What is a consignment warehouse?
By definition, a consignment warehouse is a warehouse of a supplier or subcontractor (called consignor), which is located in the immediate vicinity or on the premises of the recipient (called customer; called consignor). The consignment warehouse is used for the safe and smooth provision of goods by the customer, who regularly notifies the supplier of the withdrawal.
The quantity withdrawn from the warehouse simultaneously triggers a notification to the supplier. The time of removal of items from the consignment warehouse is determined by the customer. The supplier remains the owner of the goods until they are removed.
Advantages of a consignment warehouse for the customer
Every business owner must find solutions to increase customer satisfaction and sales while saving costs and minimizing capital commitment. A consignment warehouse can be a successful building block for a company.
The customer does not have to worry about delivery and inventory of goods. The parts are always ready to hand and quickly available for the customer. This increases the satisfaction of the customer. The purchaser 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 located in different countries within the EU, different tax regulations (e.g. VAT) may have to be observed. Both companies require an identification number for the intra-Community movement of goods.
Special form: Supplier Logistics Center (LLZ)
Large customers who require 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 automotive manufacturer that 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 focus solely on the production of the vehicles.
As long as the prerequisites are met, a consignment warehouse offers the supplier the opportunity to strengthen customer loyalty. Customers, on the other hand, benefit from the low capital commitment and thus reduce their storage costs. For the optimal cost-benefit balance of a consignment business, a coordinated IT infrastructure is required. This enables suppliers and purchasers to view important data at any time, control essential processes and process notifications of withdrawals automatically.