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Customer Consignment

In this blog, I explain the basics of the customer consignment solution introduced in SAP Business ByDesign in the 2105 release.

There are also 2 videos for your convenience available:

  • A short overview video here and
  • A detailed video with a system demo here.

A consignment process can be viewed at from the selling or receiving side. With Customer consignment, we only focus on the selling company managed in SAP Business ByDesign.

Consignment stock is comprised of goods which are send to and stored at the customers location (consignee), but which are owned by the sending company (consignor). The customer is only obliged to pay for these goods when they remove them from consignment stock. The customer can return consignment goods which are not required without being invoiced.

It has advantages for both sides. The consignor can establish a comprehensive long-term business relationship and the consignee can reduce the capital lock-up having at the same time immediate availability of the goods.

The consignment process typically has a negotiated a long-term contract (1) as a basis. This can be optionally reflected in SAP Business ByDesign but is not a must. Then, the provisioning of the products to the customer happens with an initiating fill-up sales order (2) and following with a standard outbound process (3) reducing the warehouse stock and increasing the consignment stock but without changing the ownership.

When the customer issues the goods, an information is given to the consignor which results in the transfer of the ownership, the reduction of the consignment stock (4) and hence, the invoices can be created (5).


The return and adjustment processes are enabled as described in a later section.



To use customer consignment functionality, you need to scope it in the Business Configuration > Sales > Product and Service Portfolio for Sales > Sell Consignment Products.

Furthermore, we recommend that you prepare the product data financial view and assign a special account determination group per consignee/customer and business residence to show the consignment inventory on the balance sheet.

Basic Aspects of Customer Consignment

Consignment stock can now be identified with the consignment indicator and the Custodian ID – as the possessor to whom the products were shipped-to – in the stock overview. That’s also why the site ID is not filled since the stock is not located in the own warehouse although still in the own ownership.



Consignment Indicator and Custodian ID in the Stock Overview


For inventory valuation and tax reasons, the consignment stock overview shows additionally the Account ID and the Fill-up site.

The Account is the customer to whom the products are sold. One account could have several different locations where the consignment stock is located (= custodian).

The fill-up site from which the products were initially sent to the customer is displayed because inventory valuation could differ from one site/business residence to another.

Both fields are consistently used through the process.


Consignment Stock


Furthermore, you can see the sales order ID displayed in the stock overviews which shows if a consignment issue sales order allocates a certain quantity of consignment stock until it is released. It also prevents other documents from allocating the same stock.

The inventory values in consignment are provided a new common task ‘Valuated Consignment Stock’ in the Physical Inventory Work Center. This is similar to the valuated stock for goods in your warehouse.


Valuated Consignment Stock


For those of you working with serial managed products that you use in consignment, you can use the ‘Consignment Serial Overview’. It shows all the serial IDs which are located at the custodian.


Consignment Serial Inventory


Fill-up and Issue Process of Customer Consignment (Logistics)

Consignment fill-up

The process starts with the consignment fill-up process to send and provide the goods to the customer/consignee without changing the ownership and thus without invoice relevancy.

You start with the creation of a sales order only with the difference that the item type should be changed to ‘Product – consignment fill-up’. The consignment fill-up is not invoice relevant. This item type is copied into the following item line for easier maintenance. Sales Orders mixed with consignment item types and other item types are allowed. If you want to default the consignment fill-up item type per product you can set the consignment item group in the product data.

Please also pay attention to the account and ship-to party. Often, these are the same, but you could have different ship-to-parties for one account. The ship-to party ID will be shown as Custodian ID in the consignment inventory.


Consignment Fill-up Items in Sales Order


The rest follows the ‘standard’ shipping process with or without using the customer demand release step or with or without using warehouse tasks or the Third-party logistics processing. In many screens, you have the option to select consignment documents.

With the Release of the outbound delivery, the consignment stock is increased, and the warehouse stock is reduced. The corresponding financial postings and the inventory valuation are described in the financials section.


Stock Overview after Consignment Fill-up


Consignment Issue

Further down the line, the customer uses the goods and provides the information on the quantities that are removed or issued from consignment and can be invoiced.

Also here, the process starts with creating sales order items, this time with the item type ‘Product – consignment issue’. The consignment issue is invoice relevant. The defaulting of the item type into the following item lines applies also for the consignment issue item types.

Please also use the corresponding account and ship-to party (= custodian) since these are essential for the consignment inventory postings together the ship-from (or fill-up) site.

Furthermore, the issue date on item level is important for tax and inventory valuation purposes.

In addition, the ship-from (fill-up) site is crucial for proper tax and inventory valuation. It can be either entered manually, or it can be proposed by using the ‘Allocate consignment’ Button.

The Allocation of consignment checks the consignment stock situation to make sure these quantities are available in consignment stock, and no negative consignment stock is posted. It proposes the ship-from site automatically if there is enough stock for the full quantity. If there are more sites to serve the full quantity the site with the most stock is proposed. Only a successful (green) allocation status allows the release and posting of an issue order item. In case the full quantity cannot be allocated to one site, you can use the Button Assign Source of Allocation that will show the available quantity and site information.


Consignment Issue Items in Sales Order


If the product is batch-managed, the identified Stock ID must be added in the detail section. Similar for serial-managed products the serial number has to be maintained in a separate tab.

After the release of a consignment issue sales order item, the consignment stock for the corresponding combination of Account, Custodian, Product (eventually identified stock or serial number), ship-from (fill-up) site is reduced. Technically, there is an outbound delivery created to trigger the goods and activity confirmations. Then, the items are relevant for invoicing and appear in the open invoice requests and can be invoiced.

Stock Overview after Consignment Issue


If a credit limit check is enabled for a customer, also sales orders with the item type ‘Product – consignment fill-up’ are considered in the credit limit check. It means system checks if the value of the fill-up items is in the range of the given credit limit of the customer. If the credit limit is exceeded the fill-up sales order cannot be released for delivery execution.

For sales orders with item type ‘Product – consignment issue’ the system will not check the credit limit since goods already have been consumed by the customer and the creation of the invoicing should not be restricted.

Furthermore, all the open invoices – including them for customer consignment – reduce to the open credit limit values.

If you work with approvals in sales orders, you can include or exclude the item types ‘Product – consignment Fill-up’. Or ‘Product – consignment Issue’.


The corresponding web services and options to use the excel upload for the sales order items are enabled.

Fill-up and Issue Process of Customer Consignment (Financials)


For the postings along the consignment process, specific valuation data on level Company/Business Residence/Consignee is needed. Therefore, in the product master data a new Valuation level is available to maintain the following information:

  • Account Determination Group: The recommendation is, to apply a separate Inventory account to display the value of consignment stock in reports (e.g. in Balance Sheet). For this, you have to create your own Account Determination Group for customer consignment.
  • Perpetual Cost Method: Standard and Moving Average are supported.
  • Inventory Costs per Set of Books: Please consider, that for Standard the most accounting principles prescribe to apply the same cost amount on consignee level as on Business Residence level!

The determination of the Moving Average costs happens on consignee level.


Product Data – Valuation Level Business Residence/Consignee

The maintenance of consignee valuation data can be done manually in material master data and with upload of an Excel template.

Furthermore, the system will set up the data automatically by copying the valuation data from Business Residence level when it recognizes – during Fill-up posting – that for this consignee these data are not available in the product master data.

Consignment Financial Fill-up Posting

With the Release of the Outbound Delivery and its related confirmation a Journal Entry the type Consignment Fill-up will be created with:


Consignment Financial Issue Posting

Once the Sales Order for a Consignment Issue is released the Journal Entry of type Issue for Consignment will be created:


Dependent if the automatic Revenue Recognition is activated in solution scope, the posting on debit side is made on Deferral account or Material Consumption account.


Return Processes and Adjustments


The customer can return consignment stock before they used or issued it without the obligation to pay (6). This can be initiated with a the ‘New Custodian Goods Return Notification’ from the Inbound Logistics work center (renaming of the former ‘New Parts Return Notification). Here all the relevant characteristics [account, sender (= custodian), product (evtl. identified stock, serial number), fill-up site] for posting the consignment stock have to be maintained. This is the trigger for the warehouse operators to receive the products back to the warehouse. With the corresponding inbound delivery, the consignment stock is reduced, and the warehouse stock is increased.


Custodian Goods Return Notification for Consignment Stock


Furthermore, an adjustment of the consignment stock (7) can be necessary for example due to some quality issues or differences which cannot be corrected otherwise. With the ‘New Consignment Stock Adjustment’ common task in the Physical Inventory work center, you also have the option to post the absolute quantity in consignment stock or just an additional receipt (Delta Receipt) on top of the existing quantity. Also here, the Account ID, Custodian and Fill-up Site is mandatory for posting.



New Consignment Stock Adjustment


Customer Return after the invoicing for consignment goods (8) can be processed as usual customer return.


Tips and Tricks

If you miss some of the customer consignment related fields, please use the personalization to enable it.

More Information

SAP Business ByDesign Help searching with the words “Customer Consignment” or in the related application areas of the Library as well as in the Business Scenario section.





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  • We're trying to replicate the scenarios and we have some clarifications:

    • Whats the scenario when an Account ID will have different Fill Up site which is equivalent to a Business Residence?
    • Why is the consigned quantity not reflected when we clicked on Open Consignment Inventory but can be viewed in the Stock Overview?
    • Hello Mitch,

      with regards to bullet point 1:

      There is no direct relation between account ID and Fill-up site. These are two different aspects:

      A customer (account ID) could have several locations where they store the consignment stock (= different ship-to parties) which are represented as custodian ID in the stock overview.

      The original fill-up site is only relevant from the view of the sending company (consignor) who has to take care about the inventory valuation and the correct tax calculations. The consignment stock has to be valuated based on the original fill-up site.

      with regards to bullet point 2:

      The consignment inventory only shows consignment stock quantity - that's why there is no special indicator because it would be the same for all line items. The sum of different fill-up sites in the consignment inventory is same as the consignment quantity in the standard stock overview.

      Best regards,


      • Thanks Iris for the feedback.

        I have a follow up question, i'm already on the process of Product-Consignment Issue and i've encountered this error.

        Did i miss out anything on the configuration?

        Thanks for your support






        • Hello Mitch,

          for the consignment issue, the allocation is mandatory. You need to press the <Allocate Consignment> Button to get a 'green' Allocation status. This will be the case if there is enough consignment stock for the product/custodian/account/Fill-up site combination. You could check either with the consignment stock overview or with the <Assign Source of Allocation> Button. Please check and try again to allocate.

          If the communication error (2nd one) remains together with the red allocation status - although everything seems o.k., please raise an incident.

          Best regards,


          • Thanks again Iris.

            I've already done the steps that you mentioned when i encountered an error. Your feedback confirms that i should raise an incident.


            Best regards,



  • Hi Iris,

    As of now we use Stock Transfer Orders to realize consignment processes. In this process, a good is in status "in transit" after releasing the outbound delivery. This is very convenient, as it makes transparent what quantity already is in the consignment location storage and how much is still in transit.

    With the new consignment feature I cannot find this level of transparency. As you stated above "With the Release of the outbound delivery, the consignment stock is increased, and the warehouse stock is reduced." I think this does not quite replicate the reality, as the actual consignment storage is not correctly outlined in this process. Therefore, we do not know what quantity is on stock at the consignment site.

    Also, I think maintaining minimum stock and running MRP runs is not possible with the consignment storage areas. Therefore, stock would need to be planned manually on the basis of the consignment overview. Is this correct? This would increase complexity of the consignment procces by a lot.

    Do you share this point of view and will these features be included in the near future?


    Thank you so much.

    Best Regards,


    • Hello Robin,

      Thanks for checking the new customer consignment functionality.

      With regards to the ‘in transit’ status, it is currently not included in the first release of this new functionality. How to you get the information from the customer (web service, Email, etc.)? if this is a mayor need, you can either further use the stock transfer process or - to improve the new solution - you can also create an influencing request which helps us with the votes to prioritize and focus on a specific topic.

      With respect to the planning of consignment fill-up, it is currently also not included in the first release. We are aware of this requirement and it is a candidate for a later release. Also here, an influencing request helps to see how much it is requested.

      Best regards,


  • Hi Iris Zimmermann,

    Many thanks for this detailed blog.

    We were able to post Sales Order (389 in my case) & Outbound Delivery as shown by you. Also, currently, we have activated revenue recognition in scoping for our client, where at the time of revenue recognition run I get the message "Document item 389/10 was not processed because no changes were expected".

    I have rechecked the Master Data & Steps followed and everything seems ok to me. Could you help me figure out what could be the reason for the above error message.?



    • Hello Kshama,

      thank you for interest in consignment functionality and this blog post!

      In general, only the accrual method Recognize at point of invoice is supported. The message you receive indicates that the item 389-10 is not invoiced yet. Therefore I would ask you to check, if this item has been invoiced and whether for the customer invoice a Journal Entry exist.

      Best regards!


      • Hello Katrin,

        I did check for the customer invoice. Yes, it is created and Journal Entry exists for the same. The accrual method in cost & revenue WC for sales order 389-10 is Recognize at point of invoice. I am unable to identify the reason for the message in the revenue recognition run.



        • Hello Kshama,

          this message can have different reasons. Therefore I would ask you to create an incident with the hint to forward it to me. Then I will analyze it in your system.

          Many thanks and best regards!


  • I would like to know , what all are the impacts if i dont configure the maintain consignment valuation at product level? As my company have 20000 + products and any time any product can be given as consignment to any customers. Adding each product with multiple customers for consignment valuation is very difficult, do you have any tool to upload the valuation for all product?

    • Hello Bijo,

      thank you for interest in consignment functionality and this blog post!

      When you do not maintain consignment valuation data at product, with the first Consignment Fill-up the system will set it up automatically by copying the valuation data from the Business Residence level. The disadvantage is just, that in the postings the same GL accounts are used which means, that for example for the Consignment Fill-up the GL account on debit side is the same as on credit side. Thus it is not possible to display the value of consignment stock separate in Balance Sheet.

      For mass maintenance of consignment valuation data, the following 2 options are available:

      • Migration by using the migration tool in Business Configuration workcenter
      • Mass upload by using the Microsoft Excel template in workcenter Inventory Valuation > Master Data > Material Unit Costs. There you find the action Import Unit Costs > From Microsoft Excel.

      Best regards!


  • Hi Iris,


    Assuming that my product are set as  ‘Product – consignment fill-up’, do you think we could have a TPOP process.

    The customer send a fill-up order that is directly fulfilled by a drop-shipment from the supplier.

    I guess that the Consignment issue would work the same, if the fill-up is working.

    • Bonjour Christian,

      in the first release 2105, we only support fill-up of consignment stock from a site within the sending company.

      If there is a need to extend the functionality to support external fulfillment with TPOP (Third-Party-Order Processing) together with consignment, I would like to ask customers and partners to create an influencing request which will help us to prioritize.

      Thanks and best regards,


    • Hello Mitch,

      please check the existing web service to create sales orders. You should find an option to maintain the item type. With this you should be able to create consignment fill-up and consignment issue order items.

      Best regards,


  • Hello Iris,


    We have been testing this new functionality, with 2 of our customers in Distribution Business.

    What we found out is that it is necessary to scope Service - Service and Repair in order to be able to create consignment return, if not the common task New Custodian Goods Return Notification is not available in the system.

    *Also note that its name was changed for English but not for Spanish language.*

    We expected that with the activation Business Configuration > Sales > Product and Service Portfolio for Sales > Sell Consignment Products, all necesary tools should be activated by default in the system, as not all customer has already Service module, and for sure will not use it.

    Could you confirm if it is the expected behaviour or even if there is any plan to improve it?