What is consignment material in SAP MM - Materials Management?

SAP Term: consignment material

• Component: MM

• Component Name: Materials Management

• Description: The goods from one or more vendors made available to an enterprise for storage or sale on a consignment basis that are then kept in that enterprise's storage facilities. Consignment material is not transferred to the enterprise's valuated stock until it is withdrawn from storage for sale or use. As a result of such withdrawals, the enterprise incurs a liability towards the vendor. Such liabilities are settled on a periodic basis.

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• Key Concepts: 
  Consignment material is a type of inventory that is owned by the vendor, but stored at the customer’s premises. The customer pays for the material only when it is used or sold. This type of inventory is useful for customers who need to keep a large amount of stock on hand, but don’t want to pay for it until it is used. 
  
  How to use it: 
  In SAP Materials Management (MM), consignment material can be managed using the Consignment Fill-Up process. This process allows customers to order consignment material from vendors and have it delivered to their premises. The customer can then use the material as needed and pay for it when it is used or sold. 
  
  Tips & Tricks: 
  When ordering consignment material, it is important to ensure that the vendor has sufficient stock on hand to meet the customer’s needs. It is also important to ensure that the customer has sufficient storage space for the material. 
  
  Related Information: 
  Consignment material can be managed in SAP MM using the Consignment Fill-Up process. This process allows customers to order consignment material from vendors and have it delivered to their premises. Additionally, SAP MM also provides tools for managing inventory levels, tracking orders, and managing invoices.