How To Strengthen Your Consignment Inventory Management With a Consumer Goods ERP

Let's say, as a distributor, you sell seeds. All different types: pepper seeds, watermelon seeds, tomato seeds. You name it, you sell it. And you have displays at all sorts of shops—big franchises with a significant ecommerce presence, little mom-and-pop brick-and-mortars, and everything in between.

As you know, those shops and those vendors don't own your seeds. You do. The product on the shelf doesn't belong to whoever is selling it. It belongs to you. They're there to help facilitate the transaction. The retail store only buys it (or pays for it) when the consumer does.

Those seeds on display are there on consignment, which means that the shop sells those goods on behalf of the owner. And you keep ownership until it sells. And once it does, you pay a small fee to the shop owner as compensation.

Most things you see at a big, multi-purpose shop, items with brand names, they're there on consignment. And this applies to online stores, as well—Amazon is basically one massive consignment shop. Of course, they have their own branded products, but every other product is there on consignment.  

If you sell dehumidifiers, for example, your products are up on Amazon, they're being sold on Amazon. It looks as though consumers are buying from Amazon. But those dehumidifier units that sit in the Amazon warehouse are still owned by you. And based on the specific agreements you have with your specific vendors, at an agreed-upon time, they'll accumulate what's sold and send you a report and the money you're owed from those sales.

Here's the thing, though. If you search dehumidifier on Amazon, there are, quite literally, hundreds of options. It's a competitive marketplace. And you need the right tools to help you navigate those challenges and complexities. An enterprise resource planning (ERP) can do that. If your ERP doesn't have consignment functionality, doesn't have the tools to empower you to do the work you need to do, track your inventory effectively, communicate with vendors effectively, you're going to run into some problems.

When it comes to managing your product, a consumer goods ERP solution enables you to:

-       Alleviate order fulfillment burdens – With the right ERP, you can maximize order fulfillment and shipping efficiencies. Without the right technology, you're likely spending too much time, money and labor on fulfilling orders. Streamline those processes. Don't risk missing a sale just because your internal processes are clunky and inefficient. Let your technology do the work for you, so you can focus on cultivating business. -       Improve efficiency across the supply chain – You must focus on best-in-class delivery to meet retail customer requirements. With brick-and-mortar stores competing against numerous online retailers, it is more important than ever for you to optimize performance. Retail compliance requirements will continue to become more demanding. Supply chain leaders adopt the tools they need to maintain best-in-class status. An industry-specific ERP enables you to do that. -       Seamlessly communicate with vendors – Having the right tools in place, such as integrated electronic data interchange (EDI) and tools for accurate forecasting for long lead times, helps consumer goods companies reduce distribution errors. Most of your consignment vendors have their own unique rules when it comes to compliance. Our EDI functionality enables you to improve collaboration and communication with your vendors as well as increase data accuracy. -       Strengthen consignment inventory management – You want an ERP with tools to help you create consignment process flow to meet both parties' needs effectively. To continue with the dehumidifier example from above, with our consumer goods ERP, you can track the inventory that has been consigned to each vendor. If Amazon were to reach out and say, we need to fill up our distribution center, here's an order you need to fulfill. Because it's inventory that's consigned, you know you're not processing a sales transaction, but you're doing everything else that generally goes along with it—picking, packing and shipping. Physically, you no longer have the goods, you don't have that excess inventory, but they haven't been sold either. The dehumidifiers are in limbo—so you need technology that's able to track those dehumidifiers that have been consigned. You still own them, they're in the books financially, and as Amazon sells them, our distribution ERP will true-up inventory and capture the sale. If you're responsible for replenishing the warehouse (the vendor isn't initiating it), you need to make sure you have the technology to support that kind of visibility. Because if your dehumidifier isn't readily available on Amazon, consumers will simply buy a different one—they do have thousands of options, after all. We're here to help. Our distribution ERP alleviates order fulfillment burdens, improves efficiency across the supply chain and strengthens consignment inventory management abilities.

Ready to find out how to master consignment management? Reach out, now.