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In this blog, you will learn how the ERP cloud solution SAP Business ByDesign facilitates your consignment business processes. We explain consignment in ERP based on SAP ByD and give an overview of terms like consignment warehouse, consignment stock or consignment adjustment.
Do you want to reduce your storage costs and expand your sales channels by using a consignment model?
Is the consignment model not supported by your current system and are you looking for an agile ERP cloud solution that can manage your consignment stock and support you in all relevant processes?
Explanation of the term consignment in Enterprise resource planning
Consignment is an agreement between a shipper and a consignee in which
- Goods are shipped from the consignor to the consignee
- The shipper is the owner until a sales process has been completed
- Settlement and change of ownership is based on sold products
Requirements
Configuration
To sell products from your consignment inventory, ensure that the following „Sell Consignment Products“ option is enabled in your solution scope.
In addition, the question „You can sell products from your consignment stock“ must be selected.
Valuation master data
The valuation master data is required for the inventory postings.
On the product tating tab, you can enter the following data:
- Account determination group to use specific G/L accounts.
- Valuation method: Standard / average
- Valuation level: Company/Plant
- Inventory price / type (cost): Per accounting unit
- Consignment valuation (here you define the valuation master data for individual receivers)
Business process
How consignment works in enterprise resource planning?
To give you a better overview of the consignment process, here is an example with SAP Business ByDesign – the agile cloud solution.
Feeding process
The consignment process involves shipping goods from your company to the customer without transferring ownership.
Before we capture the consignment process, let’s take a look at the inventory overview from Work Center Inventory. Here, SAP Business ByDesign allows you to identify your consignment inventory in advance with the consignment indication, owner, and owner. Additional information can be displayed in the consignment stock overview.
Scenario description
Our example consignment product is Cons_Demo1, which has 70 pieces in owner’s warehouse and 420 pieces in owner’s warehouse. Here 30 pieces are requested from consignee.
When the sales order is released, the system proposes a shipping request. You can check the proposal from the Goods Issue work center under the Shipping Proposals view and post the outbound delivery via Post Goods Issue.
After posting the delivery, you have the possibility to check your physical stock (decrease by 420 pieces toYou can check several details (customer, owner, charging location) about the consignment stock. Here you notice that 390 pieces) and your consignment stock via the stock overview (70 pieces for CP100110 + 30 pieces for a new owner CS200123, who was entered as the consignee of the goods in our sales order).
You can check several details (customer, owner, charging location) about the consignment stock. Here you notice that:
- system distinguishes between owner and customer, as there may be multiple locations for customers here.
- there is no transfer of ownership
Removal process
As soon as the customer has consumed / sold the goods, a sales order withdrawal can be created with the item category „consignment withdrawal“ and the consumed quantity can be recorded in a customer invoice in the system..
When 15 pieces have been consumed by the customer, create a new sales order collection with the following data in SAP Business ByDesign:
Check consignment stock
Your consignment stock as owner now decreases from 30 pieces to 15 pieces, which is still with the owner in CS200123.
Based on the sales order withdrawal, an invoice request is automatically generated by the system with the status „to be settled“. An invoice can then be entered based on this delivery invoice request.
Consignment return
The return of the unused products of the consignment goods can be entered in the system before or after the invoice. In this blog we will show you how to enter the return before the invoice. In the Goods Receipt Work Center you can enter a new owner goods return delivery bill.
The inbound delivery can then be recorded in the Goods Receipt Work Center under the Inbound Delivery Notifications view.
Proof stock overview
An owner goods return delivery bill has now been posted for 5 pieces. This increases the physical stock from 390 to 395 pieces. The consignment stock decreases from 15 to 10 pieces.
Consignment stock corrections
Consignment inventory can be corrected at some point through the consignment processes to flexibly and quickly resolve consignment inventory issues. You can select the consignment correction in the Inventory work center.
Here, SAP Business ByDesign enables the following types of customization:
