Consignment Process in SAP SD
Consignment Process Flow in SAP SD
1. Consignment Fill-up:
o A consignment fill-up is the initial delivery of goods from the company to the
customer without billing.
o The stock is placed at the customer’s location but remains owned by the
company.
2. Consignment Issue:
o The customer consumes or sells the consigned goods.
o Ownership is transferred from the company to the customer.
o The company creates a billing document based on the quantity used.
3. Consignment Return:
o If goods are returned by the customer, they are sent back to the company’s
inventory.
o The return process is tracked in SAP to update stock and manage inventory
levels.
4. Consignment Pick-up:
o In case goods are not consumed and the consignment stock is picked up by the
company, the stock is transferred back to the company’s warehouse.
Configuration Guide for Consignment Process in SAP SD
Step 1: Define Consignment Process Type
• T-code: SPRO → Sales and Distribution → Sales → Sales Documents → Define Sales
Document Types
o Create a sales document type specific for consignment (e.g., CS).
o Assign this document type for consignment sales to allow the system to
differentiate these orders from regular sales orders.
Step 2: Define Item Category for Consignment
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Consignment Process in SAP SD
• T-code: VOV7
o Create an item category for consignment processes (e.g., CONS for
consignment stock).
o Assign the item category CONS to the consignment fill-up document.
o Set key parameters:
▪ Delivery: Allowed for consignment processes.
▪ Billing: No billing at this point for consignment fill-up.
Step 3: Set Up Material Master for Consignment Stock
• T-code: MM01 or MM02
o Create or modify material master records.
o In the Sales View, assign the Consignment item category group.
o In the Stock view, ensure that the material type supports consignment stock.
o Make sure the material master is set to allow consignment stock at the
customer’s site.
Step 4: Define Delivery and Billing Settings
• T-code: SPRO → Sales and Distribution → Basic Functions → Delivery → Delivery
Processing
o Configure delivery types for consignment processes.
o Configure the consignment fill-up delivery type (e.g., NL).
o Billing for consignment is typically done after the consignment issue
(consumption of goods), not during the fill-up.
Step 5: Configure Billing Document for Consignment Issue
• T-code: SPRO → Sales and Distribution → Billing → Billing Documents → Define
Billing Types
o Set up billing types for consignment issue (e.g., F2 for consignment sales
billing).
o Configure the billing type to include the proper revenue recognition for
consignment sales.
Step 6: Configure Consignment Return Process
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Consignment Process in SAP SD
• T-code: VOV7
o Create an item category for consignment returns (e.g., CR).
o Set the consignment return item category to reverse the delivery process for
returned goods.
o Ensure the return stock is processed in Inventory Management (IM) and is
returned to the company’s warehouse.
Step 7: Create Customer Master for Consignment
• T-code: XD01 or BP
o Maintain the customer master data with proper sales area.
o For consignment customers, ensure they are set up with the correct partner
functions like Ship-to and Bill-to.
o Enable the consignment customer type and ensure proper payment terms for
consignment agreements.
Execution Steps for the Consignment Process
Once the system is configured, here’s how the Consignment Process works in SAP:
1. Create Consignment Fill-Up (Delivery of Goods to Customer)
T-code: VA01
• Select the Sales Document Type as CS (Consignment Fill-Up).
• Enter the customer and material details.
• The system creates a delivery document for consignment fill-up, and goods are
shipped to the customer without billing.
2. Consignment Issue (Customer Consumes Goods)
T-code: VA01 (Consignment Issue Sales Order)
• Create a sales order with Item Category: CONS.
• The customer consumes the goods and the system will trigger the billing document
for the quantity used, thus transferring the ownership of goods to the customer.
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Consignment Process in SAP SD
3. Consignment Return (Customer Returns Goods)
T-code: VA01 (Consignment Return Sales Order)
• When goods are returned by the customer, create a return order.
• The goods are returned to the company, and the stock in the system is updated
accordingly.
4. Consignment Pick-Up (Goods Not Consumed, Retrieved by the Company)
T-code: VA01 (Consignment Pick-Up Order)
• If the customer has unused consignment stock and the goods are picked up, the
system processes a consignment pick-up order, and the stock is returned to the
company’s warehouse.
Key Tables and T-Codes
Process T-Code/Table
Sales Order (Consignment) VA01, VBAK, VBAP
Delivery (Consignment) VL02N, VTTK, VETR
Billing (Consignment Issue) VF01, VBRK
Customer Master (Consignment) XD01, XD02
Consignment Return Process VA01, MSEG
Real-World Example
Imagine a wholesaler supplying goods to a retail store on a consignment basis. The store
doesn’t own the goods until they’re sold. The wholesaler sends goods on consignment (fill-
up), and when the store sells a product, the wholesaler issues a billing document for the
consumed stock. If the store returns unsold goods, the wholesaler can retrieve the goods
through the Consignment Pick-Up process.
Complete Example Scenario:
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Consignment Process in SAP SD
Let’s say you are managing a pharmaceutical distribution company that supplies medicines
to hospitals on a consignment basis.
1. Consignment Fill-Up: You deliver 1000 units of medicine to a hospital without
charging them. The goods are now in the hospital’s premises, but ownership remains
with you.
2. Consignment Issue: After a month, the hospital uses 500 units. You now bill them for
the 500 units they’ve consumed.
3. Consignment Return: The hospital returns 100 units that were not used. These goods
are sent back to your warehouse.
4. Consignment Pick-Up: After six months, the hospital decides to return the remaining
400 units. These goods are picked up from the hospital and returned to your
warehouse.
1. Consignment Fill-Up (Initial Delivery of Goods)
Detailed Explanation
The Consignment Fill-Up process is used when the supplier delivers goods to the
customer’s location but retains ownership of the goods until they are consumed by the
customer. The system does not create a billing document at this stage. This step is purely to
move goods to the customer.
Configuration Steps
1. Sales Document Type (for Consignment Fill-Up):
o T-code: SPRO → Sales and Distribution → Sales → Sales Documents → Define
Sales Document Types.
o Action: Create a Sales Document Type (e.g., CS) for consignment fill-ups. This
document type ensures that no billing is triggered when the consignment
goods are delivered to the customer.
▪ Example: You would configure a consignment fill-up order (CS) type for
tracking consignment stock deliveries.
2. Item Category for Consignment Fill-Up:
o T-code: VOV7.
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Consignment Process in SAP SD
o Action: Create an item category (e.g., CONS) for consignment items in sales
orders. This ensures that:
▪ Delivery is allowed.
▪ Billing relevance is set to No (no invoice generation at this point).
▪ The stock is updated for the consignment item.
Settings for Item Category CONS:
▪ Delivery: Allowed (because you are delivering goods).
▪ Billing Relevance: Set to No (you will not bill the customer yet).
▪ Stock Posting: Yes (this allows the stock to be moved into consignment
stock at the customer’s location).
3. Material Master Configuration for Consignment Stock:
o T-code: MM01 or MM02.
o Action: Ensure the material master is configured for consignment.
▪ In the Sales View of the material master, assign the Item Category
Group for consignment goods (e.g., BANS for consignment).
▪ This allows goods to be tracked as consignment stock.
Execution Example
• Scenario: A pharmaceutical company delivers 500 units of a medicine to a hospital on
consignment. These goods are now at the hospital, but ownership remains with the
company until the goods are used.
Steps in SAP:
1. Create a Sales Order with document type CS (VA01).
2. System creates a delivery for consignment fill-up, and goods are moved to the
hospital’s premises.
3. The ownership remains with the supplier (no billing yet).
2. Consignment Issue (Customer Consumes Goods)
Detailed Explanation
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Consignment Process in SAP SD
The Consignment Issue process occurs when the customer consumes or sells the goods
that were delivered on consignment. At this point, ownership is transferred to the
customer, and a billing document is generated for the goods consumed.
Configuration Steps
1. Sales Document Type for Consignment Issue:
o T-code: SPRO → Sales and Distribution → Sales → Sales Documents → Define
Sales Document Types.
o Action: Define the Sales Document Type for consignment issue (e.g., CI). This
document type is used when the customer consumes goods.
▪ Example: A consignment issue type (CI) allows you to track consumed
goods and trigger billing.
2. Item Category for Consignment Issue:
o T-code: VOV7.
o Action: Create an item category (e.g., CI) for consignment issues. This item
category ensures that:
▪ Billing Relevance is set to F (invoice generation).
▪ Stock Posting is set to Yes (ownership is transferred to the customer,
and inventory needs to be updated).
Settings for Item Category CI:
o Billing Relevance: Set to F to trigger billing once the consignment goods are
consumed.
o Stock Posting: Yes (consignment stock is reduced, and ownership is transferred
to the customer).
3. Billing Type for Consignment Issue:
o T-code: SPRO → Sales and Distribution → Billing → Billing Documents → Define
Billing Types.
o Action: Configure billing types for consignment issue (e.g., F2).
▪ Billing occurs when the goods are consumed by the customer.
Execution Example
• Scenario: The hospital uses 200 units of the medicine delivered on consignment.
Steps in SAP:
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Consignment Process in SAP SD
1. Create a Sales Order for Consignment Issue (VA01) for the 200 units
consumed.
2. The system triggers the billing document (VF01).
3. The ownership of the 200 units is transferred to the hospital, and the stock in
the system is updated.
4. The invoice is created, and the hospital is billed for the consumed goods.
3. Consignment Return (Customer Returns Goods)
Detailed Explanation
The Consignment Return process is when the customer returns goods that were previously
delivered on consignment. The goods are returned to the supplier’s warehouse, and the
system updates the stock accordingly.
Configuration Steps
1. Sales Document Type for Consignment Return:
o T-code: SPRO → Sales and Distribution → Sales → Sales Documents → Define
Sales Document Types.
o Action: Define a Sales Document Type for consignment returns (e.g., CR). This
document type is used to track the goods returned by the customer.
2. Item Category for Consignment Return:
o T-code: VOV7.
o Action: Create an item category (e.g., CR) for consignment returns. This item
category ensures that:
▪ Stock Posting is set to Yes, allowing the system to update inventory by
returning goods to the warehouse.
▪ Billing Relevance is set to No, as no billing occurs for returns.
Execution Example
• Scenario: The hospital returns 50 units of unused medicine. Steps in SAP:
1. Create a Consignment Return Order (VA01).
2. The system processes the return, updates inventory, and moves goods back
into the warehouse.
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Consignment Process in SAP SD
3. No billing document is generated for the returned goods.
4. Consignment Pick-Up (Supplier Retrieves Goods)
Detailed Explanation
The Consignment Pick-Up process occurs when the supplier retrieves unsold consignment
goods from the customer’s location. The goods are returned to the supplier’s warehouse,
and the stock is updated accordingly.
Configuration Steps
1. Sales Document Type for Consignment Pick-Up:
o T-code: SPRO → Sales and Distribution → Sales → Sales Documents → Define
Sales Document Types.
o Action: Define a Sales Document Type for consignment pick-ups (e.g., CP). This
document type is used for the pick-up of unused goods.
2. Item Category for Consignment Pick-Up:
o T-code: VOV7.
o Action: Create an item category (e.g., CP) for consignment pick-ups. This item
category ensures:
▪ Stock Posting is set to Yes, as the goods are returned to the supplier’s
warehouse.
▪ Billing Relevance is set to No (no billing for goods retrieved).
Execution Example
• Scenario: The hospital returns 100 units of unsold medicine after several months.
Steps in SAP:
1. Create a Consignment Pick-Up Order (VA01).
2. The system processes the pick-up order, and the goods are moved back to the
supplier’s warehouse.
3. Inventory is updated, and no billing document is created for the goods
returned.
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