Explanation of Vendor Consignment inventory

As a definition in a normal consignment process, the consignment inventory is a supply chain model in which a product is sold by a retailer, but ownership is retained by the supplier until the product has been sold. Because the retailer does not actually buy the inventory until it has been sold, unsold products can be returned.

Sales process from the Vendor Consignment Stock

As per the standard processes there is no possibility to sell the materials directly from Vendor Consignment Stock due to the restrictions based on the definition of this process (Vendor is owner of the stock).

However, based on the direct arrangements between the seller and the supplier where the Vendor allows sales directly from his stock, there is a possibility to implement this process with the required steps listed below.

Starting from the very beginning of this process:

1. Activation of Vendor Consignment Info Record:

IMG>Materials Management>General Settings for Materials Management>Activate Consignment Prices via Info Records

Transaction code: OMEV

Transaction code OMEV

2. Creation of new Strategies for Stock determination:

IMG>Materials Management>Inventory Management and Physical Inventory>Stock Determination>Define Strategies for Stock Determination

Transaction code: OSPX

Transaction code OSPX

Transaction code OSPX

Transaction code OSPX

Transaction code OSPX

3. Assign the new Stock Determination rule to the Delivery

IMG>Materials Management>Inventory Management and Physical Inventory>Stock Determination> Assign Stock Determination Rule in the Applications> Delivery

Note: assignment to the respective Item Category link to the materials using in the process (create the new item category if required)

4. Assign the new stock determination group to the material at Plant level: MRP2 View

Transaction code: MM02

Transaction code MM02

5. External procurement type and Special procurement for Material at Plant level: MRP2 View

Transaction code: MM02

Transaction code MM02

6. New movement type for good issue to the outbound delivery from Consignment stock (as a copy of 601 movement type)

Transaction code: OMJJ

Transaction code OMJJ

• Assignment of a new Stock Determination rule to the new movement

Transaction code OMJJ

• Assignment of a new Account modification (this is not a required step, there is another way to create the new Valuation Class for materials, the new Account modification has been used to avoid creating of the new Valuation Class)

Transaction code OMJJ

• Assignment of a new movement type to the respective schedule line category (new schedule line category if required)

Transaction code: VOV6

Transaction code VOV6

7. Accounts configuration for the new process

Transaction code: OBYC

• Offsetting entry for inventory posting>GBB (configuration for outbound delivery posting)

Transaction code OBYC

• Consignment payables>KON (for MRKO posting)

Transaction code OBYC

• Inventory posting>BSX (based on the requirement for Invoicing)

Transaction code OBYC

8. Condition records update for KONS output type (for printout as a result of MRKO transaction code)

Transaction code: NACE

Application: MR – Invoice Verification > Condition Records > KONS

Transaction code NACE

Demo of the process

1. Creating consignment info record (info category Consignment)

Transaction code: ME11

2. Creating Purchase Order with item category ‘K’

Transaction code: ME21N

3. Goods receipt for purchase order

Transaction code: MIGO

Transaction code MIGO

There are not accounting documents:

Transaction code MIGO

Stock type ‘K’ is automatically taken from Purchase Order. The price of  material for consignment stock posting which is visible in e.g. MB54 transaction code is taken from consignment info record.

Transaction code MB54

4. Sales order creation (with the respective item categories)

Transaction code: VA01

5. Outbound delivery creation

Transaction code: VL01N

The new movement type is taken for the schedule line category:

Transaction code VL03N

• Good issue for the outbound delivery

Stock is taken based on the stock determination rule from a consignment stock:

Transaction code MIGO

Accounting documents generated based on the OBYC configuration in previous steps.

6. Consignment Settlement

Transaction code: MRKO

Accounting documents generated based on the OBYC configuration in previous steps.