What is a consignment warehouse?
By definition, a consignment warehouse is a warehouse of a supplier or subcontractor (called consignor) that is located in the immediate vicinity or on the premises of the customer (called consignor). The consignment warehouse serves the safe and smooth provision of goods to the customer, who regularly notifies the supplier of the withdrawal.
The quantity withdrawn from the warehouse simultaneously triggers a notification to the supplier. The customer determines the time of removal of items from the consignment warehouse. The supplier remains the owner of the goods until they are removed.
Advantages of a consignment warehouse for the customer
Every entrepreneur has to find solutions to increase customer satisfaction and sales while saving costs and minimising capital commitment. A consignment warehouse can be a successful building block for a company.
The customer does not have to worry about delivery and stock of goods. The parts are always ready to hand and quickly available for the customer. This increases the satisfaction of the customer. The buyer also saves on investment costs, does not bear the investment risk for his own goods or parts warehouse and reduces his capital commitment and storage costs.
Advantages and disadvantages of a consignment warehouse for the supplier
The main advantage of a consignment warehouse for the supplier is the stronger customer loyalty and the relative plannability of his sales. The higher capital commitment that the management of one or more consignment warehouses results in for the supplier can be seen as a disadvantage.
If the registered offices of the supplier and the consignor are in different countries within the EU, different tax regulations (e.g. VAT) may have to be observed. Both companies need an identification number for the intra-Community movement of goods.
Special form: Supplier logistics centre (LLZ)
Large customers who need many individual parts, which in turn have to be delivered by different consignments, often set up an LLZ in intralogistics. Think, for example, of an automobile manufacturer who houses separate areas for each consignment in a hall. Each consignment is responsible for inventory management and quality control of the respective storage area and its parts. This allows the manufacturer to concentrate solely on the production of the vehicles.
As far as the prerequisites are fulfilled, a consignment warehouse offers the supplier the opportunity to strengthen customer ties. Customers, on the other hand, benefit from the low capital commitment and thus reduce their storage costs. A coordinated IT infrastructure is necessary for the optimal cost-benefit balance of a consignment shop. This enables suppliers and acquirers to view important data at any time, control essential processes and process notifications of withdrawals automatically.