SD / O2Cbeginner

SD Consignment Part 1: How Customer Consignment Works

Key takeaway

Customer consignment keeps your stock at the customer's site until they use it. Learn the four sub-processes — fill-up, issue, pick-up and returns — which ones move stock, which ones bill, and how special stock W tracks goods you still own at the customer.

What this complete series covers

Learn Consignment in a clear, practical sequence — from the basic idea to real project use, troubleshooting, and interview-ready understanding.

Who it is for: Best for SAP consultants, developers, and learners who want a practical understanding of Consignment.
Prerequisites: Basic SAP S/4HANA navigation and an understanding of the business process are helpful. Configuration or transaction steps require suitable access to a practice or project system.
Final outcome: By the end, you should be able to explain Consignment clearly, follow the main end-to-end flow, apply it in a project scenario, and troubleshoot the most common issues.

Part 1: SD Consignment Part 1: How Customer Consignment Works
Introduces the business case for consignment stock, the four standard consignment process steps, and how ownership and valuation differ from a normal sales order flow.
Part 2: SD Consignment Part 2: Configuring Consignment Document Types, Item Categories and Schedule Lines
Details how consignment order types, item categories, schedule line categories, and special stock valuation are configured and linked together to drive correct document flow and inventory postings.
Part 3: SD Consignment Part 3: Consignment Stock Valuation, MM Integration and Reconciliation
Understand how consignment stock at the customer (special stock indicator W) is valuated, how MM and FI integration works for goods movements, and how to reconcile consignment stoc

System and release assumptions: Examples focus on SAP S/4HANA. Exact apps, transaction codes, configuration paths, and field names can vary by release and deployment model.

Explanation

📌 KEY POINTS
✅ Consignment stock stays your property at the customer's location until the customer consumes it.
✅ Four sub-processes: fill-up (KB), issue (KE), pick-up (KA), returns (KR).
✅ Fill-up and pick-up only move stock between own stock and customer special stock (W) — no billing.
✅ Issue transfers ownership and is billed; returns reverse an issue and are credited.
⚠️ Stock at the customer still belongs to you — it must be counted and valued in your inventory.

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▶ WHAT THIS SERIES COVERS
Part 1: How customer consignment works
Part 2: Configuring consignment document types, item categories and schedule lines
Part 3: Consignment stock valuation, MM integration and reconciliation

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▶ 1. BUSINESS CASE

Customers want stock on hand without paying until use.
Supplier keeps ownership and risk.

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▶ 2. FILL-UP (KB)

Delivery to customer consignment stock; movement 631.
Stock moves from unrestricted to special stock W for that customer.

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▶ 3. ISSUE (KE)

Customer consumes goods → issue order and delivery; movement 633.
Invoice created; revenue and COGS posted.

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▶ 4. PICK-UP (KA)

Unused goods back to your plant; movement 632.
No billing.

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▶ 5. RETURNS (KR)

Customer returns consumed (already billed) goods to consignment stock; movement 634.
Credit memo.

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▶ STEP BY STEP

Create a fill-up order and delivery; check special stock W.
Create an issue order, delivery and invoice.
Create a pick-up.

✅ CHECKPOINT: MMBE shows customer consignment stock decreasing with issues and pick-ups.

Code example

ABAP Code

===== STEP 1: sub-processes =====Fill-up  KB → item KBN → movement 631 → stock to special stock W (no billing)Issue    KE → item KEN → movement 633 → billing F2Pick-up  KA → item KAN → movement 632 → back to own stock (no billing)Returns  KR → item KRN → movement 634 → credit (RE) ===== STEP 2: stock views =====MMBE: special stock W per customer | MB58 consignment and returnable packaging at customer

Real project scenario

A spare-parts manufacturer kept consignment stock at 40 dealers but recorded shipments as normal sales with deferred invoices. Ownership, stock and revenue were unclear, and counts never matched. Switching to the consignment process with special stock W, monthly consumption reports from dealers turned into issue orders, and periodic counts gave accurate stock and revenue.

Common mistakes

Treating consignment fill-up as a sale.
Billing fill-ups.
Not counting stock at customers.
Confusing pick-up with returns.
No consumption reporting process.

Best practices

Use the four sub-processes.
Agree consumption reporting with customers.
Count consignment stock periodically.
Monitor special stock W.
Train sales on billing-relevant steps.

Interview angle

Questions: "Explain the consignment process", "Which consignment steps are billed?", "What is special stock W?"
Strong answer: fill-up 631 to special stock W, issue 633 billed, pick-up 632 not billed, returns 634 credited; ownership stays with supplier until issue.

Practice this lesson

Quick check

1. What is the primary business purpose of the consignment fill-up process in the Sales & Distribution Order-to-Cash cycle?

2. Which special stock indicator is used in SAP inventory management to identify consignment stock that physically resides at the customer's location but is still owned by the company?

3. Which consignment sub-process transfers ownership to the customer and is billed?

Interview questions

1. Suppose you inherit an existing Consignment solution. How would you review it before making a change?

Answer it in your own words first, then compare.

2. A spare-parts manufacturer keeps stock at dealer sites and invoices monthly based on usage. How do you implement it in SAP?