Vendor Consignment Process Saves Time by Cutting Steps

  • by Gaetano Altavilla, Senior SAP Solutions Architect, Instructor, Project Manager, and Team Leader
  • February 15, 2009
Learn how to handle the vendor consignment process across the main logistics modules. See how this method saves you time.
Key Concept

Vendor consignment is the process of having materials stored on a company’s site that are still legally owned by the vendor. This keeps the stock from being valued until it’s withdrawn from the storage location. The company has to pay for the product and becomes the legal owner of the product only after using the material. The vendor consignment process allows large quantities to be received, inspected, and passed to stock at one time, and then used throughout a time period.

In my experience, the vendor consignment process requires special attention because of its integration across SAP modules and its importance within a company. However, I feel it’s not covered sufficiently in available documentation. This is surprising given that it provides numerous advantages, including:

  • Reduction of steps involved in the purchasing/receipt/invoice/payment cycle (e.g., three-way match process) and clerical errors

  • Elimination of price and quantity variances in the invoice, blocked invoices, purchase price variance, and goods receipt/invoice receipt (GR/IR) reconciliation

  • Elimination of the steps for receiving invoices from vendors, filing and archiving the invoices, invoice validation process (three-way match), and entering the invoice into the system.

  • Elimination of duplicate payments

  • Freeing up cash flow by paying as you consume rather than as you receive goods

Gaetano Altavilla

Dr. Gaetano Altavilla is a certified associate senior SAP solutions architect, instructor, project manager, and team leader located in Naples, Italy. His focus is on pre-sales, delivery of SAP application solutions for large international corporations and SAP knowledge management across regions.

In his 16 years of SAP application experience working for many multinational companies, such as Procter & Gamble and Hewlett-Packard, he has covered a wide range of ERP logistic areas, focusing on the MM, WM, SD, LES, PP, PP-PI, PLM (QM, PM, PS) modules, as welll as CRM (TFM), SRM (EBP), SCM (APO), SCM (TM) and SCM (EWM) components.

Dr. Altavilla holds a degree with first-class honors in mathematics from the University of Naples and is certified in many SAP modules: SAP Logistics Bootcamp, SAP MM, SD, LE (SHP/WM/LE), PP, PLM (PM, QM, PS), SRM, CRM, SCM (APO), SCM (TM), FI, CO, and Solution Manager. He also has experience in ABAP/4 and application link enabling (ALE) and IDocs. He has participated in numerous industry conferences, such as the SAP Skills Conference in Walldorf at SAP SE.

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