Consignment Stocks remain the legal property of the Vendor until the organization withdraws the material from the consignment stores. The invoice can be due at set periods of time, for example monthly, and it is also a configuration possibility that the organization will take ownership of the stock after a certain period of time. Consignment Stock is allocated to the available stock because the Consignment Stock is managed under the same material number as your company’s stock.
The most important characteristic of Consignment Stock is that it isn’t valuated. When the material is withdrawn, it is valuated at the price of the respective vendor. Before procuring the stock, consideration should be given if one consignment is coming from multiple vendors. If so, we can manage all of them independently at the price of the individual vendors. In the Info Record, we will maintain three different prices for the same material for three different vendors.
How to create Consignment Stocks?
Everything is the same as a normal PR or PO, except entering the item category “K” for the consignment item. This ensures that the Goods Receipt is posted to the consignment stores and an invoice receipt cannot be generated for the item. Also, do not enter a net price
Understanding Consignment Processing
In consignment processing, the vendor provides materials and stores them on the enterprise’s premises. The vendor remains the legal owner of the material until materials are withdrawn from the consignment stores. Only then does the vendor require payment. The invoice is due at set periods of time, for example, monthly. In addition, it can also be arranged with the vendor that the ownership of the remaining consignment material is taken over after a certain period of time.
- The consignment stock is managed under the same number as the enterprise’s own stock. Consignment stock can, therefore, be transferred to the available stock.
- It is possible to define consignment prices in foreign currency. The currency in which the order is placed with the vendor applies for consignment withdrawals.
- It is possible to determine period-specific consignment prices.
- The consignment price can be specified in any unit of measure. The conversion factor is stored in the info record.
- Using consignment info records, the enterprise 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:
- Unrestricted-use stock
- Quality inspection stock
- Blocked stock
It can be possible to make transfer postings between these three stock types. Withdrawals can only be posted from unrestricted stock, however.
Read more about Consignment Procedure in this document on Consignment Procedure.