Consignment sale and contract difference

[Former Member]

What is the basic difference between consignment sale and contract ?

Thank u gurus

[Former Member]

Consingnment sales owner of the stock is company until customer sales product

we wiil be maintaning as special stock and diff movt types invovled .

contract is outlineaggrement b/w customer and company for limited period for suppling products.this is the basic difference.

[Former Member]

Consignment Sales is a sale, in which initial ownership of the stock is with us, the stock being in the premises of the customer. The ownership is transfered on sale of material.

Contract may be quantity contract or Value contract, in which the stock remain in our owm premises, but it ia an agreement to delivery some'x' quantity of material or materials to the tune of decided valuue.

<b>Consignment Stock Processing:</b>

Consignment Stock Processing

Purpose

Consignment goods are goods which are stored at the customer location but which are owned by the company. The customer is not obliged to pay for these goods until they remove them from consignment stock. Otherwise, the customer can usually return consignment goods that are not required.

Consignment Fill-Up: Consignment fill-up replenishes the stock at the customer site. Since the goods remain the property of the company, this process is not relevant for pricing and consequently not for invoicing either.

Create a sales order using order type KB.

Enter the required data on the customer, the consignment goods and the delivering plant.

Enter all other relevant data and save the order.

Create a delivery as the subsequent document for this sales order and, after picking has been completed successfully, post goods issue.

The underlying goods movement type is a stock transfer. This ensures that when goods issue is posted, consignment special stock is created for the customer concerned. If special stock of this kind already exists in the delivering plant for this customer, the goods are posted to this special stock.

Order type: KB (document category C: sales order)

Std. Delivery type: LF

Item category: KBN (not relevant for pricing and billing)

Schedule line category: E1 (relevant for deliveries, uses availability check, 631 (GI consignment: lending) to post the stock into a special consignment category in the delivering plants stock for that particular customer and material)

Copy control rules for the sales doc, item category, and schedule line category.

Use trans MB58 or MMBE to check the stock.

Consignment Issue: The Consignment issue enables the customer to withdraw consignment goods from the special stock that are to be used or sold.

Create a sales order using order type KE.

Enter the required data for the customer, the consignment goods and the plant to which the goods are to be returned.

Enter all other relevant data and save the order.

Create a delivery as the subsequent document for this sales order and, after picking has been completed successfully, post goods issue.

The goods are then reduced by the relevant quantity in the special stock assigned to the customer. This goods issue also reduces your total stock.

Invoice the delivery which issues the consignment goods.

Order type: KE (document category C: sales order)

Std. Delivery type: LF

Invoice: F2

Item category: KEN (relevant for pricing and deliver related billing, special stock indicator W, should determine cost too)

Schedule line category: C1 (relevant for deliveries, uses availability check, 633 (GI issue: customer consignment)

Consignment returns: proceed as follows: Consignment returns enable your customer to return goods to the consignment stock that has already been issued from it.

Create a sales order using sales order type CR.

Enter the required data on the customer and the consignment goods.

Enter all other relevant data and save the order.

Create a returns delivery for the sales order (the system automatically chooses delivery type LR). The goods issue posting cancels the goods issue posting which was carried out when the consignment goods were issued. This posting records the return of the goods to the plant where goods receipt was carried out.

Create a credit memo for the consignment return you created in Step 1.

Order type: KR (document category H: returns)

Delivery type: LR

Credit for Returns Order type: RE (delivery or order related billing)

Item category: KRN (relevant for pricing and deliver related billing, special stock indicator W

Schedule line category: D0 (relevant for deliveries, no availability check, 634

Consignment Pick-Up: The company uses consignment pick-up to take back consignment goods that are faulty or excess materials that the customer does not need. This process is not relevant for billing since the goods remain the property of the company.

It may be beneficial to have a mandatory reference such as the consignment fill-up. In addition to it copy control rules can be used to further control it. In the copy control rules indicate the document flow. As the stock is coming back into the warehouse or plant, you can specify a returns shipping point to be automatically determined. No invoice is necessary, as the goods are not changing ownership.

Create a sales order using order type KA.

Enter the required data for the customer, the consignment goods and the plant to which the goods are to be returned.

Enter all other relevant data and save the order.

Create a returns delivery for the sales order (the system automatically chooses delivery type LR). The transaction is completed by the goods issue posting which initiates a transfer posting from the customer's special stock to your plant stock.

Order type: KA (document category C: sales order)

Delivery type: LR

No invoice

Item category: KAN

Schedule line category: F1 (relevant for deliveries, availability check against the stock on the customer’s consignment, 632 (Consignment pickup)

<b>Contracts</b>

Contracts represent special business relationships with customers based upon material, price, and qty. They guarantee a special price agreement with the customer and are usually called outline agreements in std SAP terminology.

There are four different types of contracts provided by SAP. They are:

1) Quantity contracts

2) Value contracts

3) Service and maintenance contracts

4) Master contracts

Regards,

Rajesh Banka

[former_member183879]

A contract is an agreement between the buyer and seller on the terms of sales like quantity , price , period etc. There are 3kinds of contracts in SAP which are Quantity contracts (based on quantity of materials) Value contract( Contract for a value, but can be for different materials) Mastercontract(it can have various contracts within it)

A consignment sale is the process where the goods will be in buyer's place though the ownership of the goods will still be with the seller. The seller keeps the goods in buyer's place. Whenever the buyer wants to purchase the material, he takes goods from the consignment location by raising proper documents.

SAP supports the following consignment process

Consignment fill upFilling up the customers location with stock( Order-delivery not invoice relevant as the goods are still in the title of the seller)

Consignmentissue-Issuing goods to buyer from consignment location (OrderDelivery---Invoice)

Consignment return -The buyer returns the goods back to consignment location where the goods are kept (Return orderRe. Delivery---Credit)

Consignment pick up-To take to goods back from consigment location (PickupOrder-ReturnsDelivery)

The difference is in terms of title of goods, and the terms of sale. There is no terms of sale in consignment while Contract has certain terms of sale. The title of goods is with the seller in consignment though the goods are at buyer's location in consignment process while in contract such issues of title of goods doesnt exist.

Reward points if helpful.