The process known as SAP Consignment is one in which the user purchases the products from a vendor but does not value that stock. Only after products are obtained from the vendor’s store is the user required to pay the vendor. The best example would be a car dealer who buys goods from its vendors for display and advertising purposes and only pays them once the automobiles are sold.

There are specific requirements/steps established for the consignment process to work, and the complete consignment process in SAP MM is handled by an item category in a purchasing document.