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Vendor consignment stock vs Customer consignment stock process?

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I should probably have been able to find some logical answer to this.

I'm just learning about the vendor consignment process, and understand that doing a settlement run in MRKO will schedule a payment to the vendor in question based on transfers to own stock in a period. While this is fine and dandy, I'm also familiar with the customer consignment process, and it kind of feels strange.

As an end user in SAP previously, we normally had a recap with the customer so that we created a KE order towards the customer consignment stock, issued and invoiced.

Suppose the vendor is also running SAP, they will have stock type W towards us when we procure from them. But if we just settle with MRKO and pay the vendor, they will just receive the payment with some reference, I guess with some details on materials etc.

So, is it then expected of the vendor to create a KE order based on our payment (using our payment as a reference), to consume their W stock? But since it's already paid, the invoice that KE triggers would then cross the payment we've made. Shouldn't standard KE then be a "cash order" type (not triggering an invoice) instead?

With the MRKO process, we are just accepting the info record conditions, it just seems like a weird process to pay before we get an invoice.. Shouldn't the output of the MRKO be sent to the vendor as the recap of materials and quantities consumed in the agreed period and wait for the vendors invoice??

I might be looking at this from the wrong angle, but it just doesn't seem like a match of the sales vs procurement process.

Any comments on why it's set up like that would be appreciated 🙂

Best regards,


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Answers (3)

Active Contributor
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In Consignment sales process, the warehouse who receives the material will have to perform MIGO and not MRKO. From there, as and when, the goods are shipped to end customer, an consignment issue KE order has to be created, reduce the special stock inventory and generate a commercial invoice to the extent of quantity despatched from warehouse to end customer.

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Thanks for your insight, Lakshimipathi.

But my main question was really about the vendor side of that consignment process.

Please let me rephrase.

Two different companies, A and B, are dealing with eachother, and both run on SAP. Company A requests for a consignment agreement and B are happy to provide. Company A sends a PO to company B, who in turn creates a sales order type KB and deliver the goods. Company A receives this and in a period, they will transfer some to their own stock. Now, running MRKO, they found they are liable to pay some amount to an agreed price and settle this.

My question is basically, how will this process look for the vendor, company B?

1) Some instructor told me that running MRKO (company A) will trigger a payment by Finance to the vendor (company B). This raised my attention, because why would company A pay the vendor without receiving an invoice?

2) Or am I understanding this that the MRKO will just create a liability towards the vendor, which will trigger an output to the vendor that confirms X quantity was consumed, then the vendor creates the invoice through KE and issue of their customer consignment stock?

I just hope 2) is correct, because otherwise why would the standard KE process end with an invoice.

Active Contributor
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The consignment liabilities account is not cleared automatically after the posting of the corresponding invoice using Transaction MRKO. To know more on this, please have a look at OSS note 487162

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Ok, I see.

But how would the vendor of the consignment stock process this transaction?

Or let me turn this around, if we were to create a sales order / Consignment Fill-Up to a customer for 100 pieces, then the customer (also running SAP) do transfer to own stock, runs MRKO and pay us for the consumption. How would we react? Create a KE/Consignment Issue for the pieces consumed, create an invoice (but not send it to the customer), and clear that with the payment from the customer?

Active Contributor
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If your query is about customer consignment, not sure, why you link vendor in this process as nowhere they come into picture. If at all, vendor is also acting as a customer, then, you need to extend the vendor as a customer, create a fill-up order and follow the subsequent process. If the end customer is in SAP, they would have raised a PO based on which, when they receive the goods, they do MIGO. Having said that where come, they have create a KE order?

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I think you misunderstood, sorry. I'm completely thinking of the vendor process with consignment stock.

You raise a PO with special stock K for a quantity, transfer the consignment stock to your own stock as required with MIGO 411-K. Then you run MRKO to settle a period and process a payment to the vendor.

I'm just questioning the MRKO-process. Why are we just paying the vendor without receiving an invoice? Yes, I know that the vendor doesn't know how much we have transfered to our own stock, but shouldn't the output from MRKO rather create an output to the vendor "Hello, we have in the period X-Y consumed Z quantity of material. Please invoice us" - rather than just paying directly?

On the supplier side (if they run SAP), they have a customer stock W towards us. If they want to consume the quantities we have consumed, they need to raise a KE order to issue the quantity. But this will in standard SAP create an invoice, which we "have already paid".

I'm just asking why it is like that, cause the customer-vendor relation in consignment process between two parties doesn't seem to fit perfectly even in the SAP world?