Vendor Consignment Process | SAP Blogs https://blogs.sap.

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What is Vendor Consignment?

Vendor Consignment is a process wherein the supplier provides materials

and stocks them in the purchaser’s premises. The material remains in the
books of the supplier (vendor) until the same is withdrawn from the stock of
the consignment and put to use. The inventory gets transferred to the books
of the purchaser only when the same is removed from the consignment
stock. The supplier (vendor) would not invoice the purchaser initially when
they come into the premises of the purchaser. The purchaser is liable to pay
the supplier (Vendor) only when the stock is withdrawn (consumed).

Key Process Design for the Consignment process for Vendors in SAP

– Consignment has been designed as a special procurement type in SAP

– – The consignment stock is not valuated till the time it is consumed or

withdrawn, since theoretically, it lies in the books of the supplier (Vendor)

– – The consignment material number is the same as that of a material in

unrestricted stock in the purchaser’s books

– – Since the sourcing of a material can happen from multiple parties, the
consignment stock is maintained at the level of each supplier or vendor.

– – The price of the consignment is maintained in the purchasing info records

(PIR) of the info category, Consignment

– – When the withdrawal happens from the consignment stock of a supplier,

the goods receipt in the purchaser’s books happens at the price maintained
in the purchasing info records of type consignment for that vendor and
material combination.

– – The goods receipt against a consignment purchase order is always non

valuated

Basic Configuration Steps for Vendor Consignment Process in SAP

1. 1. Activate Purchasing Info Record for Info category as Consignment. The

Configuration transaction code for the same is OMEV.

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1. 2. Configure the special procurement type 10. This is done in IMG Node:

IMG>Production>Material Requirement Planning>Master Data>Define

Special Procurement Type

3. Assign the special procurement type in the material master. The Master
Data transaction code for the same is MM02. This is done in MRP2 view of
the material master

4. Create a purchasing info record (PIR) of the category, Consignment. This is

done using the transac on code ME11.
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done using the transac on code ME11.

5. Maintain the automatic account assignment for material posting. The

below transaction need to be maintained in the configuration transaction
code OBYC

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Vendor Consignment Process | SAP Blogs https://blogs.sap.com/2013/09/17/vendor-consignment-process/

code OBYC

– a. Consignment Payables : KON

– b. Expense/Revenue from Consignment Material Consumption : AKO

– c. Offsetting entry for Inventory Posting : GBB – VBR

Consignment Process Steps in SAP

The consignment process steps in SAP are fairly simple. It involves creating
a purchase order, doing a good receipt and a withdrawal of the stock from
Vendor’s books. The last step in the consignment process for a vendor is
the settlement of the vendor’s liability. The steps are highlighted as:

1. 1. Procurement – A standard purchase order is created with item category

as K using the transaction code ME21N. There is no price which is
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1. 1. Procurement – A standard purchase order is created with item category

as K using the transaction code ME21N. There is no price which is
applicable for a consignment purchase order and hence should not be
entered at the time of creation of purchase order.

The goods receipt is done using the standard transaction code MIGO. The
stock is posted as consignment stock without value. The same would reflect
as a special stock for the vendor. Since the material lies in the purchaser’s
premises, the same would be reflected in terms of quantity at a storage
location as well till the time the same is consumed for use. The same can be
checked in the standard stock reports in transaction code like MMBE. There
is no accounting document which is created when the GRN is done in case
of a consumption purchase order.

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1. 2. Consumption – Consumption of consignment material happens when

goods issue is done with item category K. The price at which the goods
issue will be done will be picked from the purchasing info record which has
been created for consignment for the material and vendor combination. In
this particular case, to elaborate the process a production order was created
and a goods issue was done with the item category K against the production
order. Generally the consignment materials are part of Bill of Materials
(BOM). Goods issue document is posted in such a case when activity
confirmation is done for the production order through transaction code
CO15.

In the above case, the price is picked from the purchasing info record which
would have been created for the material and vendor combination.

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1. 3. Settlement – The next step in the vendor consignment process is the

settlement of the vendor liability. This is done through transaction code
MRKO

This would display the withdrawals from the consignment stock which have
taken place and for which the liability for the vendor has not been created.
You also have the option to check the accounting entries for the withdrawals
for consumption made from the consignment stock for a vendor.

After analyzing the unsettled withdrawals, you can create the vendor
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After analyzing the unsettled withdrawals, you can create the vendor
liabilities by selecting Settle from the main screen. This will settle the
outstanding entry in Consignment Account Payables account and create a
vendor liability. The price of vendor liability creation will happen at the Info
Record Price.

Accounting Entries
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Accounting Entries

1. 1. At the time of Goods Receipt – No Accounting entries are generated at

the time of goods receipt

2. 2. At the time of Withdrawal or Consumption of Consignment Stock –

(a) a. The material is valuated at moving average Price (Price Control in

Material Master is “V”)

Consumption Account DR (Account Assignment OBYC-

GBB-VBR)

To Consignment Payable A/c (Account Assignment OBYC-

KON)

The unit value of material comes from the Info record Price for
material vendor combination for info category Consignment

(b) b. The material is valuated at standard price (Price Control in

Material master is “S)

Consumption A/c DR (Account

Assignment OBYC-GBB-VBR)

To Consignment Payable A/c (Account

Assignment OBYC-KON)

Price Difference A/c (Dr/Cr) (Account

Assignment OBYC-AKO)

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