Consignment in Sales and Procurement

Extended consignment

In an extended consignment setup, vendor managed inventory (VMI) settings are laid down in a terms and conditions agreement between business partners. Therefore, if you want the item ownership to be consigned, in the Order Terms and Conditions (tctrm1130m000) session, set the Payment field to Pay on Use for a combination of item, business partner, and warehouse (Procurement) or Ship-to Warehouse (Sales).

When a (replenishment) order/schedule is created for the defined combination of item, business partner, and (ship to) warehouse, the Payment field on the order line/ schedule (line) is Pay on Use, as retrieved from the terms and conditions. When consignment inventory is consumed, the consumption can be linked to an existing order/schedule.

For each consumption, the following is generated:

• Procurement

  A purchase payable receipt that is linked to an existing receipt in the Purchase Payable Receipts (tdpur4130m000) or Purchase Payable Receipts for Schedules (tdpur3118m000) session.

• Sales

  A consumption line that is linked to an existing delivery in the Inventory Consumption (tdsls4640m000) session. After the consumption line is processed in the Process Inventory Consumptions (tdsls4290m000) session and invoicing is required, in the Sales Order Invoice Lines (tdsls4106m100) or the Sales Schedule Invoice Lines (tdsls3140m200) session, an invoice line linked to the sales order/schedule line is created for the consumption.

With extended consignment, you directly link the payment/invoicing for a consumption of consignment inventory to the replenishment order or schedule. The price for the payment/invoicing of consigned inventory is based on the price that is valid at the moment of replenishment or consumption, which you can specify in the Price Determination Based on field of the Order Terms and Conditions (tctrm1130m000) session.

For more information on:

• Terms and conditions, see Overview of terms and conditions.
• Inventory ownership, see Inventory ownership in Warehouse Management.

Basic consignment

In a basic consignment setup, the order and schedule procedures are split into a replenishment part and a payment/invoicing part.

Specify the following:

• Purchase order procedure

  In the Purchase Order Type (tdpur0694m000) session, create separate Consignment Replenishment and Consignment Payment order types and define their activities. Enter the order types in the Order Type for Consignment Replenishment and Order Type for Consignment Payment fields of the Purchase Order Parameters (tdpur0100m400) session.

• Purchase schedule procedure

  Select the Consigned check box in the Purchase Contract Lines (tdpur3101m000) session.
• In the Price Determination Based on field of the Purchase Order Parameters (tdpur0100m400) session, define how the price for the payment of consignment inventory is determined.

• Sales order procedure

  In the Sales Order Type (tdsls0694m000) session, create separate Consignment Replenishment and Consignment Invoicing order types and define their activities.

Consignment replenishmentIf consigned inventory must be replenished:

• Procurement

  You handle the purchase orders/schedules up to the receipt of the goods. You need not pay for the goods before consumption, so no invoice is created yet.

• Sales

  You handle the sales order up to the delivery of the goods. You need not invoice the goods before the customer uses them, so no invoice is created yet.

You can only use the consignment replenishment part of the order/schedule procedure to replenish the consignment inventory.

Consignment payment/invoicingIf consigned inventory is used:

• Procurement

  You must pay for it. Carry out the consignment payment part of the purchase order/schedule procedure. When you consume consigned inventory, a Purchase Payment order is automatically generated. For each consumption, a purchase payable receipt is linked to the purchase order line in the Purchase Payable Receipts (tdpur4130m000) session.

• Sales

  You must invoice the customer for it. You must manually create a Consignment Invoicing sales order.

For more information, refer to Consignment.