Consignment Inventory
Consignment inventory is a supply chain arrangement where the supplier (consignor) places spare parts or goods at the customer’s (consignee) site but retains legal ownership until the items are consumed, sold, or used. In maintenance contexts, this ensures immediate access to critical spare parts without upfront capital expenditure, as the buyer only pays upon actual usage.
In shop floor maintenance, consignment inventory is implemented by having the supplier ship parts to segregated bins or virtual locations in a CMMS to prevent co-mingling with owned stock. Maintenance teams pull parts for repairs, and the CMMS triggers a consumption transaction that transfers ownership and generates billing. Replenishment may be monitored by the buyer or proactively managed by the supplier under a collaborative partnership, ensuring availability of critical spare parts while reducing upfront costs.
How does consignment inventory differ from Vendor Managed Inventory (VMI)?
In consignment, the buyer often monitors stock and triggers reorders, whereas in VMI, the supplier handles both ownership and proactive replenishment.
What CMMS transaction triggers ownership transfer?
An explicit consumption transaction (e.g., issuing a part to a maintenance job) or implicit consumption via a sales/production order triggers the inventory ownership change journal.
Why is consignment inventory preferred for slow-moving maintenance parts?
It eliminates upfront financing costs for the buyer while ensuring availability continuity for critical, low-frequency repairs.