Word of the Day: consignment inventory

Word of the Day Daily updates on the latest technology terms |September 7, 2017

consignment inventory Consignment inventory is a supply chain model in which a product is sold by a retailer, but ownership is retained by the supplier until the product has been sold. Because the retailer does not actually buy the inventory until it has been sold, unsold products can be returned. Products sold through the consignment model are often seasonal, perishable or previously owned. The model is especially beneficial to retailers when customer demand is uncertain; it allows the retailer to offer customers a greater variety of products and place a greater emphasis on sales. By carrying the product on consignment, the retailer takes a smaller financial risk since they do not pay for the product unless it is sold. Consignment inventory models can be risky for suppliers because they do not receive payment until retailers sell their inventory. An important benefit, however, is the ability of the supplier to place their product in front of a larger number of prospective customers. In a consignment partnership, a crucial part of the process is inventory management. In contracts, the retailer is called the consignee and the supplier is called the consignor. The change of ownership from supplier-owned stock to retailer-owned stock is called consumption. The consignor and consignee should agree at the outset to mutually advantageous measures. For example, they should specify what commission the retailer will charge the supplier, if any, and how long the consignee agrees to keep unconsumed merchandise before returning it to the consignor.   The intervals at which the consignee will make payments for goods sold are also pertinent to a consignment contract. Agreements should also address delivery and pickup of the merchandise, including the storage conditions of any goods that are not on display, particularly perishable merchandise.   Software for managing consignment inventory is available for large enterprises as well as small and medium-sized businesses (SMB). Such software typically includes components for tracking inventory, consignor and customer management and accounting. Quote of the Day "Tackling the inventory challenge requires investment, but it can be attained quickly via real-time connectivity and sophisticated orchestration across different systems." - Oliver Guy   Trending Terms supply chain management retail vs. wholesale replenishment inventory management vendor-managed inventory digital supply chain   Learning Center What can a materials planner do to better manage inventory? A materials planner is in the tricky position of ensuring the right balance of inventory. Here's some advice on striking the balance of enough, but not too much. Three ways IoT is transforming inventory management The connectivity and real-time analytics inherent in the internet of things could be the game changer for retailers' inventory woes. The essential guide to supply chain management best practices Supply chain management best practices include collaboration, strategy and technology. This guide provides essentials on all three. Top four supply chain strategies to create the omnichannel experience Transforming your supply chain to deliver an omnichannel experience is key to gaining a competitive edge. Here are four ways to make that happen. Eight keys to supply chain sustainability Supply chain sustainability is critical to businesses looking to build a competitive edge and brand image. Here's some guidance you need to know. Quiz Yourself __________ management is primarily about specifying the quantity and placement of stocked goods. a. Inventory b. Logistics Answer       Stay In Touch For feedback about any of our definitions or to suggest a new definition, please contact me at: mrouse@techtarget.com   Visit the Word of the Day Archives and catch up on what you've missed!   FOLLOW US About This E-Newsletter This e-newsletter is published by the TechTarget network. To unsubscribe from Whatis.com, click here. Please note, this will not affect any other subscriptions you have signed up for. TechTarget, Whatis, 275 Grove Street, Newton, MA 02466. Contact: webmaster@techtarget.com Copyright 2016 TechTarget. All rights reserved.