Consignment Stock

However, you may be wondering how consignment stock can benefit your company and would like to know more. So keeping it brief, below is a little insight into how it works, and what the benefits are.

What is consignment Stock?

Consignment stocks are products that are owned by the seller but stored by the customer. This situation has benefits to both the customer and the seller. Customer benefits include :

• Elimination of delivery costs.
• Improved cash flow (the customer only pays for goods after they are used, not based on when they were shipped, so money is not tied up in unused or slow-moving stocks).
• Volume price reductions.
• Greatly reduced paperwork (a single blanket purchase order can be issued on an annual basis)
• Secure and visible supplies of qualified products.
• Guaranteed fixed prices for the first 12 months.
• Mutual benefits from a long-term business relationship.

Lynbond offers the consignment stock option to customers that have medium to high usage of consumable products.  Typically, this would mean that the customer consumes at least one pallet of consignment products each month. In some cases, depending upon the specific product range, consignment could be set up for deliveries of one pallet every two months.

The Lynbond consignment agreement includes a list of products, their prices and their units of measure (UoM).

Following the signing of a consignment agreement, Lynbond will supply the agreed range of products to the customer. Normally, the quantities would equate to approximately two months usage, but this can vary at a product level. For example, products with low volume usage might have a whole carton initially delivered, rather than a few smaller packs.

In the last week of each month, the customer has to undertake a stock-check of the consignment stocks and issue this information to Lynbond. Lynbond then raises an invoice for the items used and ships replacement stocks to top-up the consignment stores.

A record of all consignment transactions is kept in an MS Excel workbook that is updated and issued each month by Lynbond.