Consignment Stock Processing

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Created on August 27, 2014

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Table of content

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 Table of content
1 Consignment Stock Processing
1.1 Creating a Consignment Fill-Up
1.2 Creating a Consignment Issue
1.3 Creating a Consignment Pick-Up
1.4 Creating a Consignment Return
1.5 Displaying Consignment Stock
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1 Consignment Stock Processing

Purpose
Consignment goods are goods which are stored at the customer location
but which are owned by your company. The customer is not obliged to pay for these goods until they remove them from consignment stock. Otherwise, the
customer can usually return consignment goods which are not required.
Consignment processing offers the participating partners several advantages. Customers store the consignment goods at their own warehouses. The customer can
access the goods in the consignment warehouse at any time. They are only billed for the goods when they are removed from the warehouse and only for the actual
quantity taken.

Since consignment stocks still form part of your valuated stock, you must manage this stock in your system.
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 customer
In inventory management, the consignment stock is managed as special stock in your inventory and is assigned to specific customers. This enables you to
keep track of returnable packaging stock by customer.
If the consignment stocks are not managed by the sold-to party but by a central office, you can use the partner function for special stock partner.

Prerequisites
Special Stock Partner
The special stock partner has been defined for carrying out consignment stock processing by means of a third party rather than the customer. This means you
can manage all special stock under one partner. It makes sense to use the special stock partner if your customer is using decentralized order processing but
manages consignment stock centrally.
Inventory Management Using the Special Stock Partner
If 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 in the document header and the document items.
Consignment goods which have been entered in a consignment fill-up are always posted to the stock of the special stock partner when goods issue is carried out.
You can also enter the partner function SB manually in the document header or in the relevant 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 out using the sold-to party.

Process Flow
There are four main transactions for processing consignment stock in the R/3 System, all of which support separate management of stock:

Creating a Consignment Fill-Up

Creating Consignment Issue
Creating a Consignment Pick-Up
Displaying Consignment Returns

Consignment fill-up
Consignment 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 consignment fill-up order (order type KB). As a result, the system
carries out the following actions:

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 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-up
Consignment issue enables the customer to take consignment goods from the special stock for their use or to sell.
Consignment issue involves removing the goods from the special stock and making it the property of the customer.
When the customer removes consignment stock to use or sell, you record the transaction in the system by creating a consignment issue order (order type KE).
As a result, the system carries out the following actions:
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 issue
Any consignment goods stored at the customer’s warehouse that haven’t been used can be reposted to your 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 a consignment 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 return
Consignment 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 record this transaction by creating a consignment return order
(order type KR). As a result, the system carries out 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 direct reference to a consignment issue. The consignment issue
appears in the document flow for the consignment 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 processing consignments:

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 Transaction Sales order type

Consignment fill-up KB

Consignment issue KE

Consignment pick-up KA

Consignment return KR

Pricing and Availability Check

Whether pricing is carried out for the individual transactions depends on the item category. The schedule line 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 order type KB checks against your own plant stock. Requirement
records for consignment stock are stored as individual requirements, independently of the setting in the material master record.

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1.1 Creating a Consignment Fill-Up

Create a sales order using order type KB.
Enter the required data on the customer, the consignment goods and the delivering plant.
Enter all other relevant data and save the order.
Create a delivery as the subsequent document for this sales order and, after picking has been completed successfully, post goods issue.
The underlying goods movement type is a stock transfer. This ensures that when goods issue is posted, consignment special stock is created for the
customer concerned. If special stock of this kind already exists in the delivering plant for this customer, the goods are posted to this special stock.

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1.2 Creating a Consignment Issue

Create a sales order using order type
KE .
Enter the required data for the customer, the consignment goods and the plant to which the goods are to be returned.
Enter all other relevant data and save the order.
Create a delivery as the subsequent document for this sales order and, after picking has been completed successfully, post goods issue.
The goods are then reduced by the relevant quantity in the special stock assigned to the customer. This goods issue also reduces your total stock.
Invoice the delivery which issues the consignment goods.

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1.3 Creating a Consignment Pick-Up

Create a sales order using order type
KA .
Enter the required data for the customer, the consignment goods and the plant to which the goods are to be returned.
Enter all other relevant data and save the order.
Create a returns delivery for the sales order (the system automatically chooses delivery type LR). The transaction is completed by the goods issue posting
which initiates a transfer posting from the customer's special stock to your plant stock.

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1.4 Creating a Consignment Return

The following graphic shows the document flow for consignment returns.

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 To process consignment returns, proceed as follows:
1. Create a sales order using sales order type CR.
2. Enter the required data on the customer and the consignment goods.
3. Enter all other relevant data and save the order.
4. Create a returns delivery for the sales order (the system automatically chooses delivery type LR). The goods issue posting cancels the goods issue posting
which was carried out when the consignment goods were issued. This posting records the return of the goods to the plant where goods receipt was carried
out.
5. Create a credit memo for the consignment return you created in Step 1.

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1.5 Displaying Consignment Stock

If you want to display the consignment stock for one or more customers in a specific plant, proceed as follows:
1. Choose Logistics
® Materials management ® Inventory management on the main menu screen.
Choose Environment ® Stock ® Stock overview .
Enter your selection criteria and enter the special stock indicator W . Then select all fields in the Select display levels section.
Choose Program ® Execute.
Position the cursor on the Consignment stock at customer line and choose Edit ® Choose .
The system displays the current consignment stock with the customer for the material selected.

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