The consignment process is keeping the stock in customers premises, but until the customer consumes or sell it, it will be a part of the company. (It is not mandatory that we should stock the consignment stock in the agent/customer's premises, we can store it in the company premises too).
The consignment process in SAP standard consist of four small processes:
Consignment fillup (send materials to customer consignment).
Here you have a consignment fillup order and a consignment fillup delivery.
Consignment issue (issue materials from customer consignment to the customer).
Here you have a consignment issue order, consignment issue delivery and a consignment issue invoice. (the flow is very similar to a normal OR flow, but the materials are issued from the consignment stock instead of plant stock unrestricted).
Consignment return (return materials from customer ownership to customer consignment).
Here you have a consignment return order, consignment return delivery and a consignment return invoice. (the flow is very similar to a normal RE flow, but the materials are returned to the consignment stock instead of plant stock returns).
Consignment pickup (pickup consignment stock and move it to plant stock).
Here you have a consignment pickup order and a consignment pickup delivery.
Note: In consignment fillup and consignment pickup there are no invoices since there is no change of ownership for the materials.
How to perform a consignment order?
In consignment orders, you are allowing the stock to sit in your customer location. Once he informs that he used the stock you will invoice him. If he returns the stock you will accept the stock to take it back.
It is defined in 4 steps.
1. Consignment fill up:
Sales document type is KB
Item category KBN
Schedule line category E1
In this step, you are not invoicing the customer. document flow is sales order ---- delivery item category. It will not be relevant for billing and pricing because you are not charging money for these goods in this step.
In the schedule line category, you will set movement type 631 & set for availability check and TOR.
2. Consignment Issue.
Once the customer informed you that he used all the goods or partial goods then you will create a consignment issue for used goods.
Sales document: KE
Item category: KEN
Schedule line category: C0 or C1
Here you are invoicing the customer(because he used the goods). you are assigning the delivery document and billing document to the sales document.
In the item category, you are setting relevant for billing, pricing, special stock.
In the schedule line category, your setting is 633 movement type, relevant for availability check & TOR.
3. Consignment Return:
Customer found that some goods are damaged or are not able to sell the goods he would to send it back. Then we need to create the following document to accepts those goods.
Sales document type: KR
Item category: KRN
Schedule line category: D0
Assign delivery document and billing to sales document.
Create return order, return delivery, return billing.
The settings of the item category is relevant for billing, returns, pricing, special stock.
The settings of schedule line item category:- 634 movement type, NO availability NO TOR.
4. Consignment Pick up:
Even if you create the consignment return the goods are not come to direct to your plant. For that you need to create consignment pick up. here the owner ship is not changing so you do not need to create billing.
Assign return delivery to sales document type.
Sales document: KA
Item category: KAN
schedule line category: F0 & F1
The settings for item categories are relevant for returns.
The settings for schedule line category:- 632 movement type, relevant for MRP, availability check and delivery.
Check your plant stock. Stock will increase.
Below is the cheatsheet to represent the Sales Consignment process.
Please note each Consignment will process will have it's own sales cycle from order to cash. Simply creating respective Sales Order will not complete the process.