Consignment is the act of consigning, which is placing any material in the hand of another, but retaining ownership until the goods are sold or person is transferred.
Some of the features of consignment are:
1. The relation between the two parties is that of consignor and consignee and not that of buyer and seller.
2. The consignor is entitled to receive all the expenses in connection with consignment.
3. The consignee is not responsible for damage of goods during transport or any other procedure.
4. Goods are sold at the risk of consignor. The profit or loss belongs to consignor only.
Our VMI vendor managed consignment inventory system is primarily designed to prevent customers who have a hard time predicting their product demand, and to also keep them from running out of ink.
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| Our VMI system provides detailed allocation in graphs and pie charts |
The customer orders, based upon his or her estimated demand for a given period (usually one month), a predetermined amount of his or her most frequently used colors, which could include mixing inks, process colors and/or large volume orders.
Billing is deferred until the end of that period, at which time the customer is billed for the ink he or she actually used during that period, determined by a physical inventory of the consignment items. A full unit billing system is employed, which means that once the customer has opened a given unit of ink (a can, a case of cans, a kit or a drum) he or she pays for the entire unit. When he or she is billed, the customer has 30 days from the date of the invoice to pay.
At the end of each consignment-billing period, the customer’s inventory is restocked to a level based on the previous period’s usage. An approximation of this level is calculated by multiplying last period’s usage by one and one half. For example, if he or she used 85 pounds of process magenta during the period just ended, his or her inventory level for the new period should be 125 pounds. The object is to ensure that the customer always has enough ink without maintaining an unduly high inventory.
Our consignment process is facilitated by the use of VMI (vendor managed inventory), VMI is a business model that allows the vendor in a vendor/customer relationship to plan and control inventory for the customer.
There are a number of advantages that the customer derives from using our VMI consignment inventory arrangement.
There are a number of advantages that the customer derives from using our VMI consignment inventory arrangement.
1. The customer reduces the risk or chance that he or she will run out of ink.
2. The customer receives a volume price, but pays only for the ink actually used.
3. Additionally, credit is extended by the length of the consignment period, since the customer is not billed for the ink consumed until the end of each period.
For more information on our VMI consignment system and services please email us at info@pertechcorporation.com
