What is meant by Consignment stock?
The term "consignment stock" refers to a storage arrangement where inventory is held by the supplier but remains owned by the buyer. Goods in a consignment stock remain in storage until they are actually used or sold. The buyer pays for the goods only when they are withdrawn from the stock. This method helps reduce inventory levels for the buyer while improving supply readiness.
Typical software functions in the area of "consignment stock":
- Inventory Management: Monitoring and managing the inventory in the consignment stock, including automated replenishment and tracking of goods movements.
- Order Management: Creation and management of consignment orders, including the ability to automatically generate orders based on inventory levels and sales forecasts.
- Reporting and Analysis: Generating reports to analyze inventory levels, turnover rates, and goods outflow to support informed decision-making.
- Cost and Billing Management: Managing costs associated with the consignment stock, including recording and invoicing of storage and transaction costs.
- Real-time Data Transfer: Ensuring timely transfer of inventory data between supplier and buyer to improve transparency and availability of information.
- Contract Management: Managing and monitoring consignment agreements, including defining terms, agreements, and deadlines.
- Automated Notifications: Notifications for low stock levels, overdue items, or other relevant events to enable proactive measures.
Examples of "consignment stock":
- Raw Materials Consignment Stock: A manufacturer receives raw materials in the supplier’s consignment stock but pays only for the amount actually used.
- Retail Consignment Stock: Retailers receive goods from suppliers on consignment and are billed only when the items are sold.
- Medical Device Consignment Stock: A hospital manages medical devices in a consignment stock and pays only when the devices are used or consumed.
- Automotive Parts Consignment Stock: Workshops have access to a stock of auto parts, paying only when the parts are used.