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Consignment invoice template for Procurement

today i will explain the meaning of consignment  in general then i will go into the details of   the vendor consignment process and i  will run a full demo on the SAP S4HANA i have been doing these videos for a little  more than two years now and i'm almost at 14   000 subscribers and i have published more than  100 videos and i never actually imagined the   amount of effort and time i will be able to put  in this channel i really enjoy doing these videos   but still keeping this channel running requires  a lot of time and effort so i really need your   support if you like the content you see in this  channel then please share subscribe comment   like and also if you would like to support the  channel financially you can find a link to my   patreon page in the description of the youtube  video thank you and i hope you enjoy watching this   one to understand the meaning of consignment let's  take a very simple example we have a company that   produces chairs and we always have a need for wood  since this is one of the main components we use in   our production so we made a deal with our supplier  to transport a big amount of wood into our storage   location without selling the stock to us so the  owner of this stock is still the supplier but   we have the right to use the stock in  our production or for any other reasons   whenever we want and once we consume or use this  stock we are going to post the financial entries   for the goods receipt and the goods issue at the  same time and after a period a week or a month as   we agree with the supplier we are going to count  the full amount of wood that we used and we are   going to post a supplier invoice for the total  amount this is called the consignment process   the wood inventory is called the consignment  inventory and the supplier is called the consignor   and the customer or our company is called the  consignee now as you see in this situation   the consignee is happy since we can guarantee that  we will have continuous supply of raw materials   the consignor is happy since he can guarantee that  we will always use his raw materials and we are   not going to look for other suppliers and so it is  a win-win situation and there are many advantages   and disadvantages to the consignment  which is not the topic of our video today   so if we look into this process in sap it is  divided into two completely separate processes   the part of the vendor the supplier providing the  stock to another company is called the customer   consignment and the part of the consignee or  the customer taking stock from the supplier is   called the vendor consignments so today we are  going to assume that we are the chairs company   the customer or the consignee and we are going to  obtain consignment inventory from our supplier who   will be the consignor so today i will go into  the details of the vendor consignment process   so the first step is to agree with our supplier  to transfer the stock to our storage location   and to do this we are going to create a purchase  order and as you will know when we create a   purchase order there is no financial entry now  the second step is to physically receive the   stock into our storage location and when we  do this we are going to post a goods receipt   this goods receipt will increase the quantity  of the stock for consignment related to this   supplier and as you remember this stock is not  owned by us it is owned by the supplier until   we consume it so we cannot post any financial  entries at this stage we cannot post any value   to the stock because we cannot have this stock in  our balance sheet so this goods receipt will be an   unvaluated goods receipt i have already explained  this in another video before for the unvaluated   items and an unvaluated goods receipt i will leave  you a link here or here so you can go and check   the video so when we post a goods receipt it will  increase the quantity without increasing the value   now the third step is to post a good issue when  we use this this raw material so either we use   it for production we use it for a cost center we  use it for any reason we are going to post a good   issue now when we post i got the issue logically  we have to post two financial entries the first   one is the goods receipt of the stock because  we are transferring the ownership of the stock   from the supplier to us so this will be a debit to  the stock and the credit to a GR/IR account or any   balance sheet account now the second financial  entry is the consumption of the stock for the   production or cost center and this entry will be a  debit to a consumption account and accurate it to   the stock account now if you look at the  two financial entries you can see that we   have the stock debit and the credits so they can  actually go against each other so the remaining is   two accounts one account for GR/IR and the other  account for consumption and this is what we will   get in SAP so SAP can actually provide  the two cases it can provide that we have   a transfer of the product first to our own  storage location to our own stock and then   posting the financial entry of goods receipt then  doing another movement to consume the items then   posting the financial entry of consumption  or doing the two steps at the same time   so this is the goods issue now the last step  is posting the invoice the supplier invoice   and the financial entry in this case will be  accredited to the supplier and that debit to   the GR/IR account so these are the steps of the  process purchase order goods receipt goods issue   invoice now there is one more step that is  specific to consignment because when we create   the purchase order in step number one we actually  don't include any price or any conditions for   purchasing in the purchase order since we are  not actually buying the products we are only   using them we are only moving them to our storage  location until we use them so here's a question   if there is no price in the purchase  order when we post the supplier invoice   where will sap get the price that we agreed  on with the supplier this will come from an   information record an info record the info record  is actually step number one we will do this before   we create the purchase order and then the precious  order will have no prices but the prices will come   from the info record so the steps now are infor  record purchase order goods receipt goods issue   invoice now let's go into the system and do  the process end to end this way it will be   easier to understand this is where the  interesting part starts so let's go to   step number one creating an info record so the  info record is transaction me11 and you can also   find it under logistics material management  purchasing master data and for record creates   so the vendor info record is created on the level  of vendor material purchase organization plants   and also you have to choose an info category since  you can have different info records based on the   category so the category we are using today is  consignment now we start with the general data tab   and for our example we don't need to add anything  in this tab so let's move to the purchase   organization data one now you have to fill the  mandatory information so the plan delivery time   let's say one day standard standard quantity this  is the standard quantity we usually order from the   supplier this will not impact anything for our  demo so let's say 50 and the purchasing group   is very important zero zero one this is the same  purchase group we would use in the purchase order   and then we have the net price because as i  mentioned the price will not be available in the   purchase order so we have to maintain it in the  info record so the purchase price the net price   let's say it will be 15 inr per one kilogram  now you can also go to the conditions tab here   if you want to maintain the rest  of the conditions so if you have   rates or if you have customs duties or any  other conditions you can maintain them here   this is exactly similar to the conditions  you can find in the purchase order then save purchasing info record created okay so  this is step one now to step number two   the precious order creation so  the precious order transaction is   me 21n i already explained this many times  so we start with the vendor code ag01 then the purchase organization AG00  the purchase group 001 the company code   is AG01 and then the material is 273 and there is a very important field we have to  use here the the item category so until now if   you check this po it is exactly similar to any  normal po we created before so how can we tell   sap that we are creating a consignment po we  can do this by using the item category so if we   insert if you check this we have different item  categories so we are going to use consignment k   so now sap understands that we are going to  use the consignment process then we insert   the plant ag-10 and quantity let's say 200 and  i will also insert the storage location ag 11   so now as you see i used the same data that i used  when i created the info record so the pressure   organization precious group company code the plant  are all the same and also the vendor the material   are all the same like the info record  this is how sap will be able to link   this precious order to the price we have  in the info record now i'm going to save and this is our purchase order number so this  is step number two now to step number three   posting the goods receipt to post a  goods receipt the transaction is migo so i will post a goods receipt purchase  order here is the po number enter and then   okay we have everything now if you check this  goods receipt how does sap know that we are going   to receive a consigned stock not a normal one  if you check the details and go to where you can   see that the movement type is 101 k also so go to  receipt for consignment stock so this is how sap   will know that this stock is a consignment stock  not a regular one now check document ok and post   so this is it for step number three so we created  an info record a purchase order and then we posted   a good receipt now if we check the financial  entity for the goods receipt so display enter   document info financial documents no subsequent  document found in accounting why because as i   explained until now the inventory is not owned by  us it's owned by the supplier it is just stored in   our storage location so we are going to to have a  quantity without a value since we cannot post this   stock to our balance sheet so it's only a quantity  posting without a value posting so there is no   financial accounting document okay now before  we move into the step number four which is the   goods issue let me show you some uh reports that  can display the consignment stock we have in our   company there are two reports i want to show you  so the first one is mmbe the second one is mb54   let me go to the menu and show you where  you can find these reports so slash o create now to display the reports go to logistics  material management inventory management   environment stock and then we have mmb stock  overview so mmbe is a very famous transaction   it will show you for any material and plant it  will show you the total amount of stock we have   so in this transaction as you see in our plant  ag-10 storage location ag-11 we have vendor   consignment of 200. so this is the quantity  we have but as you see it does not show the   vendor code so we don't know which vendor is  the owner of this and we don't see any values so   to see the values and the vendors you can use the  other transaction that was made specifically for   consignment so the other one is you can find  under consignment consignment from supplier   and that transaction is mb54 stock overview so  this one you also have to insert material or   separate materials and that plant and then  display now this one will show you that   for the vendor ag01 material 273 we have  some stock in storage location ag-11   we have 200 kilograms and the price of purchase  was 15 inr per one so the total value is 3000 inr   so this is the overview of our consignment stock  if you have multiple vendors so if we buy the same   stock as consignment for multiple vendors you will  have different lines for every vendor here so the   consignment stock is displayed on the level of the  storage location and the vendor who owns the stock   so this are this is it for the reports  now i'm going to move to step number four   which is using the consignment stock so  as i mentioned in the process overview   now we have two scenarios the first one is to  consume directly from the consignment stock to   production or to a cost center and the second one  is to first transfer the stock to our own stock   so move it to our own stock and in this case we  will post a financial entry as if we are buying it   and then consuming our own stock to production  cost centers so we have two steps in the scenario   so now i'm going to show you the two scenarios  let me start with the first one so i'm going to   consume directly from the consignment stock and we  can see the financial entries so to consume from   the consignment stock the transaction is again  migo so go to goods issue other and material 273 quantity let's say i'm going to  consume 50 pieces 50 kilograms where   so the plant is ag-10 the  storage location is ag-11 and for the movement type we have to use  201k so we also have to mention to sap that   we are using consignment stock enter now  we have to insert the account assignment   since i'm going to post a consumption to a  cost center or a goods issue to a cost center   so we have to insert the cost center and as  you see we have another tab called partner   now if we try to post as is now and i  put click on check we will get an error   that we have to enter a vendor for specif for  special stock k why because as i just mentioned   the consignment stock is maintained on the  storage location and vendors so whenever we do any   movements we have to mention the vendors so the  partner here we have to mention our vendor ag01 enter check document is okay and post material document posted now let me  check the financial entry so display   enter document information financial documents  now if we go to the accounting document you   will have two gl accounts so the consumption is  debit and the credit is our payable consignment   this is similar to the grir account and we  maintain it in obyc under transaction kon   i will not go into the configuration today but  you just have to understand the financial entry   so we have a debit to the consumption account  which is normal since we consumed the item   and we have a credit to our grir account  which is the payables consignment this one   we will use again when we post the supplier  invoice so this is the financial entry for   the goods issue of consignment stock to  a cost center or to a production order   now let's move to the second scenario which  is first moving the stock into our own stock   and then consuming it to production or to a  cos center so let me go back now to transfer   the items from consignment stock to standard  stock i'm going to use also in my geo but   this time i will use transfer posting and then  the material we are going to transfer is 273   the plant is ag-10 the storage location  ag-11 and the same for the destination and special stock is consignment okay so i'm  moving from the stand the consignment stock to   our standard stock now the movement type we are  going to use is 411 so if we go to where here   we will mention 411 transfer posting  from consignment to owen stock   and then we also have to mention  the vendor so the vendor is ag01   and we have also to mention the quantity so  let's say we are going to transfer 100 kilograms   check document is ok and post so now we  transferred 100 kilograms from the consignment   stock into our own stock okay now let me display  the financial entry display financial entry   document info fi documents accounting documents  so we moved the stock from the consignment stock   into our own so the entry will be a debit to  the stock and the credit to the grir account   which is called payables consignment in our  case and as you see this is the same account   that was used when we posted the goods  issue in one step from the consignment stock   and it is exactly the same as grir account but for  consignment now the second step is to consume our   own stock for any reason to a cost center or to  production order and this is exactly similar to   all the consumption to cost center i used in  all my other videos so let's go back to migo go the issue and other again material will be  273 where so the movement type this time is 201   without consignment since i'm going to go to  the issue from my own stock the plant is ag 10   storage location is ag 11 and  account assignment code center 1   check we have to insert a quantity so the quantity  let's say i'm going to consume 40 kilograms check   and post now let me go back to the reports or  before we go we can also check the financial entry   for this goods movement it is similar to what  i showed before in many videos but let's see it   in order to have a full video anyway so display  document info fi documents we have one accounting   document so this accounting document has a credit  to the raw material and add it to the consumption   raw material account so this is for the financial  entry for goods issue from our own stock   now let me move back to the reports  that i just displayed the mb54   so we can see the impact on the  report so this is our report and i'm going to display the report for  our material and the plant display so   now from the consignment stock we only have 50  kilograms remaining because we consumed 50 and   we transferred 100 to onstock so this report is  showing that we only have 50 kilograms remaining   on this vendor and the total value is 750 inr now  if i want to see the details of the other stock   types we have because we still have some stock in  our own stock i have to go to mmbe so mmbe is in   stock mmb stock overview so display now as you  see here we have unrestrict unrestricted use 60   and we have window consignment 50 so we have 60 in  our own stock and we have 50 in window consignment   so this is how you can see the details and you can  also go to the detailed display this will show it   in the more obvious way so we have unrestricted  use 60 and we have consignment unrestricted 50.   so this is the overview of our stock now the last  step is to post the invoice so as i mentioned in   the explanation at the end of every period maybe  a week or a month we are going to count the total   amount the total quantity that we used and we are  going to raise and post a vendor invoice for this   amount so if we go back the transaction to do this  is under material management inventory management   environment consignment consignment from  supplier and this one mrko liability so   the transaction is mrko this transaction is used  to settle the liability we have to the supplier   so if you click we have two options we can  either display or settle so if you display   it will generate a report telling us how much  we should generate invoices for to the supplier   and if we click on settle then sap is going to  post automatically the supplier invoices i will   start with the display and the vendor i will  insert the vendor code ag01 and plant is a g10 material 273 and display so as you see we have two  lines that we should invoice the first line was   the consumption of 50 pieces of 50 kilograms and  the second line was the transfer of 100 kilograms   and this is the amount 750 plus 1500  so if you sum so the total is 2250 inr   so we should raise an invoice to the supplier for  this amount and as you see in the information it   is not settled we did not create the invoice  yet we did not post it so i will go back and click on settle and execute so now as you see the information now is document  created and sap has created one invoice if you   click here so this is the invoice that sap created  so we have a credit to the supplier for 2250 inr   and we have debit to the payables consignment  account the same account that was used when we did   the goods issue and when we did the movement from  these from the consignment stock to our own stock   so the same account as i told you this is the  same as grir account but it's used for consignment   so the entry is credited to the vendor and  debit to the grir accounts and this is the   end of the vendor consignment process now to  see the full picture we can also display the   gline items for this account so this one is 169  900. let me open a new screen to display the   line items of any gl account the transaction  if sfbl 3n 169 900 and i'm going to display   all the open items execute so the items  that start with four these are material   documents and the ones that start with  five are the invoices so if we do like this so we have two documents that were generated from  migo from the goods issue or the stock transfer   so the first one is for 750 the other one  is for 1500 so this is the 100 units the   100 kilograms and this is the 50 kilograms  and then we have a debit from the invoice   for the same amount so the net is zero  because this is exactly like the grir account   so whatever we posted was cleared when we  posted the invoice i hope this clarifies the   process i wanted to show you the overview of this  account because it can be a little bit complicated   but i hope now that it's clear to everyone and you  completely understand i hope you appreciate this   video if you have any questions you can send me  on youtube or on linkedin and also don't forget   to subscribe to the channel share like comment  interact with the video in any way to support me   to continue making these videos and i will  see you again soon thank you for watching!