{"id":2016,"date":"2026-05-29T05:40:48","date_gmt":"2026-05-29T05:40:48","guid":{"rendered":"https:\/\/www.icacourse.in\/blog\/?p=2016"},"modified":"2026-05-29T09:08:33","modified_gmt":"2026-05-29T09:08:33","slug":"consignment-process-in-sap-mm","status":"publish","type":"post","link":"https:\/\/www.icacourse.in\/blog\/consignment-process-in-sap-mm","title":{"rendered":"99% of Aspirants Get the Consignment Process in SAP MM Wrong. Here’s the Fix"},"content":{"rendered":"
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Quick Summary<\/h3>\n

The consignment process in SAP MM is a procurement method where a vendor delivers goods to the buyer’s premises but retains ownership until the goods are consumed or withdrawn. Payment is triggered only at consumption, not at delivery. It is managed using item category “K” in the purchase order, with key T-codes including ME21N, MIGO, MRKO, and MB58.<\/p>\n<\/div>\n

Picture this.<\/p>\n

You’re sitting in a job interview for an SAP MM consultant role. The conversation is going well. Then the interviewer leans forward and asks: “Can you walk me through the consignment process in SAP MM?”<\/i><\/p>\n

Your mind goes completely blank. You studied it. You know it’s important. But in that moment, you can’t connect the dots.<\/p>\n

If that scenario made your stomach drop a little, this post is exactly for you.<\/p>\n

Whether you’re a fresher who just enrolled in an SAP course, a supply chain professional looking to upskill, or someone switching careers into ERP consulting, understanding the consignment process in SAP MM is non-negotiable. It’s one of the most commonly tested topics in SAP MM interviews and certification exams, and one of the most misunderstood.<\/p>\n

Let’s fix that today.<\/p>\n

What Is the Consignment Process in SAP MM?<\/h2>\n

Before we jump into T-codes and steps, let’s build intuition for what consignment <\/strong>actually means in the real world.<\/p>\n

Imagine you run a car manufacturing company. You need bolts, nuts, and other components regularly, but you’re not sure exactly how many you’ll need each month. Instead of buying a huge batch upfront (and tying up working capital), you strike a deal with your supplier:<\/p>\n

“Send me 10,000 units. Store them in my warehouse. I’ll pay you only for what I actually use.”<\/i><\/p>\n

That’s consignment in plain English.<\/p>\n

Your supplier delivers the goods. They sit in your warehouse. But legally, they still belong to the supplier until the moment you pick them off the shelf and use them. Only then does a financial liability arise for your company.<\/p>\n

Now, when you run this business process inside SAP tracking stock levels, posting goods receipts, recording consumption, and settling payments, that’s the consignment process in SAP MM.<\/p>\n

As SAP’s own community defines it, vendor consignment is a process in which the supplier provides materials and stocks them on the purchaser’s premises. The material remains in the supplier’s books until it is withdrawn from stock and put to use.<\/p>\n

Why Does the Consignment Process Matter for Your SAP Career?<\/h2>\n

Let’s be blunt about the career angle here.<\/p>\n

SAP MM is one of the most in-demand ERP modules globally. Companies across manufacturing, retail, pharmaceuticals, and logistics run SAP. And within SAP MM, special procurement types, consignment, are topics that separate candidates who just know the basics from those who truly understand how supply chains operate.<\/p>\n

In interviews, you will almost certainly be asked:<\/p>\n

    \n
  • What is vendor consignment in SAP?<\/li>\n
  • What T-codes are used in the consignment process?<\/li>\n
  • What is the difference between consignment and subcontracting?<\/li>\n
  • When is the vendor’s liability created in consignment?<\/li>\n<\/ul>\n

    Master this topic, and you walk into that room with confidence.<\/p>\n

    Key Concepts You Must Know Before Starting<\/h2>\n

    Consignment Stock:<\/strong> Stock physically present in the buyer’s warehouse but legally owned by the vendor. It appears in the buyer’s system as a special stock type (category “K”) and is tracked by quantity but not valued until it is consumed.<\/p>\n

    Item Category K:<\/strong> The special item category used in the SAP purchase order to indicate a consignment procurement. When you use category “K,” the system knows no price should be entered at the PO level; it will be picked up from the Info Record later.<\/p>\n

    Consignment Info Record:<\/strong> A master data object (created via T-code ME11) that holds the agreed price and tax code for a specific material-vendor combination under consignment. This is the pricing backbone of the entire process.<\/p>\n

    MRKO (Consignment Settlement):<\/strong> The special transaction used to settle vendor liability. Think of it as a self-billing invoice that the buyer generates based on what was actually consumed.<\/p>\n

    \"Key<\/p>\n

    The Consignment Process in SAP MM: Step-by-Step<\/h2>\n

    Here’s the complete flow you need to know:<\/p>\n

    Step 1: Create a Consignment Info Record (T-Code: ME11)<\/h3>\n

    This is the foundation. Before you can create a consignment PO, you need an Info Record that tells SAP the price at which the vendor’s goods will be valued when consumed.<\/p>\n

    What you do:<\/strong><\/p>\n

      \n
    • Open transaction ME11<\/strong><\/li>\n
    • Enter the vendor, material, purchasing organization, and plant<\/li>\n
    • Under “Info Type,” select Consignment<\/strong><\/li>\n
    • Maintain the price<\/strong> and tax code<\/strong> (both are mandatory; skip either,r and your PO or settlement will error)<\/li>\n
    • Save the record<\/li>\n<\/ul>\n

      Why this matters:<\/strong> Unlike standard procurement, the consignment PO carries no price. The system pulls the price from this Info Record at the time of goods withdrawal. If the Info Record is missing or has wrong pricing, the entire process breaks down.<\/p>\n

      Step 2: Create a Consignment Purchase Order (T-Code: ME21N)<\/h3>\n

      This is where you place the order with your vendor.<\/p>\n

      What you do:<\/strong><\/p>\n

        \n
      • Open transaction ME21N<\/strong><\/li>\n
      • Enter vendor, material, quantity, plant, and storage location<\/li>\n
      • In the item details, set the Item Category to “K”<\/strong> (Consignment)<\/li>\n
      • Notice that the price field is greyed out. This is correct and expected<\/li>\n
      • No invoice tab or conditions tab will appear at the item level (another sign you’re in consignment mode)<\/li>\n
      • Save the PO<\/li>\n<\/ul>\n

        Beginner trap:<\/strong> Many students panic when they see that the price is blank. Don’t. It’s supposed to be blank. The price lives in the Info Record.<\/p>\n