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Inventory management - Inventory Ownership Options

UPPRO offers financial and commercial functionality based on the unique needs of each customer. UPPRO can procure your inventory, and manage and maintain it in our ownership. The opportunities for consignment stock are many and are largely ignored because of the mistaken belief that third-party owned inventory options costs more.
Gaining stocking control gives UPPRO and your suppliers many options with which to be proactive in the management of the supply chain. UPPRO can schedule manufacturing and deliveries to suit supplier timetables rather than be reactive to your purchase orders and a wider network to manage safety stocks can be drawn. The goal with consignment agreements is to define those supply chain opportunities that can result in the double benefit of reduced inventory and reduced cost.

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Consignment Inventory Models

Consignment transfer of ownership models

  • Pay as sold (real-time)
  • Pay as sold during a pre-defined period
  • Ownership changes after a pre-defined period
  • Order-to-order consignment (when next consignment order is placed, previous is billed)

System tracking models (supplier) 

  • Transferred to consignment warehouse/facility
  • Purely an accounting process (rather than moving dollars to payables, it transfers amount to aconsignment account)
  • Sometimes overall quantities are tracked, sometimes quantities are tied to original consignment order

System tracking models (supplier) 

  • Received into consignment warehouse/facility.
  • Purely an accounting process (create an offsetting consignment inventory account)
  • Sometimes overall quantities are tracked, sometimes quantities are tied to original consignment order
  • Transitioning can be a problem (how you deal with owned and consigned quantities of the same item)

 

Consignment Inventory Models

  • Increased cash flow as you pay only for what is used
  • Reduced inventory obsolescence because you have not bought all the material. If the material becomes obsolete, you do not have a lot of on-hand material that you need to sell or write off
  • Decreased inventory values are shown on your balance sheet
  • Increased inventory management efficiency