As profit margins grow tighter and supply chains diversify, managing inventory has become a challenge for many manufacturers and their partners. Many manufacturers have been turning to new and innovative supply chain models such as parts consignment inventory to improve their cash flow management and increase cost savings. 

What is consignment inventory?

Consignment inventory is a supply chain model in which a retailer offers a product for sale, but the supplier retains the actual ownership of the product until a customer purchases it. Put simply, the retailer doesn’t buy the inventory until the product is actually sold, allowing them to return any unsold items that customers don’t purchase to the OEM. This provides advantages to suppliers and retailers alike, such as greater product visibility and inventory control to suppliers, and less financial risk for retailers. Suppliers often experience reduced inventory costs as well, and good communication across both parties allows this model to succeed for many. 

Parts Consignment Inventory for Manufacturers

While still relatively new to the manufacturing industry, parts consignment inventory models have proved incredibly beneficial to manufacturers. Introducing new products poses risks for everyone, but consignment plans often reduce that risk. Manufacturers are given far more visibility into the supply chain and product introduction. They also have better ability to maintain right inventory levels, offering more efficient supply chain management, improved product costs, useful forecasting, and actual usage data that can help drive production. 

Parts consignment inventory offers many other advantages. It provides manufacturers with a risk-free way to establish relationships with new distributors. They can take control of stocking levels as well, since they have better visibility on what products are moving quickly and which ones aren’t. Also, manufacturers can displace competitive product lines, implement new replacements with ease, and have a better understanding of distributor and end-customer relationships. 

Consignment Inventory at Global Precision Parts

In addition to our quality manufacturing services, Global Precision offers an automated consignment inventory program. We provide our customers with complete visibility of their inventory outside your facility, significantly reducing the cost and risks typically associated with inventory management. 

For more information about our manufacturing services, our inventory management programs, and more on our website!