Consignment Procurement PDF

2012
Consignment
Procurement In SAP
MM Purchasing
By Satish Babu Bodepudi
o
A guide to learn about consignment process
AGEMO Press
Consignment Procurement In SAP MM Purchasing
AGEMO Press
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Satish Babu Bodepudi

1st Edition, 2012.
2012 by AGEMO Press
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Preface
It has been a privilege for me to write about this book. I know the author from the
last ten years, and he has extensive knowledge in his domain as well as in SAP MM.
This book was the result of his deep knowledge and the research that he has done
in this module. In my view this book is a must to read for the beginners in SAP MM
as it is written in a simple language and was explained with screen shots.
Dwarakadeesh.S.A
AGEMO Press
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Acknowledgement
I am very proud to present this book to my fellow consultants and SAP MM Users.
I dedicate this book to my parents, whoever helped and initiated me to write this
book.
I wrote this book with extensive care and by utilizing my research experience in
SAP MM.
I provided screen shots for each and every step where ever possible for easy
understanding.
I consider this book will help you in understanding various things related to the
consignment process.
Happy Reading...
--Satish Babu Bodepudi
AGEMO Press
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Contents
1.0 Consignment Procurement ..................................................................................................................... 6
1.1 Description .......................................................................................................................................... 6
1.2 Features .............................................................................................................................................. 6
1.3 Steps For Consignment Procurement: ................................................................................................ 7
1.3.1 Assign standard purchasing organization to plant....................................................................... 7
1.3.2. Create a Material Master ............................................................................................................ 8
1.3.3. Create Vendor Master ................................................................................................................ 8
1.3.4. Create info record ....................................................................................................................... 8
1.3.5. Create purchase order with item category Consignment (K). .................................................. 24
1.3.6. Goods Receipt with reference to purchase order. ................................................................... 27
1.3.7. Goods Issue from vendor consignment stock to cost center (201K) ........................................ 38
1.3.7A. Transfer posting in to your own stock .................................................................................... 52
1.3.8. Settle the consignment liabilities to be paid to vendor. ........................................................... 62
1.3.9. Consignment settlement Message Setup ................................................................................. 67
1.4. Account Determination w.r.t. Consignment .................................................................................... 84
1.4.1. Consignment liabilities (KON) ................................................................................................... 84
1.4.2. Expense/revenue from consumption of consignment material (AKO) .................................... 85
1.5. Cancelling consignment settled invoice. .......................................................................................... 92
1.6. Consignment procurement with Standard price Control material ................................................ 107
About Author ........................................................................................................................................ 120
Bibliography .............................................................................................................................................. 120
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1.0 Consignment Procurement

1.1 Description
In consignment process, the vendor provides materials and stores them on our
premises. The vendor remains the legal owner of the material until we withdraw
materials from the consignment stock. Only then we have to pay to the vendor.
There will be no invoice sent by vendor and we will settle payment to the vendor at
set periods of time, for example, monthly. In addition, we can also take the
ownership of the remaining consignment material from vendor after a certain
period of time.
1.2 Features
The consignment stock is managed under the same number as our own stock.
Consignment stock can, therefore, be transferred to the available stock.
We can define consignment prices in foreign currency. The currency in which
the order is placed with the vendor applies for consignment withdrawals.
We can determine period-specific consignment prices.
We can specify the consignment price in any unit of measure. The conversion
factor is stored in the info record.
Using consignment info records, We 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
o
o
Unrestricted-use stock
Quality inspection stock
Blocked stock
We can make transfer postings between these three stock types. However
withdrawals can only be posted from unrestricted stock.
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1.3 Steps For Consignment Procurement:
1.3.1 Assign standard purchasing organization to plant

If several purchasing organizations procure for a certain plant, define one
of them as the standard purchasing organization for the transactions "pipeline
procurement", "consignment" and "stock transfers".
SPRO > img > Enterprise Structure > Assignment > Material Management >
Assign Standard Purchase Organization to plant
Here assign one of the purchase organizations assigned to your plant as standard purchase organizations to your
plant.
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1.3.2. Create a Material Master

1.3.3. Create Vendor Master
1.3.4. Create info record
Create info record of type Consignment (K) with the combination of material,
vendor, std purchase organization and plant.
T.Code: ME11
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in purchase organization data1 enter tax code, planned delivery time, purchasing group, net price and
any discounts or delivery costs if exist.
Note: Tax code Is Mandatory in consignment info record as there is no possibility to enter in consignment
settlement(MRKO).
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if you get the above information message after pressing enter in purchase organization Data 1 view
carry out the below settings.
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1. Check your schema group for purchase organization assigned to your purchase organization at
below path
SPRO > Img > Material Management > Purchasing > Conditions >Define Schema Group
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In the pop Up double Click on Assignment schema group to purchase organization
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Here observe purchase organization schema group assigned to your purchase organization
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2. check your vendor schema group assigned in purchasing data view of vendor master XK02
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then check the calculation schema assigned to the combination of vendor and purchase organization
schema groups in below path
SPRO > Img > Material Management > Purchasing > Conditions >Define Schema detrmination
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In the pop up double click on determine calculation schema for standard purchase orders
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Here click on position and input your purchase organization schema group and vendor schema group
and press enter.
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IF an entry not found maintain an entry and assign calculation schema to the combination by pressing
new entries
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NOW create info record again and now there will be no information message.
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1.3.5. Create purchase order with item category Consignment (K).

Here observe
1.Net price field in display mode
2. No Conditions Tab
3. No invoice tab
4. Account Assignment Category Field in Display mode
5. In Delivery Tab observe No Goods Receipt and GR-Non valuated Indicators
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Consignment Item Category K
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Material number necessary

No account assignments
Material kept in stock
GR necessary
Invoice receipt not necessary
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1.3.6. Goods Receipt with reference to purchase order.

Now the goods will come in to vendor consignment stock Movement type 101 'K'
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Display the material document and observe that there will be no account documents as still the
ownership of the goods lies with vendor and no liability to vendor exists.
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Observe stock overview of material

Tcode :MMBE
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You can also use T code MB54 to see vendor consignment stock
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1.3.7. Goods Issue from vendor consignment stock to cost center (201K)
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Display the material document and observe accounting document
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here the consumption account( assigned to combination of chart of accounts of company code,
transaction event key GBB, account Modifier VBR, corresponding valuation class in material master and
valuation grouping code assigned to plant in T. code OWMD) will be debited and consignment payable
account ( Assigned to combination of Chart of accounts of company code, Transaction Event Key KON
and account modifier blank ' ') is credited.
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In stock overview observe the reduction in vendor consignment stock.
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in Material master additional data consumption Tab observe increase in consumption quantity in
current period
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1.3.7A. Transfer posting in to your own stock

You can also do transfer posting from vendor consignment stock to your own stock
T. Code: MB1B (Movement type 411 K)
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Display the material document and observe the accounting document
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Here Stock account (assigned to combination of Chart of accounts of company code, transaction event
key BSX, Valuation grouping code of plant and valuation class of material) will be debited and
consignment account payable will be credited.
1.3.8. Settle the consignment liabilities to be paid to vendor.

T. Code: MRKO
Select 'Display' in processing group to see the liabilities or select 'Settle' to settle the liabilities to vendor.
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1.3.9. Consignment settlement Message Setup

If you get the below error do the fallowing steps
1. click on execute function in error message window
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2. click on message determination node
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3. Execute maintain Conditions function.

In the pop up double click on create condition
or directly go to T. Code: MRM1
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4.give output type as 'KONS'
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Select any one option in the pop up and maintain the condition record as shown below.
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SAVE IT
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and go back to the settlement transaction as shown below
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As shown above an accounting document is created with a document number. open that accounting
document to observe account postings.
Note: In logistic invoice verification transaction MIRO An Invoice document and a corresponding
accounting document will be created but in MRKO there will be no invoice document but only accounting
document.
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Here vendor Account will be Credited and Consignment payable account will be debited.
1.4. Account Determination w.r.t. Consignment
1.4.1. Consignment liabilities (KON)

Consignment liabilities arise in the case of withdrawals from consignment stock or from a pipeline or
when consignment stock is transferred to own stock.
Depending on the settings for the posting rules for the transaction/event key KON, it is possible to work
with or without account modification. If you work with account modification, the following
modifications are available in the standard system:
None for consignment liabilities
PIP for pipeline liabilities
Using the account grouping, you can have different accounts for consignment liabilities and pipeline
liabilities.
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1.4.2. Expense/revenue from consumption of consignment material (AKO)

This transaction is used in Inventory Management in the case of withdrawals from consignment stock or
when consignment stock is transferred to own stock if the material is subject to standard price control
and the consignment price differs from the standard price.
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1.5. Cancelling consignment settled invoice.

For Cancelling settled invoice its not possible directly but it is possible by cancelling material
document and then run MRKO again. It will create a credit note( only reverse accounting
document)
To Cancel the material document Use MIGO Cancellation or MBST T Code.
Note: SAP recommends to use MIGO cancellation.
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if your run MRKO after cancelling a material document, the account postings are consignment payable
account debited and stock account (consumption account) credited.
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To display settled withdrawals select 'display' in processing group and settled withdrawals in display
options group of selection options as show above.
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1.6. Consignment procurement with Standard price Control material

If the material is Standard price(S) controlled, then any variance in info record price other than material
master price, then fallowing account postings takes place.
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For example, Create a material with price control S and Standard price as Rs.400 as Shown above.
Then Create a consignment info record with net price Rs.600.
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A goods issue of 10 qty from vendor consignment stock to cost center with above settings will make the
fallowing account postings.
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Here Consignment payable account credited with the amount in info record i.e., Rs.600 x 10, Stock
account will be debited with the standard price in material master i.e., 400 x 10 and loss from
consignment material consumption account will be debited with RS.200x10 (Difference of material
master price and info record price)
Where AKO is Expense/revenue from consignment material consumption Transaction Key.
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if the info record price is less than material master price then fallowing postings will takes place
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If you receive vendor consignment stock in to your own stock the same above postings will takes place.
And there will be no effect of Standard price control in material master on consignment settlement.
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If you are cancelling a material document of standard price controlled material then the account posting
to the loss or gain account will replaced with gain or loss account respectively as shown below.
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About Author
A native of Indian, Satish Babu Bodepudi is a Graduate in mechanical engineering
from JNT University, Hyderabad. He Joined the computer industry in 2005 and
started his Career as AutoCAD Engineer. He began working with SAP R/3
Materials Management in 2010 and his vast experience in domain helped him to gain
knowledge in SAP MM and initiated him to write this book to share his knowledge
with fellow consultants.
Bibliography
www.help.sap.com
SAP Library
www.scn.sap.Com
AGEMO Press
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2012

A guide to learn about consignment process

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

--Satish Babu Bodepudi

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

1.0 Consignment Procurement

Consignment Procurement In SAP MM Purchasing

1.3 Steps For Consignment Procurement:

1.3.1 Assign standard purchasing organization to plant

Consignment Procurement In SAP MM Purchasing

1.3.2. Create a Material Master

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

In the pop Up double Click on Assignment schema group to purchase organization

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

1.3.5. Create purchase order with item category Consignment (K).

Consignment Procurement In SAP MM Purchasing

Consignment Item Category K

Material number necessary

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

1.3.6. Goods Receipt with reference to purchase order.

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Observe stock overview of material

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Display the material document and observe accounting document

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing

Consignment Procurement In SAP MM Purchasing