The Difference between Consignment and Third-Party Procurement in SAP MM

Consignment procurement in SAP MM refers to a scenario where the material is stored at the customer's location until it is consumed. The ownership of the material remains with the vendor until it is withdrawn by the customer.

In contrast, third-party procurement involves the purchase of goods directly from a supplier and the delivery is made directly to the customer, without the goods being stored in the company's own inventory. The entire transaction is managed by the third-party supplier.

While consignment procurement is suitable for situations where the customer does not want to take ownership of the goods until they are needed, third-party procurement is often preferred when the company wants to streamline its inventory management processes and reduce overhead costs.

In summary, consignment procurement involves temporary ownership of goods by the vendor, while third-party procurement involves direct delivery of goods to the customer without passing through the company's inventory.