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Background/ Business Use Case

Many customers have a need to withdraw material directly from the supplier owned consignment stock against a Production Order. Production BOM (Bill of Material) has one or multiple components which are externally procured and withdrawn/consumed using the Consignment Process.

Consignment inventory is a supply chain management strategy that nurtures supplier collaboration/ relationship. By using the consignment process for procurement, the supplier provides the material and stores it at site of the procuring party. The supplier maintains the legal owner of the material until it is withdrawn from the consignment stores. Payment for consignment stock is only required in case the material is withdrawn optimizing inventory costs. For this reason, the supplier is informed of withdrawals of consignment stock on a regular basis.

This blog covers the steps needed to support Goods Issue for a Production Order from the supplier owned consignment stock in a single step in S4HANA.

Use of S4HANA to manage the process streamlines procurement processes in an efficient and cost-effective manner ensuring highly automated processes with desired control and the real-time analytics capabilities.

Set Up Needed for Goods Issue/ withdrawal from the supplier consignment stock for the Production Order.

  • Production BOM has one or more components which are externally procured using the supplier consignment process.

Material Master for such a component is set up with the following settings in the MRP2 View.

Procurement Type – F

Special Procurement Type- 10 (Consignment)

  • Production Order needs to have been costed.

If you have real-time overhead activated, during a posting process in CO overheads get posted in addition but results in dump CALL_FUNCTION_REMOTE_ERROR.

This error is caused because of data export to session memory, a RFC call is not working properly.

If you encounter this issue during Production Order Confirmation, please implement OSS Note 2919180 and the issue will be resolved.

  • Once the Production Order is confirmed, you can post Mvt Type 261 K to issue the Vendor consignment stock for the Production Order.

  • Once withdrawn from the Vendor consignment stock, settlement transaction can be run using “Create Consignment and Pipeline Settlement” App.


Above process steps help the customers take advantage of the consignment stock (Vendor Owned) in their manufacturing process with single step Mvt 261K rather than 2 step approach to first do the transfer posting from the consignment to company’s inventory and then issue against the production order. This helps optimize/ streamline the use of consignment stock that also helps in the cost of Inventory Ownership.