevant for availability check. Process:
Consignment return > Returns delivery > Credit for returns Well start with creating
return order.
11. 11. CONSIGNMENT PROCESS BySrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 11 Create Order: Create Return Order. While creating any return order we need to
mention the order reason. Billing block should always be blank. We can see that system is
proposing net value as the consignment returns is relevant for billing. Create Delivery:
12. 12. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 12 Here we can see the picked quantity is ZERO. The reason is here end customer
is returning to our customer. So, the stock will be added to consignment stock and not unrestricted stock. Company is not picking any material in Consignment returns. After
doing PGI, check with the stock overview using t.code MMBE. Here we can see that
whatever stock is returned by the end customer is added to consignment stock but not unrestricted stock. It happens with the special stock indicator W. Consignment returns is
relevant for billing. Create Invoice: Here we can see that we are creating credit for returns
nothing but a credit memo as it is a returns process.
13. 13. CONSIGNMENT PROCESS BySrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 13 4. Consignment Pickup: If there is any unsold stock with the customer,
customers asks to take back the consignment stock. Then we do consignment pick up.
Document type: CP Item Category: KAN
14. 14. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 14 Consignment pickup is not relevant for billing. But in Indian scenarios we are
going to create pro-forma invoice. Schedule line category: The effect of movement type
632 is it will reduce the stock from the consignment stock and stock will be added to unrestricted stock. And inventory accounting document will not be generated. Process:
Consignment pick up > Returns delivery >Proforma invoice Create Order:
15. 15. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 15 In the above screen shot we can see that system is not proposing any net value as
consignment pick up is not relevant for billing. We need to mention the order reason and
remove billing block if any. Create delivery: Here no need to pick remaining 75 quantity
as the ownership of the stock is still with the company itself. After doing PGI, check with
the stock overview with t.code MMBE. Here we can see that after doing consignment
pick up, complete consignment stock is added to un-restricted stock. This is all about the
consignment business process. Let us summarize the whole consignment process once.
16. 16. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 16 Summary: Consignment goods are goods which are stored at the customer
location but ownership remains with the company itself. The customer is not liable to pay
for these goods until they removed from consignment stock. Customers store the
consignment goods at their own ware house. The customer can access the goods in the

consignment warehouse at any time. Consignment stock is billed when they are removed
from the ware house and only for the actual quantity taken. Generally companies will do
consignment process for slow moving items or newly launched products. Whenever
management decides to dump the stock on consignment basis the company will inform to
all the customers. If customer accepts then we do consignment fill up process.
Consignment process is classified into 4 types: 1. Consignment Fill Up 2. Consignment
Issue 3. Consignment Pick Up 4. Consignment Returns 1. Consignment Fill Up:
Consignment fill up is all about dumping the stock at customers location without billing.
Document type: CF Item Category: KBN Schedule line category: E1 Consignment fill up
process is not relevant for billing. But in Indian scenarios we will create pro- forma
invoice. CF > KBN > E1 > 631 Process: Consignment fill up > Delivery > Pro-forma
invoice The effect of movement type 631 is it will reduce the stock from un-restricted
stock and it will added to the consignment stock. Inventory accounting document will not
be generated. While creating consignment fill up we can see that system will not propose
any net value as it is not relevant for billing.
17. 17. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 17 When we do delivery system deducts the stock from un-restricted stock and adds
to the consignment stock with the help of movement type 631. 2. Consignment Issue: In
this step our customer sells the goods to the end customer. Document type: CI Item
category: KEN Schedule line category: C1 Item category KEN will have special stock
indicator W. The special stock indicator W controls that while doing delivery in
consignment issue system considers the consignment stock. Consignment fill up process
is relevant for billing. CI > KEN > C1 > 633 Process: Consignment issue > Delivery >
Billing The effect of movement type 633 is it will reduce the stock from consignment
stock and system generates inventory accounting document. The accounting document is:
COGS a/c Dr. To Inventory a/c Cr. Q. Why we are doing delivery again in consignment
issue as we already delivered the goods to customer in consignment fill up? A. i. To
transfer the ownership ii. To reduce the stock from consignment stock. In consignment
issue we can see that system will propose net value as it is relevant for billing. When we
deliver the goods, system deducts the stock from consignment stock with the help of
special stock indicator W in item category KEN. 3. Consignment Returns: When end
customer returns the consignment goods to our customers then we do consignment
returns.
18. 18. CONSIGNMENT PROCESS By SrinivasuluAlgaskhanpet (Sr. SAP SD Consultant)
Page 18 Document type: CONR Item category: KRN Schedule line category: D0 CONR
> KRN > D0 > 634 Process: Consignment returns > Return delivery > Credit for returns
KRN Item category will have special stock indicator W. The special stock indicator
W controls that while returning goods stock will be added to consignment stock and
inventory accounting document will be generated. It is relevant for billing. The effect of
movement type 634 is it will reduce the stock from consignment stock and system
generates inventory accounting document. The accounting document is: Inventory a/c Dr.
To COGS a/c Cr. 4. Consignment Pick up: When our customer asks to take back the
consignment stock then we do consignment pick up. Document type: CP Item category:
KAN Schedule line category: F1 CP > KAN > F1 > 632 Process: Consignment pick up >

Returns delivery The effect of movement type 632 is, it will reduce the stock from
consignment stock and the stock will be added to un-restricted stock. Inventory
accounting document will not be generated.
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