Most people think SAP is complex. It really is. As you can see in the set up for consignment cycle there are 8 steps. Let us discuss how complex SAP set ups can go.
step 1: Activate consignment payment via info records in the IMG: This step is straight forward. Only need to set this up in IMG.
step 2: Create info record of consignment type for the material that is to be procured from the consignment vendor: This step needs prior settings for creating a vendor and the material. Creating a vendor is a complete set up and you need to provide all the information about the vendor and then set the values in SAP. Creating a material is also a complete set up about the material.
step 3: Check general ledger (G/L) account setting for consignment payable and stock posting: This again needs prior set up. You must have entries done in the General Ledger for the vendor and material and only then you can come to this step and set it up.
step 4: Create a consignment contract (with an item category type “K”): Here a contract (purchase document) is made. Not a complicated step.
step 5: Create a PR referencing the above created contract: Here is purchase requisition is made. Simple step.
step 6: Create a PO referencing the above-created PR for ordering the consignment material into consignment stock: Here a purchase order is made. Simple step.
step 7: Post GR for the PO. The material will be received in consignment stock. At this point, a material document will be created: This is a simple transaction.
step 8: Post GI to withdraw material from consignment stock to customer’s own stock. At this point, a material document and an accounting document is made: This is simple transaction.
step 9: Do settlement of consignment payment to vendor: This is again a simple transaction.
Step 2 and 3 are the most crucial steps in the consignment cycle. What is not mentioned here is that pricing procedure, purchase organization and plant also need to be set up. inside pricing procedure you may also need to set up country specific tax procedure.
in practice, the whole set up can take up even more than 100 hours. Imagine, you may also need to write some custom code and need to do some customization. In that case, things can go really really complex and messy.
In a nutshell, SAP is complex and difficult.