Reduce working capital by 45% with vendor-managed inventory consignment programs. Our system streamlines supplier partnerships, automates usage tracking, and ensures parts availability without the financial burden of ownership.
Manage $2M+ in vendor-owned inventory with zero capital investment and 99% availability.
Consignment agreements are strategic partnerships where suppliers maintain ownership of inventory stored at your facility until the parts are actually used, dramatically reducing working capital requirements.
Our comprehensive management system integrates with min-max reorder points to ensure optimal stock levels while the vendor retains ownership. You only pay for what you use, when you use it, transforming fixed inventory costs into variable operational expenses.
| Agreement Element | Standard Terms | Benefit |
|---|---|---|
| Ownership Transfer | Upon Usage | Cash preservation |
| Payment Terms | Net 30-60 days | Extended float |
| Min/Max Levels | Vendor managed | No stockouts |
| Restocking | Automatic | Zero effort |
| Inventory Risk | Supplier owned | Risk transfer |
Essential elements for successful vendor partnerships that work seamlessly with your vendor catalog integration systems.
Comprehensive legal structure protecting both parties' interests and defining responsibilities.
Day-to-day management protocols ensuring smooth operations and accountability.
Payment structures and pricing mechanisms that optimize cash flow and costs.
Track key performance indicators to ensure your consignment programs deliver maximum value while maintaining operational efficiency. Integration with fast-moving parts analysis identifies ideal consignment candidates.
Working capital reduction
Parts availability rate
Inventory cost savings
Admin time reduction
Carrying Cost Elimination
Obsolescence Risk Reduction
Administrative Savings
Cash Flow Improvement
Proven strategies for successful vendor partnerships, coordinated with annual inventory counts for accurate reconciliation.
Evaluate suppliers based on financial stability, service levels, and technology capabilities.
Secure favorable terms including pricing, liability, and performance guarantees.
Connect vendor systems with your inventory management for seamless operations.
Regular audits and KPI tracking to ensure program objectives are met.
Expert answers to optimize your vendor partnerships
High-value, slow-moving items with predictable demand patterns are ideal for consignment. This includes major components, specialized parts, and seasonal items. Fast-moving consumables like filters and fluids may be better managed through traditional purchasing with cross-reference optimization.
Implement barcode or RFID scanning at point of use, integrate with work order systems for automatic consumption recording, and conduct regular cycle counts. Monthly reconciliation with vendor records ensures accuracy. Digital tracking eliminates manual errors and provides real-time visibility.
Consignment inventory remains the property of the supplier until used, so it doesn't appear on your balance sheet and you don't pay property tax on it. However, sales tax obligations vary by jurisdiction. Consult your tax advisor to ensure compliance with local regulations and proper accounting treatment.
Typically, suppliers maintain insurance on their inventory while you're responsible for general liability and care/custody coverage. Clearly define insurance responsibilities in the agreement, including coverage amounts, named insureds, and claims procedures. Review with your insurance provider to avoid coverage gaps.
Include protective clauses in agreements such as immediate purchase options, alternative supplier arrangements, and clear title documentation. Maintain relationships with backup suppliers for critical items. Consider requiring performance bonds or guarantees for high-value consignment programs.
Leverage your usage data from equipment maintenance records to demonstrate consistent demand. Offer longer-term commitments for better pricing, consolidate vendors to increase volume, and negotiate performance-based incentives. Consider offering preferred vendor status in exchange for favorable terms.
No, use a hybrid approach. Consignment works best for expensive, slow-moving parts. Fast-moving items like those tracked in your regular maintenance supplies may be more cost-effective through traditional purchasing with volume discounts. Analyze each category based on usage, value, and criticality.
Comprehensive solutions for wear parts optimization
Connect supplier systems for real-time pricing and availability.
IntegrateValidate consignment stock levels with comprehensive cycle counting.
Plan CountsTrack high-value undercarriage components ideal for consignment.
Track PartsDiscover specialized inventory solutions across all categories
Join leading fleets saving 45% on working capital through strategic consignment programs. Ensure parts availability without ownership burden while improving cash flow.
Reduced working capital needs
Guaranteed parts access
No obsolescence exposure