3.7 Special Business Processes: Consignment, Rush Orders, Cash Sales, and Free-of-Charge Deliveries

Special Business Processes: Consignment, Rush Orders, Cash Sales, and Free-of-Charge Deliveries

Quick Summary: Beyond standard order-to-cash workflows, enterprise sales environments require specialized document types to manage unique physical fulfillment and billing demands. These include Cash Sales (counter sales with immediate delivery and order-printed invoice), Rush Orders (urgent warehouse dispatches with immediate delivery), Consignment (vendor-managed inventory stored at customer site under Special Stock W), and Free-of-Charge Deliveries (complimentary samples and corrective shipments).

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Cash Sales Processing (Order Type CS)

In a Cash Sales process, the customer orders goods, pays immediately in cash or by card at the sales counter, and picks up the physical merchandise simultaneously.

Customizing Mechanics in Transaction VOV8

• Order Type: CS (internal key BV).
• Immediate Delivery: Active. Saving the sales order immediately creates the outbound delivery (delivery type BV); goods issue is posted later as a separate step so the customer does not wait.
• Shipping Condition: A shipping condition such as 10 (immediately) can be set in the order type so that a suitable shipping point is determined.
• Billing Type: Order-related billing type BV (cash sale). It has no output determination of its own (the receipt was printed from the order), no new pricing, and posts to a cash settlement account instead of the customer account. Cancellations use billing type SV.

The Critical Architectural Difference in Invoicing

A key certification concept is how the invoice receipt is produced:

• In standard sales, customer invoices are printed only after a billing document is created in transaction VF01.
• In Cash Sales, the printed cash sale receipt provided to the customer (output type RD03) is generated and printed directly from the sales order upon save!
• The actual billing document (type BV) is generated later in background batch processing (transaction VF04). When VF04 runs, it does not print another invoice for the customer; instead, it generates the internal billing document to post financial entries: debiting the Cash Clearing Account and crediting Sales Revenue.

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Rush Order Processing (Order Type RO)

In a Rush Order, the customer requires immediate physical dispatch from the warehouse, but commercial billing follows normal credit terms (e.g., Net 30 days) rather than counter payment.

Customizing Mechanics in Transaction VOV8

• Order Type: RO (internal key SO).
• Immediate Delivery: Active. Saving the sales order automatically generates an outbound delivery (delivery type LF).
• Shipping Condition: A fast shipping condition such as 10 (immediately) can be set in the order type.
• Billing Behavior: Billing does not occur immediately. The order does not print an invoice. Instead, the outbound delivery document proceeds through normal warehouse picking, packing, and Post Goods Issue (PGI). Once PGI is posted, a standard delivery-related invoice (type F2) is created in transaction VF01.

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The Four-Step Consignment Process

Consignment inventory involves placing company-owned stock at the customer's warehouse or job site. The goods remain the legal property of the selling enterprise until the customer withdraws them for consumption or resale.

Special Stock Indicator 'W'

Consignment stock is tracked in inventory management as Special Stock 'W' (Customer Consignment Stock). Special stock W is:

• Located physically at the customer site.
• Managed separately in table MSKU (Consignment Special Stock by Customer).
• Still part of the selling company's valuated stock, recorded separately for each customer; it is not the customer's stock.

Consignment Lifecycle in SAP S/4HANA:
├── 1. Consignment Fill-up (CF)  --> Move stock to Customer Site (Special Stock W)
├── 2. Consignment Issue (CI)    --> Customer consumes stock (Title transfers, Billing posted)
├── 3. Consignment Pick-up (CP)  --> Return unused stock to Vendor Warehouse
└── 4. Consignment Return (CONR) --> Return consumed stock back to Consignment Stock (Credit Memo)

Step 1: Consignment Fill-up (Order Type CF)

• Business Action: Vendor replenishes consignment stock at the customer site.
• Item Category: KBN (Fill-up).
• Fulfillment & Movement Type: Outbound delivery is created. Posting Goods Issue (PGI) triggers Movement Type 631.
• Inventory Impact: Stock transfers from unrestricted plant stock into Special Stock 'W' at the customer location.
• Financial & Billing Impact: Non-billable. No title transfer occurs, no revenue is recognized, and no cost of goods sold (COGS) is posted. The stock remains on the vendor's balance sheet.

Step 2: Consignment Issue (Order Type CI)

• Business Action: The customer reports that they have consumed or sold consignment stock. Title transfers to the customer.
• Item Category: KEN (Consignment Issue).
• Fulfillment & Movement Type: Outbound delivery is created. Posting Goods Issue (PGI) triggers Movement Type 633.
• Inventory Impact: Stock is decremented from Special Stock 'W' at the customer site.
• Financial & Billing Impact: Billable. PGI posts COGS to financial accounting. A delivery-related billing document (type F2) is created to debit customer Accounts Receivable and credit Sales Revenue.

Step 3: Consignment Pick-up (Order Type CP)

• Business Action: The customer requests that unused or obsolete consignment inventory be returned to the vendor's warehouse.
• Item Category: KAN (Consignment Pick-up).
• Fulfillment & Movement Type: Return delivery is created. Posting Goods Receipt (PGR) triggers Movement Type 632.
• Inventory Impact: Stock transfers from Special Stock 'W' back into unrestricted warehouse stock.
• Financial & Billing Impact: Non-billable. Because the stock was never billed during fill-up, no credit memo is generated.

Step 4: Consignment Returns (Order Type CONR)

• Business Action: The customer returns goods that were previously withdrawn and billed via Consignment Issue back into consignment stock.
• Item Category: KRN (Consignment Returns).
• Fulfillment & Movement Type: Return delivery is created. Posting Goods Receipt (PGR) triggers Movement Type 634.
• Inventory Impact: Stock transfers back into Special Stock 'W' at the customer location.
• Financial & Billing Impact: Billable Credit. A returns credit memo (billing type RE) is created with reference to the consignment returns order to credit the customer.

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Free-of-Charge Deliveries (FD) vs. Subsequent Deliveries Free-of-Charge (SD)

In business operations, enterprises frequently ship merchandise without charging the recipient. SAP differentiates between voluntary promotional deliveries and corrective remediation shipments:

Free-of-Charge Deliveries (Order Type FD)

• Purpose: Used for complimentary product samples, marketing demonstration equipment, or promotional gifts.
• Item Category: Configured with item category KLN (Free of charge).
• Document Relationship: Created standalone without requiring reference to any prior sales order.
• Execution: An outbound delivery is created, picked, and issued (Movement Type 601). Financial accounting records COGS against a promotional expense account. No customer invoice is generated.

Subsequent Deliveries Free-of-Charge (Order Type SD)

• Purpose: Used as a corrective remedy when a customer reports that goods were received damaged, short-shipped, or defective during an earlier delivery.
• Item Category: Configured with item category KLN.
• Document Relationship: Mandatory Reference. In transaction VOV8, the Reference mandatory setting is active, so the operator must create the document with reference to the original sales order.
• Execution: Physical replacement units are dispatched via outbound delivery without billing. The document flow links the replacement shipment directly to the original order, maintaining full cost accountability.