Managing Inventory at Customer Locations using Customer Consignments

Managing Inventory at Customer Locations using Customer Consignments

Written By Janice Phelps, Operations Director

These days, every company is looking to maximize revenue while reducing costs. In many companies, this is difficult because often that reduction in cost results in keeping less inventory in stock. This reduction may be achieved by only purchasing inventory when there are sales for the items, or by downsizing their warehouses. And having less inventory in stock means risking a decrease in customer satisfaction.

Many companies have addressed this issue by shipping items to their customers on consignment. Typically, this means that the customer takes possession of the items, and, once sold to their customer or consumed by them, they receive an invoice, and then additional inventory is sent to replenish what was sold. After a certain period of time, the items are returned to the consignor, and are placed back into their inventory.

By using Blue Moon’s Customer Consignment module, the initial shipment or replenishment shipment of the items is done using standard Dynamics GP Sales Transaction Entry, however, the amount on the customer’s invoice is zero, and, behind the scenes, a transfer is performed to move the items from the shipping warehouse (consignor) to the customer’s (consignee) warehouse (a Dynamics GP site ID that may be customer-specific). The inventory is still owned by the consignor, but can be managed, tracked, and even confirmed by an inventory count at the customer’s location.  That keeps the auditors happy.

Once the items are sold, an invoice is created that has the customer’s pricing on it, and relieves the inventory from the customer’s site. In cases where a salesperson visits the customer to take the inventory and generate the invoice, or in cases where the desire is to have a self-service environment, jLAN Mobile (priced and sold separately) may be used to generate the invoice and submit it directly into Dynamics GP.

If the items are instead returned back to the consignor, the Sales Return document is processed, which, like the initial shipment, is priced at zero dollars, and facilitates the transfer back from the customer’s site to the consignor’s site.

Replenishments to the consigned inventory are processed in the same fashion as the original shipment. Sales volumes and trends for this customer can be easily tracked using the existing Dynamics GP tools, providing an easy method to suggest new products, rotate stock, and monitor any discrepancies.

Contact our Channel Management team for more information about Customer Consignments!

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