What is consignment in SAP MM - Materials Management?

SAP Term: consignment

• Component: MM

• Component Name: Materials Management

• Description: 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 The vendor retains ownership of the materials until they are withdrawn from the consignment stores. Payment for consignment stock is required only when the material is withdrawn for use.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.

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• Key Concepts: 
  Consignment is a type of inventory management in SAP Materials Management (MM) that allows a company to store goods at a customer’s site without taking ownership of them. The supplier retains ownership of the goods until they are used or sold by the customer. The supplier is then reimbursed for the goods by the customer. 
  
  How to use it: 
  In SAP MM, consignment can be used to manage inventory in two ways: consignment fill-up and consignment issue. With consignment fill-up, the supplier delivers goods to the customer’s site and stores them there. The customer then pays for the goods when they are used or sold. With consignment issue, the supplier delivers goods to the customer’s site and stores them there, but does not charge for them until they are used or sold. 
  
  Tips & Tricks: 
  When using consignment in SAP MM, it is important to keep track of all inventory movements and transactions. This can be done by setting up a consignment stock type in SAP MM and assigning it to all relevant materials. This will ensure that all inventory movements and transactions related to consignment are tracked accurately. 
  
  Related Information: 
  For more information on using consignment in SAP MM, please refer to the SAP Help Portal or contact your local SAP consultant.