The consignment procurement scenario covers the flow of sequential processes of providing goods by the vendor to the company on consignment terms.

Within this scenario, the vendor provides materials and stores them in the company's warehouse. Goods are provided mainly for resale purposes. Before its use by the company, the goods belong to the vendor.

In rare cases, this consignment procurement scenario is used for consumption by the company for internal needs (for example, manufacturing). In this case, the consignment procurement scenario is similar to the S2P Procurement via vendor-managed inventory scenario. All goods consumed by the company need to be redeemed, and an invoice issue must be initiated.

Consignment contracts usually define the terms of regular notifications about the sale of goods, goods consumption, and identified goods shortages.

The company regularly tracks the consignment goods level and sales statistics to timely initiate the follow-up actions:

• Consignment goods replenishment (fill-up).
• Consignment goods redemption.
• Consignment goods pick-up by the vendor.