SAP Consignment Purchase Process Flow

Prepared by Harshvrdhan Rathore

Keeping the vendor's stock at the company's premises and paying only for what is used — from the consignment PO and receipt of vendor-owned stock, through withdrawal, when ownership and liability pass to the company, to periodic settlement, invoice and payment. Solid boxes are the main flow (number = sequence); dashed boxes are setup, supporting or automatic SAP steps. Hover over a box to see details.

Consignment PO→ GR to vendor-owned stock→ No liability→ Withdrawal→ Liability created→ Settlement→ Invoice→ Payment

Main process step (number = order) Supporting / master data activity Document flow Input / support

Department-wise role

Step-by-step flow

#	Department	Activity	What happens	Output

Key consignment concepts

OwnershipThe material sits in the company's warehouse but belongs to the vendor until it is withdrawn. Only then does the company own it and owe money.

Special stock KConsignment stock is tracked separately per vendor. It has quantity but no value in the company's books.

Consignment info recordHolds the agreed consignment price. The price valid on the day of withdrawal is used to value the liability.

Movement types101 K — goods receipt to consignment stock, 201 K / 261 K — withdrawal for consumption, 411 K — transfer to own stock.

SettlementWithdrawals are settled periodically per vendor; many companies use self-billing so the vendor does not need to send an invoice for each withdrawal.

BenefitsLower working capital and no risk of paying for stock that is never used; the vendor gets assured offtake and a place close to the customer.

Note: GST treatment of consignment supplies varies by arrangement — confirm the invoicing point with the tax team. Gate entry is usually a custom development. Codes and settings vary by client configuration.