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Consignment Process

The consignment process involves four key steps: Consignment Fill Up, Consignment Issue, Consignment Return, and Consignment Pick Up, where ownership of stock remains with the supplier until sold. Each step has specific item categories, document types, and movement types that dictate inventory accounting and stock management. An example is provided with Nestlé supplying Maggie noodles to a supermarket chain on a consignment basis, illustrating the process from stock delivery to returns and pickups.

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37 views2 pages

Consignment Process

The consignment process involves four key steps: Consignment Fill Up, Consignment Issue, Consignment Return, and Consignment Pick Up, where ownership of stock remains with the supplier until sold. Each step has specific item categories, document types, and movement types that dictate inventory accounting and stock management. An example is provided with Nestlé supplying Maggie noodles to a supermarket chain on a consignment basis, illustrating the process from stock delivery to returns and pickups.

Uploaded by

pawarsharvari3009
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Consignment Process

Whenever Customer(consignment service agent) gives us space within their premises to


stock our material, that process is called as consignment process. In this process we don’t
transfer the ownership to consignment service agent.
There are 4 steps in consignment:
1) Consignment Fill Up : It is basically dumping the stock at consignment service agent’s
place without transferring the ownership and raising an invoice .
Item category – KBN , Doc type – KB , Movement Type – 631
i). It will reduce the stock from unrestricted stocks and stock will be added to
consignment stock.
ii). No inventory accounting document generates because KB process is not relevant
for invoice.
2) Consignment Issue : It’s an actual point of sale. When CSA sell the goods to their
customers then CSA will inform the same to company. Then we do consignment issue
process.
Item category – KEN , Doc type – KE , Movement Type – 633
i). Stocks will be reduce from consignment stocks.
ii). Inventory accounting document will generate and accounting entry is
COGS A/c.......Dr.
To, Inventory A/c......Cr.

3) Consignment Return : When end customer returns the goods to CSA, then CSA will
inform the same to company, then we do consignment returns.
Item category – KRN , Doc type – KR , Movement Type – 634
i). The stock will be added back to consignment stock.
ii). Inventory accounting document will generate and accounting entry is
Inventory A/c......Dr.
To. COGS A/c.....Cr.

4) Consignment Pick up : if CSA request to take back the consignment stock, then we
do consignment pick up.
Item category – KAN , Doc type – KA , Movement Type – 632
i). Stock will be reduced from consignment stock and added to unrestricted stock.
ii). Inventory accounting document will not generate because CP is not relevant for
invoice

Real Life Eg : A company like Nestlé supplies Maggie noodles to a large supermarket
chain (e.g., D-Mart), but instead of selling the stock outright, they place the products
on a consignment basis.
1) Consignment Fill-Up (KB) – Stock sent to the customer
• Nestlé delivers 500 packs of Maggie noodles to D-Mart but does not invoice them.
• The stock still belongs to Nestlé and is recorded in D-Mart's consignment stock in
SAP.
2) Consignment Issue (KE) – Customer sells the stock
• After one month, D-Mart sells 300 packs of Maggie to end customers.
• Now, Nestlé generates an invoice for 300 packs based on the actual sales.
3) Consignment Returns (KR) – Unsold stock returned
• D-Mart realizes that 50 packs are damaged or unsold and returns them.
• Nestlé updates its consignment stock and adjusts inventory.
4) Consignment Pick-Up (KA) – Take back remaining stock
• After another month, if 150 packs are still unsold, D-Mart asks Nestlé to take them
back.
• Nestlé records this in SAP, moving the stock from consignment back to its warehouse.

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