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Author's profile photo Rohit Zalani

The Consignment Process Limitations

In several industries like the Medical Devices Industry, it is a common business practice to place materials at a customer location and retain ownership of the stock unless they are consumed by the customer. This is to provide “stock on premise” to the customers like Medical Hospitals and Practitioners. It is also due to the fact that some of the materials cannot be determined unless the actual procedure is carried out and hence it is not feasible for the customers to purchase and stock every variation of the product.

SAP’s Consignment Processing is a natural process to use for supporting such a business scenario. However, SAP Consignment Processing is limited in its capability and use of this functionality can demand a number of enhancements and additional manual steps.

From the Sales and Distribution perspective, the following limitations exist:

  • Consignment stock is either tagged to the Ship to or to the Stock Partner. However, a customer sub-location ( like Department, Receiving locations etc ) available in the customer master cannot be used to show consignment stock at the customer sub-location. This requires creating additional business partner data and leverage them as “Stock Partner” in the customer master.
  • Cross Company code transactions are unable to show the products sent to the customer on behalf of the Selling Company Code as consignment stocks under the selling company code. It shows the consignment under the shipping company code.
  • Stock in Transit is not supported using VLPOD transaction. While you can reflect a consignment stock as in transit, SAP does not support use of VLPOD for confirmation of consigned stock at the customer. Instead, one has to use MIGO in order to confirm receipt and remove the consignment stock in transit
  • Consignment Pick-up does not placed received stock in Return Blocked stock. It is directly posted to unrestricted stock. Also, you cannot ship products from one plant and receive the consigned stock back into the other unless you show a receipt in the original plant and then do a stock transfer and place the stock as consigned stock in the receiving plant.
  • Consignment transfer is not supported. You cannot directly transfer a consignment stock from one customer to another OR between the Customer and the Field Service Associate. It expects a pick up and a fill up transaction.
  • Consignment Report is limited. The Consignment report does not provide critical details like the expiration of the batch, the number of days that the stock was in consignment, ability to show a customer ship to and sub-location ( e.g. A Hospital and its different departments ) to name a few.

In addition, many customers would like to include a percentage of the consigned stock in their production planning process based on consigned stock pick up volumes and so that the plan does not over stock / understock the customer.

I would encourage our forum members to please share their comments and experiences of using Consignment or an alternate approach to align the needs of the businesses.

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