Consignment / Production

[Former Member]

Hi all,

I have a scenario where a company will be sending us raw materials into our warehouse. We need to keep these values reflected in our inventory, but there should be no accounting impact (So i was thinking vendor consignment).

However, eventually this company will send us an order to produce finished goods for them using the raw materials they sent us before. I am having trouble on how to set this up in SAP because if vendor consignment is used, there will be an accounting impact since the materials will need to be moved from 'consignment' to 'unrestricted' for our production process.

Any input will be appreciated, thanks

[Former Member]

Used a process where we are acting as a subcontractor.

Take in goods as free item and process it as a normal sales order.

[Former Member]

Hi,

I hope this is related to sub contracting process in MM.

ok,lets come to consignment,it is just like related to customer consignment.

so frist the raw material has to be stored at special stock.so it is not included to the total inventry.

so in this frist there is no accounting entry.

next this special stock has to move production.in this case there will be consumption account,which automatically reduced from special stock.

then after finished good is ready you have to send it to that company

againe there is an account which will have customer account Dt and sales account Cr.

Thank you

[Former Member]

Ravi,

You are exactly correct with what you said. My problem is though with this line:

next this special stock has to move production.in this case there will be consumption account,which automatically reduced from special stock.

I don't want there to be an accounting impact because realistically, we never own the goods. We are just using the customers' materials to produce finished materials.

How is this normally done?

Thanks,