Consignment Inventory and SAP Movement Types
Consignment Foundation and Masters
The Consignment Foundation
In standard procurement, when you order goods, they become yours the moment you receive them. The company's books reflect this ownership and the corresponding liability to the vendor. Vendor consignment flips this logic. The goods are physically in your warehouse, but they still belong to the vendor. You only take ownership—and incur a liability—at the moment you withdraw them for use.
This process requires a specific setup in SAP, starting with how you signal your intent. This is done using the . When creating a Purchase Requisition or Purchase Order, specifying 'K' tells the system this isn't a standard purchase. It's a request to receive vendor-owned stock into your location. This simple flag changes the entire downstream process, ensuring no financial liability is posted during the goods receipt. It's a crucial first step that differentiates consignment from your everyday procurement cycle.
The Info Record Engine
Since you don't receive an invoice immediately after the goods receipt, how does SAP know the price to pay when you finally consume the material? This is managed by the Consignment Info Record. Unlike a standard info record, a consignment info record is mandatory for the process to work. It acts as the master record for the price and terms of the consignment agreement between you and the vendor.
Think of the Consignment Info Record as the price tag that sits on the vendor's stock in your warehouse. It's dormant until you 'buy' the item by withdrawing it.
When you create the info record (using transaction ME11), you must select the 'Consignment' info category. The most critical field within this record is the price. This price will be picked up automatically when you settle your liabilities later. Without a valid for the material and vendor combination, you cannot post a goods receipt for consignment stock. The system will issue an error because it has no reference for the eventual settlement price.
Stock in Name Only
A key concept to grasp is the distinction between different stock types. When you post a goods receipt for a consignment PO using , the inventory appears in your system. You can see it in your stock overview (MMBE). However, it is not part of your valuated stock. It's special stock, designated with a 'K', indicating it's vendor consignment material.
This stock is physically yours to manage—you can move it between storage locations within the same plant—but financially, it's off the books. It doesn't impact your inventory valuation until you explicitly transfer it to your own stock. This distinction is fundamental to the consignment process.
| Stock Type | Ownership | Valuation | Goods Receipt Movement |
|---|---|---|---|
| Standard Plant Stock | Company-owned | Part of company's valuated inventory | 101 |
| Vendor Consignment Stock | Vendor-owned | Not part of company's valuated inventory | 101 K |
Having the correct master data—the 'K' item category on the PO and a valid Consignment Info Record—is what allows the system to correctly execute the 101 K goods receipt. This ensures the material is available for use without prematurely creating a financial liability, laying the perfect foundation for the rest of the consignment process.
Ready to check your understanding of these core concepts?
What is the primary purpose of using Item Category 'K' in a purchase order?
Which of the following master data records is mandatory to successfully process a goods receipt for consignment stock?
With this foundation in place, you are ready to manage the physical receipt and eventual consumption of consignment goods.