Consignment Sales Process is a supply chain management strategy in trade where the consignor/supplier retains the legal ownership of the stock. The consignee/retailer stores the consigned stock at their store/warehouse and pays for the product only when the goods are sold. The consignee is not liable for the stock relating to the monetary repercussions in case of loss, damage or return of the stock. Each product sold and returned will lead to bill generation.
Consignment sales is a tedious process as each stock has to be tracked with the consigned location. The tracking and management of consigned stock movement on a spreadsheet is prone to errors. These errors in manual reporting will lead to the loss of stock and revenue. The EDST Consignment sale solution for the SAP system by EDS Technologies, a SAP Gold Partner, will help in streamlining the process to eliminate errors, improve efficiency and adapt digital continuity.
EDST Consignment Sales solution includes the following:
- 4 Processes: Fill up process, issue process, return and pick up process from customers and retailers
- 4 Forms: Main invoice, child invoice, main packing list and part packing list
- 6 Reports: Inventory stock movement report, aging analysis report, outstanding report, incentive report, commissions report, Merchandise Export from India Scheme (MEIS)/export incentive report by country/product wise calculations
For instance, let’s consider a pharmaceutical supplier in Mumbai with products including medicines, personal care and first aid etc. is consigned to a retailer in Bangalore.
As per the sales order, the supplier prepares the products with the main invoice and main packing list for shipping from Mumbai. Main packing list includes details of the packaged content, quantities and description of the pharmaceutical products. This packing list is useful for parties handling the stock during shipping and the stock recipient. The consigned stock will be stored at the retailer’s store and warehouse in Bangalore.
The retailer displays the product at their Bangalore store and sells the product in fractions to their customers as required. The retailer prepares the goods for delivery from the consignment stock as per the consignment issue sales order. EDST Consignment solution provides the child invoice per transaction for each portion of the stock sold.
EDST Consignment sales solution for SAP system provides visibility on the stock sold prompting the retailer for a re-stock, if required. The retailer can submit a consignment fill-up sales order to the Mumbai supplier to restock the Bangalore warehouse with new consigned products. EDST consignment solution provides support during the fill-up process with the main invoice for transport logistics, main and child packing lists. The child packing list provides the details of each part of products including the content and description from the main stock.
Consignment sales process can involve returns if the retailer and the customer is unsatisfied with the product quality. The retailer submits a consignment return sales order where the stock is picked for return delivery to the pharmaceutical supplier in Mumbai.
Exporting goods on consignment basis is very risky. As manufacturer/supplier is not guaranteed payment and goods are in foreign country in the hands of distributor/retailer. However, consignment exports helps manufacturer to become more competitive and reduction of direct costs storing and managing inventory.
EDST helps customers by providing quality solution. EDST Consignment Process solution for SAP systems present at each step of the way of stock movement and management to streamline optimal efficiency and process visibility throughout the process.
Features of EDST Consignment Sales Process
- EDST solution covers the both forward logistics and reverse logistics with returns management features and functionality.
- Consignment Sales solutions holds the capacity for the management of inter-country and intra-country stock movement.
- The solution is packaged to handle complex batch determination, serial number functionality, bill of materials and multilevel BOM Kit products.
- All the forms included in this solution are easy to share and archive in the pdf format with controlled e-mail functionality.
- All six reports are developed for improved performance efficiency with logically driven secondary indexes.
Benefits of EDST – SAP Consignment Process
- Reduced risk: Consignment sale allows suppliers and retailers to scale the success of new products and new sales channel – retail and wholesale; without the risk of major financial loss. With the Consignment Sales implementation, both parties benefit from analysing the sales behaviour of the product in a particular channel before capital investment.
- Product visibility: Bringing the product in front of potential customer increases sales of merchandise that customers need to touch, taste or test before purchase is made easy through the consignment stock. Improvement in customer experience enables suppliers to convince retailers to stock their product.
- Process visibility: The consignment sales solution includes six reports representing the real-time accurate recording and analysis to interpret consignment sales transactions.
- Easy Restock: The lag time between goods sold and re-stock of goods arriving is a potential business loss. Consignment sale process optimises the re-balance of warehouse stock as per requirement.
- Cost Savings: Improvement in cashflow on the part of the supplier and retailer. With the consignment sales, the supplier does not require a warehouse to store the goods. The retailer is also not liable for the monetary repercussions of the consigned stock and displaying a variety of products adds value to the retailer’s business.
- Consignor-Consignee Relationship: Using the consignment sales process builds a strong relationship between the consignor and the consignee. Ordering and selling products with the change of course every now and then establishes a stronger relationship between both parties.
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