Consignment Procedure

APAC Procurement Business Model
Consignment Procedure Training Document

Local Group Companies
Submit Date, 17-Nov-04

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This document is for Super Users Training on 17 21 January, 04
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APBM
Table of Contents
CONSIGNMENT: USE ......................................................................................................................... 4
FEATURES .......................................................................................................................................... 4
PRICING FOR CONSIGNMENT SOCKS ............................................................................................ 4
USE .................................................................................................................................................... 4
PROCUREMENT OF CONSIGNMENT MATERIAL............................................................................ 5
USE .................................................................................................................................................... 5
ACTIVITIES .......................................................................................................................................... 5
Creating Purchase Requisitions for Consignment Material ...........................................................................5
Creating Purchase Orders / Outline Agreements for Consignment Materials ...............................................5
STOCKS MOVEMENTS FOR CONSIGNMENT MATERIAL.............................................................. 5

USE .................................................................................................................................................... 5
POSTING GOODS RECEIPT FOR CONSIGNMENT MATERIAL ..................................................................... 5
Goods Receipt With Purchase Order ............................................................................................................6
Goods Receipt Without Purchase Order .......................................................................................................6
Updating Consignment Stock........................................................................................................................6
DISPLAY CONSIGNMENT STOCK ........................................................................................................... 6

Use................................................................................................................................................................6
Activities........................................................................................................................................................7
TRANSFERRING CONSIGNMENT STOCKS ............................................................................................... 7

TRANSFERRING CONSIGNMENT MATERIAL TO ANOTHER STOCK TYPE .................................................... 7
TRANSFERRING CONSIGNMENT MATERIAL INTO OWN STOCK ................................................................ 8
Prerequisites .................................................................................................................................................8
Result............................................................................................................................................................8
SETTING CONSIGNMENT LIABILITIES ..................................................................................................... 8

Use................................................................................................................................................................8
BUSINESS PROCESS PROCEDURE................................................................................................. 9

1. CREATION OF PURCHASING INFO RECORD FOR CONSIGNMENT.......................................................... 9
2. MAINTENANCE OF GOODS RECEIPT FOR CONSIGNMENT STOCK ....................................................... 18
3. MAINTENANCE OF GOODS ISSUE FOR DIRECT CONSUMPTION ........................................................... 24
4. PERFORM CONSIGNMENT LIABILITIES SETTLEMENT......................................................................... 31

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Consignment: Use
In consignment processing, the vendor provides materials and stores them on the enterprises
premises. The vendor remains the legal owner of the material until materials are withdrawn from the
consignment stores. Only then does the vendor require payment. The invoice is due at set periods
of time, for example, monthly. In addition, it can also be arranged with the vendor that the ownership
of the remaining consignment material is taken over after a certain period of time
Features
The consignment stock is managed under the same number as the enterprises own
stock. Consignment stock can, therefore, be transferred to the available stock.
It is possible to define consignment prices in foreign currency. The currency in which
the order is placed with the vendor applies for consignment withdrawals.
It is possible to determine period-specific consignment prices.
The consignment price can be specified in any unit of measure. The conversion factor
is stored in the info record.
Using consignment info records, the enterprise can make use of other condition
functions used in Purchasing, such as discounts and price quantity scales.
Consignment stocks of the same material from different vendors can be managed
independently from one another and at the price of the individual vendors.
Consignment stocks are not valuated. When the material is withdrawn, it is valuated at
the price of the respective vendor.
A consignment material can be allocated to one of three stock types:
o Unrestricted-use stock
o Quality inspection stock
o Blocked stock
It can be possible to make transfer postings between these three stock types. Withdrawals can only
be posted from unrestricted stock, however.
Pricing for Consignment Socks

Use
Before a material can be ordered from a vendor or a goods receipt is posted to consignment stock,
the consignment price must be maintained for the vendor in an info record. The price is required for
material valuation and accounting purposes.
If consignment material is ordered from several vendors, the system maintains the consignment
stock separately for each vendor, since the individual quantities of the material can have different
prices with each vendor.

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APBM
Procurement of Consignment Material

Use
Consignment material can be procured via purchase requisitions, purchase orders and outline
agreements for consignment material.
Activities
Creating Purchase Requisitions for Consignment Material
The purchase requisitions are maintained for consignment materials in exactly the same way as for
other materials. The order category (such as NB) that the system proposes is then accepted as a
default and the item category K (for consignment) is entered accordingly.
Creating Purchase Orders / Outline Agreements for Consignment Materials
The procedure for creating consignment orders is the same as for standard purchase orders or
outline agreements. However, the following should be noted:
Enter the item category K for the consignment item. To ensure that the goods receipt is
posted to the consignment stores and an invoice receipt cannot be generated for the
item.
Do not enter a net price.
Stocks Movements for Consignment Material

Use
This section describes the different movement types for consignment material.
Posting Goods Receipt for Consignment Material

Goods receipts to your consignment stores can either:
refer to a purchase order or

be made by the vendor directly without a purchase order

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The posting procedure differs slightly.

A goods receipt to consignment stock is possible for three stock types:
Unrestricted-use stock
Quality inspection stock
Blocked stock
Goods Receipt With Purchase Order

If a purchase order exists for the consignment material delivered, enter a goods receipt as follows:
1. From the Inventory Management menu, choose Goods movement Goods receipt
For purchase order PO number known. The initial screen is displayed.
2. Enter the number of the purchase order to which the goods receipt refers. It can also be
possible to enter the plant and storage location.
3. Select the movement type with Movement type PO to warehouse. Please ENTER to
display the item overview.
4. Select the items to be processed and check the quantities delivered. If required, enter a
stock type in column S. Copy (adopt) the selected items.
5. Post the goods receipt.
Goods Receipt Without Purchase Order
If the vendor's goods receipt is not based on a purchase order, proceed as follows:
1. Choose Goods movement Goods receipt Other from the Inventory Management
menu.
2. On the initial screen choose Movement type Receipt W/o purchase order To
consignment unr. Enter the plant and storage location. Press ENTER to display the
collective entry screen.
3. Enter the number of the vendor.
4. Enter the number and quantity of the consignment material.
5. Post the goods receipt.
Updating Consignment Stock
After a goods receipt for consignment material has been posted, the consignment stock of the
material increases. The consignment stock is available for MRP.
However, the material's valuated stock does not increase since the consignment stock still belongs
to the vendor.
Display Consignment Stock

Use
A goods issue can only be posted from consignment stock to consumption if the material belongs to
unrestricted-use stock. If the consignment material is in quality inspection or blocked stock, it is
mandatory to first transfer it to the unrestricted-use stock.

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Activities
Choose Goods movement Goods issue. Enter the data as required, including movement type,
account assignment object, and vendor.
After the goods issue, the vendor is due the net value of the goods issue.
Transferring Consignment Stocks

If, for example, a consignment material is required to be transferred within a plant from one storage
location to another, proceed as follows:
1. From the Inventory Management menu, select Goods movement Transfer posting.
The initial screen is displayed.
2. Enter the plant and the issuing storage location. Choose Movement type Transfer
posting Vendor Consignment SLoc unre. to unre. (Storage location unrestricted to
unrestricted). It is also possible to transfer quality inspection stock or blocked stock.
3. Press ENTER. The collective entry screen appears.
4. Enter the following data:
o Receiving storage location
o Vendor
o Material
o Quantity
5. Post the stock transfer.
The transferred quantity is now managed in the consignment stock of the receiving plant.
Transferring Consignment Material to Another Stock Type

If the consignment material is posted to the quality inspection stock or blocked stock, it is mandatory
to transfer it to the unrestricted-use stock before it can be withdrawn.
To transfer a consignment material from one stock to another, proceed as follows:
1. From the Inventory Management menu, select Goods movement Transfer posting.
The initial screen appears.
2. Enter the plant and storage location. Choose Movement type Transfer posting
Consignment and then the stock type (for example, Ql to unrestricted).
3. Press ENTER. The collective entry screen appears.
4. Enter the following data:
o Vendor
o Material
o Quantity
Only enter a receiving storage location if the material should be stored in another
storage location.
5. Post the stock transfer.
The consignment material is now managed with a different stock type.

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Transferring Consignment Material Into Own Stock

Prerequisites
Supposing it is mutually agreed with the vendor that after six months the enterprise will take over
ownership of the remaining consignment stock. To do this, carry out the following goods movement:
1. Choose Goods movement Transfer posting. The initial screen appears.
2. Enter the plant and storage location. Choose Movement type Transfer posting
Consignment Consignment to own. (Movement type 411 with special stock indicator
K).
3. Select Continue. The collective entry screen appears.
4. Enter the vendor, material, and quantity. Only enter a receiving storage location if the
material should be stored in another storage location.
5. Post the document.
Result
The transfer results in a liability towards the vendor.
Setting Consignment Liabilities

Use
Removing material from consignment stores or transferring material to the enterprises own stock
results in liabilities towards the vendor. These liabilities should be settled at regular intervals.
Consignment materials are settled without the vendor issuing an invoice, as the vendor company is
unable to track withdrawals directly. The vendor can only manage its consignment stock by taking
deliveries and payments into account.
The payment initiation shall be made for consignment withdrawals using the Logistics Invoice
Verification application component.

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Business Process Procedure

1. Creation of Purchasing Info Record for Consignment
1.1. Access transaction by
Via Menu
Logistics Materials Management Purchasing Master Data

lnfo Record Create
Via Transaction Code
ME11
Key T-Code: ME11
Fig-01

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1.2. On Create Info Record: Initial Screen screen, fill in the data as below:
Fig-02
Field Name
Vendor
Description
Alphanumeric key uniquely
identifying a vendor
Alphanumeric key uniquely
identifying the material
R/O/C/D
R
User Action and Values

Enter the vendor number
Enter the material number
Purchasing Org.
Denotes the purchasing

organization
Enter the purchasing organization
Plant
Specifies the key for a

production
facility
or
branch office within the
company
Specifies the number that
uniquely
identifies
a
purchasing info record
Indicator
Enter the plant number
Enter the info record number
Flag the indicator:

Standard: If this indicator is set,
the data from the info record is
only adopted in standard POs.
Subcontracting: If this indicator
is set, the data from the info record
is only adopted in subcontract
orders.
Pipeline: Specifies that the info
record is used specifically for
pipeline withdrawals.
Consignment: If this indicator is
Material
Info Record
Info Category

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Field Name
Description
R/O/C/D

set, the data of the info record is
only adopted for the purpose of
procuring consignment materials.
It
is
mandatory
that
the
Consignment radio-button will be
flagged
to
differentiate
the
consignment info record with
standard info record document.
Press ENTER to access to the
General Data view of the Info
Record
Legend: R = Required, O = Optional, C = Conditional, D = Display
1.3. On Create Info Record: General Data screen, fill in the data as below:
Fig-03
Field Name
Reminder 1, 2, 3
Description
Number
of
days
presenting
the
time
interval at which reminders
or urging letters/messages
are to be issued to the
vendor
R/O/C/D
R
Order Unit
Specifies the unit of

measure in which the


Enter the number
A negative number of days means
that a reminder is to be issued to
the vendor n days prior to a certain
date.
A positive number of days means
that a letter or message urging
delivery of submission of a
quotation etc. is to be issued n
days after the due date.
Enter the order unit
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Field Name
Description
material is ordered
R/O/C/D

Press ENTER

1.4. On Create Info Record: Purch. Organization Data 1 screen, fill in the data as below:
Fig-04
Field Name
Tax code
Net price
Description
A tax category which must
be taken into consideration
when making a tax return
to the tax authorities
Price arrived at after taking
all
discounts
and
surcharges into account
R/O/C/D
R

Enter the tax code
Enter the net price

Press ENTER

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1.5. On Create Info Record: Purch. Organization Data 1 screen, maintain information as
specified in the table below:
Fig-05
Field Name
Description

Continue to press ENTER to
branch into the Conditions tab
view where pricing conditions as
well as validity period will be
defined

R/O/C/D
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1.6. On Create Gross Price Condition (PB00) : Condition Supplements screen, maintain
information as specified in the table below:
Fig-06
Field Name
Description
R/O/C/D

Enter
the
specific
pricing
conditions for the consignment
purchasing
info
record
in
.
icon to return to
Then click on
main view of the info record

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1.7. On Create Info Record: Purch. Organization Data 1 screen, maintain information as
specified in the table below:
Fig-07
Field Name
Description

Should text information is required
to be maintained in either Info
Record
Item
Note/Text
or
Purchase Order Text field, then
the Texts view will be selected

R/O/C/D
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APBM
1.8. On Create Info Record: Text Overview screen, fill in the data as below:
Fig-08
Field Name
Description
R/O/C/D
Click on
Consignment
Record.

icon to save this

Purchasing
Info
16/35
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Fig-09

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2. Maintenance of Goods Receipt for consignment stock

Via Menu
Logistics Materials Management Inventory Management

Goods Movement Goods Movement (MIGO)
MIGO
Key T-Code: MIGO
Fig-10

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2.2. On Goods receipt Others screen, fill in the data as below:
Fig-11
Field Name
Material slip
Material
Description
R/O/C/D
Specifies the identifier on

an external document
A description
material
of
the

Since it is decided that the stock
replenishment
for
consigned
materials will be done without
reference to any purchase order,
the
option shall be mandatory selected
in the Reference Document field.
Enter the material slip
tab
Branch to
page of the GR Item Details where
you can maintain the material
number of your consigned stock in
the Material field
Enter the material number or
description
Branch to

tab
19/35
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Fig-12
Field Name
Qty in unit
entry
of
Description
Specifies the quantity to
be moved in the unit of
entry
R/O/C/D
R

Enter the quantity in unit of entry
Branch to

tab
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Fig-13
Field Name
Special
stock
indicator
Description
Specifies the special stock
type
R/O/C/D
R
Plant
Plant name
Storage location
Description of storage
location
Specifies the recipient for
whom the material or the
service is destined
Contain an explanatory
text on the line item
Goods recipient
Text

Enter the special stock type K
(used purely to indicate that the
receipt is for consignment stock
replenishment)
Enter the plant name
Enter the description of storage

location
Enter the goods recipient
Enter the text
Press ENTER then two additional

tab pages appear Partner and
Account Assignment

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Fig-14
Field Name
Description
R/O/C/D
Vendor
Specifies the name of the

vendor

tab
Branch to
Enter the vendor name to indicate
that this consignment stock is for
that particular vendor
icon to validate
Click on
the correctness of data being
entered
Click on
icon or
to post the GR document

icon
22/35
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Fig-15

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3. Maintenance of Goods Issue for direct consumption

Via Menu
Logistics Materials Management Inventory Management

Goods Movement Goods Movement (MIGO)
MIGO
Key T-Code: MIGO
Fig-16

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APBM
Fig-17
Field Name
Description
R/O/C/D

Supposing the consumption is for
direct
cost
center,
both
Transaction/Event and Reference
Document fields are chosen as
and
Material slip
Material
Specifies the identifier on

an external document
A description of the
material
R
R
accordingly
Enter the material slip
Enter the material number or
description
Branch to

tab
25/35
APBM
3.3. On Goods issue Others screen, fill in the data as below:
Fig-18
Field Name
Qty in unit
entry
of
Description
Specifies the quantity to
be moved in the unit of
entry
R/O/C/D
R

Enter the quantity in unit of entry
Branch to

tab
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APBM
Fig-19
Field Name
Special
stock
indicator
Description
Specifies the special stock
type
R/O/C/D
R
Plant
Plant name
Storage location
Description of storage
location
Specifies the recipient for
whom the material or the
service is destined
Specifies a key you can
use to call up a standard
text stipulating the reason
for a goods movement
Contain an explanatory
text on the line item
Goods recipient
Reason
movement
Text
for

Enter the special stock type K (to
indicate that this stock issuance is
from consignment stock instead of
unrestricted use stock of the
company)
Enter the plant name
Enter the description of storage

location
Enter the goods recipient
Enter the reason for movement
Enter the text
Press ENTER then two additional

tab pages appear Partner and
Account Assignment

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APBM
Fig-20
Field Name
Description
R/O/C/D
Vendor
Specifies the name of the

vendor

tab
Branch to
Enter the vendor name which
represents the consignor of which
the consignment stock is to be
withdrawn
Branch to

tab
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Fig-21
Fig-22

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Field Name
G/L account
Business area
Cost Center
Description
The G/L account in a chart
of accounts
Key identifying a business
area
Key uniquely identifying a
cost center
R/O/C/D
O

Enter the G/L account
Enter the business area
Enter the cost center

icon to verify
Click on
the accuracy of all entries
Once
the
validation
proves
successful (with green light), this
Goods Issue Document can be
posted by clicking on
icon
icon
or
Fig-23

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APBM
4. Perform Consignment Liabilities Settlement

Via Menu
Logistics Materials Management Logistics Invoice Verification

Automatic Settlement Consignment and Pipeline Settlement
MRKO
Key T-Code: MRKO
Fig-24

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APBM
4.2. On Consignment and Pipeline Settlement screen, fill in the data as below:
Fig-25
Field Name
Company code
Vendor
Plant
Material
Document date
Posting date
Description
The organization unit by
which
consignment
settlement is to be made
The
third-party
supplier/consignor
to
which
payment
of
consignment settlement is
to be made
The
organization
unit
belonging to company
code
for
which
the
consignment settlement is
to be executed
The
alphanumeric
uniquely representing the
reference number of the
consignment stock being
settled
The date on which the
stock issuance (goods
issue) is created
The date on which the
goods issue document is
entered into the financial
accounting
and/or
controlling

R/O/C/D
R

Enter the company code
Enter the vendor
Enter the plant
Enter the material number
Enter the document date
Enter the posting date
32/35
APBM
Field Name
Material
document
Document
number
Variant
Description
The reference number of
the
goods
issue
of
consignment stock
The indicator indicating
that the settlement is to be
made for consignment
stock being withdrawn
The indicator indicating
that the system lists the
pipeline withdrawals
This selection option, if
being chosen, will only
enable the display of
which
goods
issue
documents are to be
settled for consignment
stock
This option is purposely
selected
when
the
consignment liabilities is
required to be settled
based upon the total
withdrawn quantities. In
most
cases,
what
warehouse/purchasing is
doing is to use Display
mode to view the possible
posting. The Settlement
icon will therefore, be
particularly used by A/P
when the validation is as
successful as expected
Once being flagged, this
indicator help determine
the list of all goods issues
for which settlement to the
consignment vendor has
not been made
The selection of this
alternative option results in
the production of only
goods issues which were
settled beforehand
The key that the system
uses to access to the
accounting document
The layout determines the
list format
R/O/C/D
O

Enter the material document
Select the indicator
Select the button
Select the button
Enter the document number
Enter the variant
Click on

icon
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APBM
4.3. On Consignment and Pipeline Settlement screen, after making a proper validation of
the entries, the Settled running mode will be chosen:
Fig-26

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4.4. On Consignment and Pipeline Settlement screen, the document number represents the
actual accounting document being generated automatically after MRKO transaction run:
Fig-27

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APAC Procurement Business Model

Consignment Procedure Training Document

Submit Date, 17-Nov-04

Consignment Procedure Training Document

Consignment Procedure Training Document

STOCKS MOVEMENTS FOR CONSIGNMENT MATERIAL.............................................................. 5

DISPLAY CONSIGNMENT STOCK ........................................................................................................... 6

TRANSFERRING CONSIGNMENT STOCKS ............................................................................................... 7

SETTING CONSIGNMENT LIABILITIES ..................................................................................................... 8

BUSINESS PROCESS PROCEDURE................................................................................................. 9

Consignment Procedure Training Document

Pricing for Consignment Socks

Consignment Procedure Training Document

Procurement of Consignment Material

Stocks Movements for Consignment Material

Posting Goods Receipt for Consignment Material

refer to a purchase order or

Consignment Procedure Training Document

The posting procedure differs slightly.

Goods Receipt With Purchase Order

Display Consignment Stock

Consignment Procedure Training Document

Transferring Consignment Stocks

Transferring Consignment Material to Another Stock Type

Consignment Procedure Training Document

Transferring Consignment Material Into Own Stock

Setting Consignment Liabilities

Consignment Procedure Training Document

Business Process Procedure

Logistics Materials Management Purchasing Master Data

Via Transaction Code

Key T-Code: ME11

Consignment Procedure Training Document

User Action and Values

Enter the material number

Denotes the purchasing

Enter the purchasing organization

Specifies the key for a

Enter the plant number

Enter the info record number

Flag the indicator:

Consignment Procedure Training Document

User Action and Values

Specifies the unit of

Consignment Procedure Training Document

User Action and Values

User Action and Values

Legend: R = Required, O = Optional, C = Conditional, D = Display

User Action and Values

Enter the net price

Legend: R = Required, O = Optional, C = Conditional, D = Display

Consignment Procedure Training Document

User Action and Values

Consignment Procedure Training Document

User Action and Values

Consignment Procedure Training Document

User Action and Values

Consignment Procedure Training Document

User Action and Values

Consignment Procedure Training Document

icon to save this

Consignment Procedure Training Document

2. Maintenance of Goods Receipt for consignment stock

Logistics Materials Management Inventory Management