Consignment Process: Consignment Fill-up, Issue, Return in SAP SD

The consignment process in SAP SD involves the sale of goods that are kept at a customer’s location but remain the property of the supplier until they are consumed or sold by the customer. The process includes various stages such as consignment fill-up, consignment issue, and consignment return. This tutorial will guide you through each stage of the consignment process in SAP SD with a real-world example.

Overview of Consignment Process

In SAP SD, the consignment process enables businesses to manage goods that are provided to a customer without a formal transfer of ownership until certain conditions are met. The key steps in the consignment process are:

  • Consignment Fill-up: The process of transferring goods to a customer for consignment storage.
  • Consignment Issue: The customer takes ownership of the goods when they are used or sold.
  • Consignment Return: The process of returning unsold or unused goods from the customer back to the supplier.

Step-by-Step Guide to Consignment Process

Step 1: Consignment Fill-up

The consignment fill-up process involves sending goods to the customer without transferring ownership. The goods are stored at the customer's location for future sale or use.

  1. Go to transaction VA01 to create a consignment fill-up order.
  2. Enter the following details in the "Create Sales Order" screen:
    • Sales Document Type: Select the consignment fill-up document type (e.g., KB for consignment).
    • Customer: Enter the customer code for the consignment agreement.
    • Material: Enter the material to be consigned to the customer.
    • Quantity: Enter the quantity of goods to be consigned.
  3. Click Enter to proceed to the next screen, and verify the details of the consignment order.
  4. Click Save to create the consignment fill-up order.

The goods are now transferred to the customer’s consignment stock but remain the property of the supplier.

Step 2: Consignment Issue

The consignment issue process occurs when the customer uses or sells the consigned goods and takes ownership of them. This process involves creating a consignment issue document.

  1. Go to transaction VA01 to create a consignment issue order.
  2. Enter the following details:
    • Sales Document Type: Select the consignment issue document type (e.g., KE for consignment issue).
    • Customer: Enter the customer code.
    • Material: Enter the material that the customer has taken from consignment stock.
    • Quantity: Enter the quantity of goods that the customer has consumed or sold.
  3. Click Enter to proceed and check the details of the consignment issue.
  4. Click Save to create the consignment issue order.

Once the consignment issue is processed, the customer will be billed for the goods consumed, and ownership of the goods is transferred to the customer.

Step 3: Consignment Return

The consignment return process happens when unsold or unused goods are returned by the customer back to the supplier. This is typically handled by creating a consignment return order.

  1. Go to transaction VA01 to create a consignment return order.
  2. Enter the following details:
    • Sales Document Type: Select the consignment return document type (e.g., KR for consignment return).
    • Customer: Enter the customer code.
    • Material: Enter the material that is being returned by the customer.
    • Quantity: Enter the quantity of goods to be returned.
  3. Click Enter to proceed to the next screen, verifying the return details.
  4. Click Save to create the consignment return order.

Once the consignment return is processed, the goods are moved back into the supplier’s stock, and the customer is no longer liable for those goods.

Real-World Example of Consignment Process

Consider a scenario where a supplier, Company A, provides goods to a customer, Company B, on a consignment basis. The process works as follows:

  • Step 1: Consignment Fill-up - Company A ships 100 units of material to Company B for consignment. Company B stores these goods at their location, but ownership remains with Company A.
  • Step 2: Consignment Issue - Company B sells 50 units of material to end customers. Company A creates a consignment issue order for the 50 units sold, transferring ownership to Company B.
  • Step 3: Consignment Return - Company B returns 20 unsold units of material back to Company A. Company A processes the consignment return order, moving the goods back into its inventory.

Throughout this process, SAP SD ensures that the goods are tracked, ownership is correctly transferred, and financial documents (such as billing and inventory updates) are created automatically.

Conclusion

The consignment process in SAP SD helps businesses manage inventory held at customers' locations while retaining ownership until the goods are consumed or sold. By following the steps outlined in this tutorial, you can configure and process consignment fill-ups, issues, and returns efficiently, ensuring smooth inventory and financial management for your business.




Advertisement