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Vendor consignment process in SAP is used when a vendor provides your
company materials on loan. The materials are kept in the warehouse of your company until
you withdraw the said materials for processing. Then, the liability is created for the vendor
and a payment is done to the vendor on agreed intervals, e.g. weekly or monthly.
After maintaining consignment info records, a consignment purchase order is created in SAP
and handed over to the vendor. The vendor provides your company with materials according
to the purchase order (PO). The warehouse of your company performs goods receipt of the
materials against the purchase order and the materials are stored as consignment stock in
the SAP system.
Later, when materials are required for processing, you withdraw the material from the
warehouse and a liability is created for the vendor which is settled through a special
payment process (i.e., MRKO transaction).
A visual illustration of the steps of the vendor consignment process in SAP is presented on
the picture below.
Vendor Consignment Process in SAP Diagram
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Steps of Vendor Consignment Process in SAP
The step-by-step process of working with vendor consignments goes as explained below.
1. Consignment Info Record
You first create a Consignment Info Record through transaction ME11. The screenshot
below is for the transaction ME12 that can be used to change an existing Info Record in
SAP. We use ME12 because we have already created an Info Record as a preparation for
this tutorial.
Start Transaction ME12
You need to select Consignment and enter Vendor, Material, Pur.Org, Plant as shown on the
picture below then hit Enter button.
Transaction ME12 – Initial Screen
Provide the price in highlighted box in Purchasing Organization view and then save the info
record.
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Transaction ME12 – Enter Price
2. Consignment Purchase Order
Now, start transaction ME21n in the dialog box to create a consignment purchase order
(PO).
Start ME21N Transaction
In the new purchase order, enter Vendor, Item Category: K, Material, Quantity, Plant,
Storage location as highlighted on the screenshot below and hit Enter button on your
keyboard.
ME21N Transaction – Create a Purchase Order
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Next, enter Purchasing Organization, Purchasing Group, Company Code under Org. Data tab
as show below.
ME21N – Enter Organizational Data
Then, click on Check button, to check for errors in the document.
Check Purchase Order for Errors
Finally, click the Save button to save the document and the SAP system will display a
message that a PO was created.
A Purchase Order was Created
3. Goods Receipt
Now, to do Goods Receipt against the Purchase Order you need to use the
transaction MIGO.
Start MIGO Transaction
In below screen, choose Goods Receipt against Purchase Order and enter the number of
the purchase order created earlier. Then, hit Enter button.
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Goods Receipt against a Purchase Order
Data is pulled in MIGO by the SAP system from the Purchase Order. Next, you should click
on OK check boxes for all the items.
Set OK Indicator for Items to Perform Goods Receipt
Then, click on Check button to check for possible errors.
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Check Goods Receipt for Errors
Finally, click on Post button to save the document. The system will display a message that a
material document was posted.
Use Post Button to Save Goods Receipt. Goods Receipt of Consignment Stock was Posted.
4. Goods Issue
Now, when goods are required, you can perform Goods Issue to, for example, a cost center.
To do this you use the transaction MIGO where it is necessary to choose Goods
Issue against Other with the movement type 201 and a special indicator K for consignment
as highlighted on the screenshot below.
Goods Issue against a Cost Center
In the Material tab of MIGO transaction, enter the material number that you would like to
issue from the warehouse.
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Material Number in MIGO Transaction
In the Quantity tab of MIGO transaction, enter quantity required for issue.
Quantity in MIGO Transaction
In the Where tab of MIGO transaction, enter Plant and Storage Location (from where you
would like to issue the materials).
Plant and Storage Location in MIGO Transaction
In Partner tab of MIGO transaction, enter the vendor number.
Vendor in MIGO Transaction
In Account Assignment tab of MIGO transaction, enter a cost center (the cost of the
materials will be allocated to the specified cost center).
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Cost Center in MIGO Transaction
Click on Check button to check for possible errors.
Check for Errors with Goods Issue
Finally, click on Post button to save the goods issue document. The SAP system will display
the number of posted material document.
Click Post Button to Save Goods Issue
Goods Issue was Successfully Posted
5. Settle Liabilities
Finally, the last step of vendor consignment process in SAP is to settle the liabilities that
our company has for the vendor. It is necessary to use the transaction MRKO for settling
liabilities created against the vendor.
Start MRKO Transaction
In the first screen of MRKO transaction, you should enter Company Code, Material and
choose Settle radio button as shown on the screenshot below.
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Consignment Settlement
Next, click on Execute button.
Click Execute Button
The system will show a list of the consignment materials that can be settled. Double click
on the line item which requires settlement and finally save the document. This step will end
the vendor consignment process in SAP.
Consignment Items for Settlement
