Timing of Confirmation from Consignee to Company during Consignment Issue

[Former Member]

Hi, The consignment process is something where the company keeps his stocks at consignee place with full ownership (consignment fill-up). When the consignee sells the stock then the consignee informs the company and company invoices the consignee (consignment issue). Now my question is what happens if the consignee sells the item and informs the company (owner) after sometime ? e.g. if consignee sells an items and informs the company after say 1 year, then by this time the consignee might have earned some interest on the sold items for year and after 1 year it pays the amount to the company (owner). So the consignee profits more (one through higher selling price and second by informing and paying the amount to the company after sometime). To prevent this, is there any stock checking carried out from company side to the consignee ? Or does any other sort of process take place to prevent this ? Thanks.

[Shiva_Ram · Accepted solution]

Hi,

When an agreement is made with a customer for consignment process, certain conditions are to be met by the concerned parties. One of the item is reporting the stock of the materials (which are lying at the customer site as consignment goods) at regular intervals by the customer to the Company (Vendor).

As you mentioned if the consignee sells the products and inform the company (vendor) after 1year, it is considered as violation of the consignment agreement, which leads to legal proceedings.

Depending on the volume or quantity or value of the products involved in the consignment process, the Vendor (supplier) sends some one to the customer site to check the inventory. This is happening in real scenario.

You may also know that evey product has shelf life also, so if the customer is not able to consume the product it must be returned to the Vendor.

Regards,

[Former Member · Accepted solution]

Hi Shiva Ram,

Thanks much for your reply here. So as you said I believe that the tracking process takes place out of the SAP and it might be through manual or any other IT process. Is there any scope inside SAP to incorporate this tracking procedure to automate the process ? I mean when Consignee sells, an automatic notification would reach the owner or something like that ?

[Former Member]

Hi there,

In consigment process, stock is maintained as consignment special stock. When a consignment fillup happens, stock will still be under the pocession of the company but under consignment special spock.

If you see the item catg KEN (consignment issue item) in VOV7, you will find that there is a special stock indicator W. When you raise a consignment issue order KE, basing on the item catg determination, automatically KEN will be proposed. So when you PGI a KEN item, stock will automatically deducted from consignment special stock. When the stock in consignment special stock reduces, it means that a consignment issue has happened.

Also KEN item catg is relevant for billing. So when you PGI a KEN item, automatically system do pricing & will generate billing. (Note that for consignment fillup item KBN, there is no pricing or billing relevance).

Basing on these settings, when a consignment issue happens, there is no need for some1 to inform the company. Even though the stock is there at a different location, consignment stock visibility is available in SAP.

Hope this clarifies.

Regards,

Sivanand