The scenario of consignment procurement covers the flow of sequential processes of providing goods by the vendor to the company on consignment terms.
In this scenario, the vendor provides materials and stores them in the company's warehouse. Before its use by the company, the goods belong to the vendor.
Goods are provided mainly for resale purposes. In rare cases, this consignment procurement scenario is used for the consumption be the company for internal needs (e.g. manufacturing). In this case, the consignment procurement scenario is a similar to the S2P Procurement via vendor managed inventory scenario.
Regular monitoring of the consignment goods sales ensures that the goods replenishment, goods pick up by the vendor and other important follow-up actions are initiated on time.
The consignment contract usually defined the condition of regular notification about the sale of goods and identified shortages of goods.