A form of business in which a vendor (external supplier) maintains a stock of materials at a customer (purchaser) site.
The vendor retains ownership of the materials until they are withdrawn from the consignment stores.
Payment for consignment stock is
required only when the material is withdrawn for use. For this reason,
the vendor is informed of withdrawals of consignment stock on a regular
basis.
What are the steps involved in consignment cycle?
Consignment is a type of procurement process. In this process, the vendor makes material available, which you then manage as consignment stock. A liability only arises when material is withdrawn from consignment stock, not when the stock is placed in the consignment stores.
1. Material Master record and Vendor should be there.
2. Info record with procurement type consignment should be there.
3. You have to activate the consignment price via info record in SPRO -> Materials Management -> General settings for materials management --> Activate Consignment Prices via Info Records
4. Here you have to remember that, while placing PO, the price will be zero and the price will be picked from inforecord.
5. Vendor will supply the goods as per the PO and our company will receive the goods. After receiving the goods the same will be lying in your company premises, but not belongs to your inventory. It can be used only after posting to inventory or consuming directly. But will pay for the goods as & when we are consuming/posted to inventory to the company.
6. The payment will be made thru
MRKO settlements. We can also set for automatic payments thru batch jobs.
What is a reference purchase organization? When can it be used?
Pur Org:
The purchasing organization is an organizational unit which procures articles and negotiates general purchase price conditions with vendors. It is responsible for all purchasing transactions in the company.
Ref Pur Org:
In Customizing it is possible to assign reference purchasing organizations to a purchasing organization. This allows the purchasing organization access to the conditions and contracts of these reference purchasing organizations. The purchasing organization can make use of up to two reference purchasing organizations when the sequence in which it accesses conditions is determined.
Std Pur Org:
This standard (default) purchasing organization is used When the source of supply is determined for the purposes of a stock transfer or consignment, the default purchasing organization is used automatically. Further purchasing organizations can be assigned to the site in addition to the default. A site cannot order if it has not been assigned to a purchasing organization.
