Understanding the Consignment Pickup and Return Process

What Is the Consignment Process in Supply Chain Management?

Consignment stock refers to inventory that is stored at the customer’s location but still owned by the supplier (consigner). The goods are only invoiced once the customer uses or sells them. Managing consignment inventory involves two important processes: Consignment Pickup and Consignment Return. Though they may seem similar, they serve different purposes and impact inventory differently.

Consignment Pickup Process Explained

The consignment pickup process occurs when goods that have not yet been consumed or sold by the customer (consignee) are returned to the supplier (consigner). This is typically done under the following conditions:
  • The goods are still in special stock at the customer site.
  • The customer decides not to use or sell them.
  • The goods may be damaged or nearing expiry.
  • These goods are taken back into the supplier's unrestricted stock after the pickup.

Inventory Movement in Consignment Pickup:

Flow:
Consigner → Consignee → Consigner

SAP Transaction Code:

KA – Consignment Pickup

Example: You deliver 100 items to a customer. If 75 items are unused and you wish to take them back, you use the KA (Pickup) process to reclaim them.

Consignment Return Process Explained

The consignment return process occurs after the goods have been sold to the end customer by the consignee. If the end customer finds issues such as:
  • Defects or poor quality
  • Unsellable condition
  • Pricing discrepancies
  • Expired items
…the consignee initiates a return to the consigner. Unlike pickup, these goods cannot be added back into unrestricted stock directly. They return to special stock, and if needed in unrestricted stock, the pickup process (KA) must be used.

Inventory Movement in Consignment Return:

Flow:
Consigner → Consignee → Customer → Consignee → Consigner

SAP Transaction Code:

KR – Consignment Return

Example: You issued 25 items (via KE - Issue) which were invoiced to the customer. If these items are defective, you accept the return using the KR (Return) process. The items go back into special stock.

Key Differences Between Consignment Pickup and Return

Feature Consignment Pickup Consignment Return
Timing Before customer uses/sells After goods are sold/invoiced
Stock Movement From special stock to unrestricted stock From customer to special stock
Transaction Type KA (Pickup) KR (Return)
Use Case Goods unused, returned before issue Goods used/sold, returned due to issue
Inventory Flow Short loop: Customer → Supplier Long loop: Customer → End Customer → Supplier

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