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How to Configure Consignment Stock in SAP S/4HANA MM 2023 – Step-by-Step Walkthrough

Consignment stock is a critical inventory management process where a supplier provides goods to a customer but retains ownership until the goods are consumed or sold. In SAP S/4HANA MM (Materials Management), configuring consignment stock ensures accurate tracking, valuation, and financial reporting.

This guide provides a detailed, step-by-step walkthrough of configuring consignment stock in SAP S/4HANA MM 2023, covering master data setup, transaction processing, and reporting. Whether you’re an SAP consultant, business analyst, or inventory manager, this post will help you implement consignment stock efficiently.

Understanding Consignment Stock in SAP S/4HANA MM

Before diving into configuration, it’s essential to grasp the concept, business scenarios, and key SAP components involved in consignment stock management.

What is Consignment Stock?

Consignment stock is a vendor-managed inventory (VMI) model where:

• The supplier owns the stock until the customer consumes or sells it.
• The customer stores the stock in their warehouse but only pays when the material is used.
• No goods receipt (GR) posting occurs at the time of delivery—only when consumption happens.

Example:
A manufacturing company receives 1,000 units of raw material from a supplier under consignment. The stock remains the supplier’s property until the company uses 200 units in production. Only then does the company record a liability for the consumed quantity.

Key Business Scenarios for Consignment Stock

Consignment stock is useful in:

• Just-in-Time (JIT) manufacturing – Reduces inventory holding costs.
• High-value or perishable goods – Ensures payment only upon usage.
• Supplier-managed replenishment – Improves supply chain efficiency.
• Retail consignment – Stores pay suppliers only after selling goods.

SAP S/4HANA MM supports two main consignment models:

1. Consignment at Customer’s Site (Standard Consignment) – Supplier owns stock until consumption.
2. Consignment at Supplier’s Site (Subcontracting Consignment) – Customer owns stock but stores it at the supplier’s location.

SAP S/4HANA MM Components Involved

Configuring consignment stock requires interactions between:

Component	Role in Consignment Stock
Material Master (MM01/MM02)	Defines consignment-specific material attributes.
Vendor Master (FK01/XK02)	Marks vendors as consignment suppliers.
Movement Types (MIGO)	Special movement types (e.g., 411K, 412K) for consignment postings.
Valuation & Accounting (OBYC, MR21)	Ensures correct financial postings (e.g., price differences, consumption liabilities).
Inventory Management (MI04, MB5B)	Tracks consignment stock levels and consumption.

Prerequisite Master Data Setup for Consignment Stock

Before processing consignment transactions, you must configure material master records, vendor master data, and plant parameters.

Configuring the Material Master for Consignment

The material master must be consignment-enabled with the following settings:

Steps:

1. Transaction: MM01 (Create) / MM02 (Change)
2. Navigate to:

– MRP 1 View → Set Special Procurement Key to “K” (Consignment).
– Accounting 1 View → Ensure Valuation Class is assigned (e.g., 3000 for consignment materials).
– Purchasing View → Define Standard Price (if applicable) and Moving Price for valuation.

Example:

• Material: RAW-MAT-100
• Special Procurement Key: K
• Valuation Class: 3000 (Consignment)

Pro Tip:
– Use MM17 to mass-change special procurement keys if multiple materials require consignment setup.

Setting Up the Vendor Master for Consignment

The vendor must be marked as a consignment supplier in the vendor master.

Steps:

1. Transaction: FK01 (Create) / XK02 (Change)
2. Navigate to:

– Purchasing Data View → Set Consignment Indicator (X).
– Accounting View → Ensure Reconciliation Account for Consignment is assigned (e.g., 200100).

Example:

• Vendor: SUPPLIER_A
• Consignment Indicator: X
• Reconciliation Account: 200100

Validation:
– Run FK03 to verify the consignment flag is set.

Plant and Storage Location Configuration

Ensure the plant and storage location allow consignment stock postings.

Steps:

1. Transaction: OX10 (Plant Parameters)
– Verify Consignment Allowed flag is active.
2. Transaction: OX09 (Storage Location)
– Ensure storage locations are consignment-enabled (if using storage location-level tracking).

Example:

• Plant: 1000
• Storage Location: 0001 (Consignment allowed)

Troubleshooting:
– If consignment postings fail, check OMJJ (Movement Type Authorization) to ensure 411K/412K are permitted.

Configuring Consignment Stock Transactions in SAP S/4HANA

Now that master data is set up, we’ll configure goods receipt, consumption, and return processes.

Goods Receipt for Consignment Stock (Movement Type 411K)

When the supplier delivers consignment stock, use Movement Type 411K (GR for Consignment).

Steps:

1. Transaction: MIGO
– Select Goods Receipt → Purchase Order (PO) → 411K.
2. Enter:
– Vendor: SUPPLIER_A
– Material: RAW-MAT-100
– Quantity: 1,000
– Storage Location: 0001
3. Post the document.

Key Notes:

• No financial impact occurs—only stock increase in consignment storage.
• Verify in MB5B (Stock Overview) under Consignment Stock tab.

Example Posting:

Field	Value
Movement Type	411K
Document Date	01.10.2023
Posting Quantity	1,000
Storage Location	0001

Consumption of Consignment Stock (Movement Type 412K)

When the customer uses consignment stock, post consumption (412K) to trigger liability.

Steps:

1. Transaction: MIGO
– Select Goods Issue → Consumption → 412K.
2. Enter:
– Material: RAW-MAT-100
– Quantity: 200 (consumed)
– Cost Center: CC-100 (for cost allocation)
3. Post the document.

Financial Impact:

• Debit: Consumption Account (e.g., Raw Material Consumption)
• Credit: Consignment Liability Account (e.g., 200100)

Verification:

• Check MB5B – Consignment stock reduces by 200.
• Run FBL3N (Vendor Line Items) to see the liability.

Returning Consignment Stock to Supplier (Movement Type 413K)

If unused consignment stock is returned, use 413K.

Steps:

1. Transaction: MIGO
– Select Goods Issue → Return to Supplier → 413K.
2. Enter:
– Material: RAW-MAT-100
– Quantity: 50 (returned)
– Vendor: SUPPLIER_A
3. Post the document.

Key Notes:

• No financial impact—only stock reduction.
• Supplier’s consignment liability decreases.

Financial and Valuation Configuration for Consignment Stock

Consignment stock requires proper valuation, price control, and accounting settings to ensure accurate financial reporting.

Defining Valuation Class and Price Control

Consignment materials must have a unique valuation class (e.g., 3000) and price control method.

Steps:

1. Transaction: OMSK (Valuation Class)
– Assign 3000 to consignment materials.
2. Transaction: MM02 (Material Master → Accounting 1 View)
– Set Price Control: V (Moving Average) or S (Standard Price).

Example:

• Valuation Class: 3000
• Price Control: V (Moving Average)

Why It Matters:
– Ensures correct inventory valuation in FBL3N and S_ALR_87012015 (Inventory Valuation Report).

Configuring Automatic Account Determination (OBYC)

Consumption postings must automatically hit the correct G/L accounts.

Steps:

1. Transaction: OBYC
– Navigate to Transaction Key: BSX (Inventory Posting).
– Assign:
– Consumption Account (e.g., 500000 – Raw Material Consumption)
– Consignment Liability Account (e.g., 200100 – Consignment Payable)
2. Save and test with F-02 (Post Simulated Document).

Example OBYC Entry:

Transaction Key	Account	Description
BSX	500000	Raw Material Consumption
WRX	200100	Consignment Liability

Handling Price Differences in Consignment

If the actual consumption price differs from the standard price, SAP posts price differences to a separate G/L account.

Steps:

1. Transaction: MR21 (Price Change)
– Update the moving average price if using Price Control = V.
2. Transaction: OBYC
– Configure Transaction Key: PRD (Price Difference) to post to a price variance account (e.g., 500010).

Example:

• Standard Price: $10/unit
• Actual Consumption Price: $12/unit
• Price Difference: $2 → Posted to 500010 (Price Variance Account)

Reporting:
– Use S_ALR_87011973 (Price Difference Analysis) to monitor variances.

Reporting and Monitoring Consignment Stock in SAP S/4HANA

Effective consignment management requires real-time stock tracking, financial reconciliation, and audit trails.

Stock Overview and Consignment Reports (MB5B, MI04)

Use these transactions to monitor consignment stock levels.

Key Reports:

Transaction	Purpose	Example Use Case
MB5B	Stock Overview (by material)	Check consignment stock for RAW-MAT-100.
MI04	Stock by Storage Location	Verify consignment stock in 0001.
MC.9	Consignment Stock List	Generate a list of all consignment materials.

Example (MB5B):

1. Enter Material: RAW-MAT-100.
2. Select Consignment Stock tab.
3. View current stock (800 units) after consuming 200.

Financial Reconciliation (FBL3N, S_ALR_87012015)

Ensure consignment liabilities match consumption postings.

Steps:

1. Transaction: FBL3N
– Enter Vendor: SUPPLIER_A.
– Filter for Consignment Liability Account (200100).
2. Transaction: S_ALR_87012015
– Run Inventory Valuation Report to verify consignment stock value.

Example (FBL3N):

• Open Items: $2,400 (200 units × $12/unit).
• Cleared Items: $0 (until payment).

Audit and Compliance Checks (S_P00_07000121, GR/IR)

Use GR/IR (Goods Receipt/Invoice Receipt) reconciliation to ensure no unmatched consignment liabilities.

Key Transactions:

Transaction	Purpose	Example
MRBR	GR/IR Account Maintenance	Check for uninvoiced consignment GRs.
S_P00_07000121	Consignment Stock Analysis	Audit trail for RAW-MAT-100.
F.19	Automatic Payment Run	Settle consignment liabilities.

Best Practice:

• Run MRBR monthly to clear unmatched consignment GRs.
• Use S_P00_07000121 before year-end closing for audit compliance.

Final Thoughts

Configuring consignment stock in SAP S/4HANA MM 2023 requires precise master data setup, transaction processing, and financial integration. By following this step-by-step guide, you can:
✅ Enable consignment stock for suppliers and materials.
✅ Process goods receipts, consumption, and returns correctly.
✅ Ensure accurate financial postings with OBYC and valuation controls.
✅ Monitor stock and liabilities using SAP reports.

For advanced scenarios (e.g., subcontracting consignment, intercompany consignment), consider SAP S/4HANA Embedded Analytics or SAP IBP (Integrated Business Planning) for deeper insights.