Consignment Inventory
Consignment inventory is stock held at the customer's location but owned by the supplier until it is used or otherwise consumed under the agreement.
What this term means in maintenance
Consignment inventory is stock held at the customer's location but owned by the supplier until it is used or otherwise consumed under the agreement.
Why consignment is used
It may improve availability of:
- High-value parts
- Specialist components
- Frequently used items
- Long-lead materials
- Vendor-specific spares
Practical example
A bearing supplier holds agreed stock inside the plant, and the customer is charged when an item is issued.
Required controls
The arrangement should define ownership, counting, replenishment, damage, expiry, usage reporting, pricing, and termination.
CMMS integration
Issues should update the work order and trigger supplier consumption reporting.
Common mistake
Mixing consignment and customer-owned stock without clear ownership creates accounting and replenishment errors.
Related concepts
Related maintenance terms
Keep exploring connected CMMS, reliability, and maintenance planning terms.
Vendor-Managed Inventory
Vendor-Managed Inventory is an arrangement in which the supplier monitors agreed stock information and manages replenishment within defined rules.
Spare Parts Service Level
Spare parts service level measures how reliably maintenance inventory can meet valid parts demand when required.
Inventory Carrying Cost
Inventory carrying cost is the annual cost of holding spare-parts inventory, including capital, storage, insurance, handling, deterioration, and obsolescence.
Consignment Inventory FAQs
- What is consignment inventory?
Supplier-owned stock held at the customer's site until used.
- When does ownership normally transfer?
According to the agreement, often when the item is issued or consumed.
- What must the agreement define?
Ownership, usage, replenishment, counting, damage, expiry, pricing, and termination.