Unit 6: Special Procurement Processes

Lesson 1 · Performing the Process of Vendor Consignment

Key concepts

In a consignment arrangement the supplier places goods in your warehouse but keeps legal ownership of them. You only owe the supplier money at the moment you actually take material out of the consignment stock (for consumption or by transferring it into your own stock). Until then the quantity is visible and plannable in your system, but it carries no value on your balance sheet.

No special material master is needed: the consignment quantity is simply kept under the same material number as your own stock, so planners see one material with several stock segments. The supplier is the normal supplier (business partner with supplier role). The decisive extra object is a purchasing info record of info category Consignment for every supplier/material combination. Without it, a goods receipt into consignment stock is rejected, and its price is the basis for valuing every withdrawal. If the same material is consigned by three suppliers, three consignment info records are required.

The consignment info record is created with ME11 (or the corresponding Fiori app) for the standard purchasing organization of the plant that holds the stock (if the plant is assigned to only one purchasing organization, that one is used automatically). Its conditions may use the full condition technique: foreign currency, validity periods, alternative order units, discounts, price and quantity scales.

The consignment purchase order item (item category K)

• A material number is mandatory (no text items).
• No price or conditions can be entered on the item – the price lives in the consignment info record.
• A goods receipt is required; it lands in supplier consignment stock and is not valuated.
• No invoice can be entered against the item – settlement happens later on withdrawals, not on receipts.

Consignment stock in Inventory Management

Supplier consignment is a supplier-related special stock with indicator K, managed at storage location level because the goods are physically in your storage locations. It supports the three stock types unrestricted use, quality inspection and blocked, and it counts as available stock in availability checks and MRP – but it is not valuated.

Goods movements for consignment stock

All receipts and internal transfers inside the consignment segment are quantity-only postings. The moment value arises is the withdrawal or the 411 K transfer: the system values the quantity with the consignment info record price valid on the posting date and posts a liability towards the supplier.

Typical accounting entries

Process flow

System steps

1. Create the consignment info record with ME11: supplier, material, standard purchasing organization, plant, info category Consignment; enter the consignment price.
2. Create a PO with ME21N using item category K; no price field is available on the item.
3. Post the GR with MIGO (movement type 101); check in MMBE or MB54 that the quantity appears as consignment stock of the supplier.
4. Withdraw material with MIGO, e.g. 201 + special stock K + supplier + cost center; or take over the stock with 411 K.
5. Run MRKO (Consignment and Pipeline Settlement): select unsettled withdrawals by company code, plant, supplier, material, posting date or material document and settle them. The system creates an invoice-like settlement document and an output of type KONS to tell the supplier which withdrawals were credited.

Configuration (IMG)

Lesson 2 · Performing the Process of Subcontracting

Key concepts

In subcontracting you buy a processing service rather than a complete product: you send some or all of the components to an external supplier, the supplier manufactures or refines the end product (the "assembly") and delivers it back. From the inventory viewpoint the components leave your warehouse but remain your property, so they must be tracked as a special stock at the supplier.

Subcontracting in Purchasing

The item category L (subcontracting) requires at least one component subitem. If a bill of material exists for the end product, the components are exploded from it into the item; you can also add components manually or re-explode. The PO price represents only the subcontractor's charge (processing plus any material the subcontractor itself contributes). Conditions can be stored in a subcontracting info record.

Stock of material provided to supplier (special stock O)

• Supplier-related special stock, managed at plant level (the goods are not in any of your storage locations).
• It is valuated (still your property) and relevant for planning. Subcontractor MRP areas can be used to plan the components separately per subcontractor so that provided quantities are not mixed into the plant's available stock.
• Possible stock types: unrestricted use and quality inspection only – no blocked stock. Consumption by the subcontractor is possible only from unrestricted use.
• The stock must be included in physical inventory.
• Report: MBLB (Stock with Subcontractor), selectable by supplier, plant, material, company code.

Ways to provide components

The provision itself is a transfer posting from unrestricted use to stock O: one step with 541, or a two-step procedure (the handbook names 30A/30C), typically in combination with a delivery. In the Fiori Subcontracting Cockpit you can filter by subcontractor, component, assembly, plant and shipping status, post the GI per document item, create deliveries and calculate a component's stock balance at plant/supplier level (including direct deliveries in transit to the subcontractor). For refurbishment subcontracting in Plant Maintenance there is a separate monitor ADSUBCON.

Transfer postings within stock O

A transfer from one subcontractor to another is not supported.

GR of the end product

The GR is posted like any PO receipt with movement type 101. For the subcontracting item the system automatically adds one goods issue line per component (movement type 543, special stock O). So one material document contains the receipt of the assembly and the consumption of the components. If the subcontractor already tells you at delivery that consumption deviated, you simply change the component quantities before posting.

Subsequent adjustment

If excess or under-consumption is only reported after the GR, you correct component consumption with a subsequent adjustment – possible only after at least one GR exists for the subcontracting item.

• MIGO: business transaction Subsequent Adjustment with reference to the PO item. For excess consumption enter only the additional quantity; for underconsumption also set the Underconsumption/Short Receipt indicator, which returns the quantity to stock O (reverses consumption).
• Post Subsequent Adjustment (Fiori, since S/4HANA 2021): enter the purchasing document, open item details and, per component, choose Overconsumption, Underconsumption or leave No Posting, then post.

Process flow

System steps

1. Create the PO with ME21N, item category L; check the component overview of the item (BOM explosion or manual entry).
2. Provide components via ME2ON (select by supplier, post GI) or via MIGO transfer posting 541.
3. Check stock O in MBLB or MMBE.
4. Post the GR of the end product with MIGO (101); verify the 543 component lines in the material document.
5. If needed, post a subsequent adjustment with MIGO or the Fiori app.
6. Enter the supplier invoice for the processing charge with MIRO.

Configuration (IMG)

Lesson 3 · Operating Pipeline Processes

Key concepts

Pipeline material flows straight into consumption through a pipe or line – oil, gas, water, electricity. It is never stored in your warehouse; it is simply "always there" and can be drawn in any quantity at any time. Unlike consignment, there is no purchase order and no goods receipt: the only inventory event is the withdrawal, which immediately creates a payable to the supplier.

Material type PIPE and other material types

The material type controls (per valuation area) whether pipeline movements are mandatory or merely allowed. For type PIPE pipeline handling is the only option:

• Only pipeline movements can be posted in all valuation areas; no other goods movements.
• The material is neither procured via Purchasing nor planned by MRP.
• It is not stored and not inventoried; no inventory management takes place.
• Any quantity can be withdrawn at any time; it can be backflushed as a component in production orders.

If another material type only allows pipeline movements, the material can be stock-managed normally and also withdrawn from the pipeline.

Supplier determination

With only one pipeline info record, its supplier is proposed automatically. With several, the preferred supplier comes from the source list; if none is maintained, MIGO picks the supplier with the most favourable conditions. Other entry transactions require you to choose the supplier manually.

Withdrawals

The liability equals withdrawn quantity × pipeline info record price. Pipeline withdrawals do not change warehouse stock and do not affect availability. Settlement uses the same function as consignment: MRKO, again producing a settlement document and an output of type KONS. In account determination, the liability is posted via transaction key KON (the pipeline case is distinguished by account modifier PIP).

Process flow

System steps

1. Create the pipeline material (type PIPE) with purchasing and accounting data.
2. Create a pipeline info record with ME11 (info category Pipeline); optionally maintain a source list with ME01.
3. Post the withdrawal with MIGO (Goods Issue, e.g. 201, special stock P, supplier, cost center).
4. Settle with MRKO (Inventory Management › Environment › Consignment › Consignment from Supplier › Liability).

Configuration (IMG)

Unit summary & exam focus

T-codes in this unit

Self-check questions

1. Which master data must exist before you can post a GR into supplier consignment stock?
   Answer

   Material master, supplier (business partner) and a purchasing info record of category Consignment for that supplier/material and the plant's standard purchasing organization.
2. At which point does a liability arise in vendor consignment, and how is it valued?
   Answer

   On withdrawal for consumption or transfer to own stock (411 K); valued with the consignment info record price valid on the posting date of the withdrawal.
3. Can you post blocked stock for material provided to a subcontractor?
   Answer

   No. Stock O supports only unrestricted use and quality inspection.
4. Which movement types appear in the material document of a subcontracting GR?
   Answer

   101 for the end product and automatically generated 543 (special stock O) lines for each consumed component.
5. Which transfer postings are allowed for stock O?
   Answer

   Plant to plant one-step (301), material to material (309), QI to unrestricted (321). Supplier-to-supplier is not possible.
6. Why is the provision of components with PO reference not visible in the PO history?
   Answer

   Because stock of material provided is managed per supplier, not per PO – the PO is only used as a template for the proposal.
7. What restrictions apply to a material of type PIPE?
   Answer

   Only pipeline withdrawals can be posted; it is not procured, planned, stored or inventoried; it can be withdrawn at any time in any quantity and backflushed in production orders.