Consignment inventory
Also called consignment stock, consigned inventory
Reviewed by Dasha ShakovVP Marketing, Proton
Updated
What is consignment inventory?
Consignment inventory is stock that sits at the customer’s site but belongs to the supplier until used, so the customer pays only for what it consumes. Ownership passes when the stock is used or sold; distributors offer consignment to customers, and some manufacturers consign stock to distributors.
Consignment inventory example
A distributor keeps ownership of a cabinet of cutting tools at a machine shop. Each month it counts what the shop used and invoices for those tools only.
Related terms
- Vendor-managed inventory (VMI)Vendor-managed inventory (VMI) is an arrangement in which a distributor or manufacturer keeps a customer’s stock filled to agreed levels.
- Integrated supplyIntegrated supply is an arrangement in which a distributor takes over most or all of a customer’s purchasing, stocking and storeroom work for a category.
- Inventory carrying costInventory carrying cost is the total cost of holding inventory over time: the cash tied up, space, insurance, taxes, handling, damage and obsolescence.
- Dead stockDead stock is inventory that hasn’t sold for a long time and probably won’t sell at its normal price.
