Consignment Inventory Management

This article covers consignment inventory management within Stock&Buy.

Inventory consignment occurs when a consignor (the owner) sends goods to an agent (the consignee) who sells the goods. The consignor owns the goods until they are sold. The goods appear as inventory in the accounting records of the consignor, not the consignee.

Consigned stock can easily be managed within Stock&Buy using the multi location feature. This feature helps separate stock into related but independent locations or warehouses.

To better explain consigned inventory management within Stock&Buy, let’s consider the example of a consignor, Alice and a consignee Bob. Alice holds X units of stock for a given product, she wants to send Y units to Bob as consigned stock.

1. Initial setup

In Stock&Buy, each consignment location should be created as a warehouse location. Alice creates a location, namely Cons_Loc where the consigned stock will be located.

2. Initial Transfer

To send X units of stock over to Bob, Alice creates a stock transfer with From location assigned to her main warehouse and To Location assigned to Cons_Loc. The transfer has one line to move X units of stock to Bob’s location.

3. Recording sales

Every now and then, Bob will send a report highlighting the total sales made on Alice’s products. As a result, Alice creates a sale order in Stock&Buy. The sale order Ship From location must be set to Cons_Loc so stock can correctly be subtracted from the consignment location.

The sale order and other related transactions will automatically be created on your accounting system such as Xero if you have one installed. You can find more details about the Xero installation settings at this link.

4. Returning inventory

Let’s assume that Bob sold Y units of stock from Alice’s consigned stock and has Z units remaining which he sends back to Alice.

X=Y+Z

To account for this, Alice creates a stock transfer to move Z units from the consignment location Cons_Loc to her main warehouse.

4. Reporting

The Stock On Hand report can be used to create a report of all stock available at given consignment location at any time.

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