Vendor Consignment Process Overview
The Vendor Consignment Process in SAP S/4HANA MM is a highly efficient and streamlined version of the traditional process found in the SAP ECC (Enterprise Central Component) system. With notable enhancements, this process offers improved functionality and ease of use. In this blog, we will provide a detailed step-by-step overview of the SAP S4 HANA MM-Vendor Consignment Process. By following these steps, you can optimize your inventory management and maximize efficiency in your business operations.
Prerequisite
- Specifying the Special Procurement type as “Consignment” is an optional step in the Material Master.
- It is mandatory to create a Consignment Info Record.
- Ensure that the OBYC settings for Transaction Key KON, which relates to Consignment Accounts Payable, are configured.
- Maintain Output Condition Records for Output type KONS using Transaction Code MRM1.
SAP S4 HANA MM-Vendor Consignment Process Step
Generate Purchase Order (PO)
Upon the Purchase Requisition (PR), a Purchase Order (PO) is generated. In this instance, it’s a consignment purchase order. The PO must explicitly indicate that the materials are under consignment and define the terms of the consignment arrangement.
Receiving Consignment Goods with Goods Receipt (GR)
In SAP S/4HANA, when the vendor delivers consignment goods to the customer’s premises, the customer carries out a Goods Receipt (GR) and indicates the consignment status. Usually, the received materials are stored in a dedicated consignment stock area within the customer’s warehouse.
Tracking Consignment Inventory
Utilizing SAP S/4HANA’s advanced reporting and analytics features, the customer can continuously monitor the levels of consignment stock in real time.
Consumption Posting
When the customer uses or consumes the consignment materials, they create a consumption posting in SAP S/4HANA to reduce the consignment stock levels and record the consumption. The system automatically tracks the consumption and updates stock levels.
Transfer to Own Stock (Optional)
If the customer chooses to assume ownership of a portion or the entirety of the consignment materials, they can initiate a transfer posting within SAP S/4HANA. This transfer operation relocates the materials from the consignment stock to their own inventory.
Automated Billing
SAP S/4HANA enables more efficient and automated billing procedures. As materials get consumed, the system has the capability to automatically produce invoices according to pre-established pricing arrangements and consumption data. Billing can be initiated either upon consumption or at regular intervals, contingent upon the terms of the agreement.
Accounting Entries
Consignment Payable – KON – Credit
Stock – BSX – Debit
Invoice Settlement – MRKO
Consignment Payable (KON) – Debit
Vendor Account – Credit
The Vendor Consignment Process is taken to the next level with SAP S/4HANA. This innovative solution provides real-time visibility into stock, streamlines billing procedures, and empowers users with advanced analytics for more intelligent decision-making. With its state-of-the-art technology, SAP S/4HANA improves efficiency and adaptability to meet evolving business needs. To set up and configure the Vendor Consignment Process in SAP S/4HANA, you can leverage the system’s latest functionalities and features for optimal results. Get ready to transform your vendor consignment operations with this cutting-edge solution!
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