Consignment Process in Cin7 Core - no Dropship

The consignment process in Cin7 Core typically involves managing goods that are owned by a supplier but stored at a retailer's location. The retailer only pays for the items once they are sold, which means tracking stock, sales, and payments can be a bit more complex.

Supplier / Consigner

Setting Up Consignment Products in Cin7

• Create a Product: For consignment, create a product entry in Cin7 for the items you’ll consign. You’ll assign details like pricing, SKU, description, and stock levels.
• Consignment-Specific Details: You can configure certain products to indicate they are for consignment. This can help separate consignment stock from regular stock in reports, for instance, putting a tag on the products that are for consignment.

Transfer of Inventory to Consignee

• Inventory Transfer: Once a consignment agreement is in place, the seller transfers stock to the consignee. In Cin7, this can be done by creating an inventory transfer to the consignee’s location. The transfer process in Cin7 will ensure that inventory levels at the seller’s location decrease, while the consignee's location will show the transferred goods as consignment stock.

Selling Consigned Goods

• Sale Transactions: When a consigned item is sold, the retailer (buyer/consignee) will record the sale in the usual manner.
• Inventory Adjustment: As the goods are sold, Cin7 will adjust the stock levels for the consignee’s location, ensuring that the items are deducted from consignment stock.

Consignment Sales Reporting

• Sale Tracking: Cin7 will track which items have been sold from the consignment inventory.
• Reporting on Consignment Stock: Cin7 provides comprehensive reports that can differentiate between consignment and regular stock. You can track the consignment items separately through the tags that were added on the product to identify if it's a consigned stock.

Billing the Retailer (Buyer/Consignee)

• Billing the Retailer: The seller invoices the consignee based on the number of goods sold during a given period.
• Payment Terms: The payment terms for consignment can vary, but generally, the seller only gets paid after the goods are sold.

Inventory Replenishment

• Restocking: The seller may need to replenish consignment stock based on the performance of the items at the consignee's location. Cin7 can help monitor stock levels and trigger restock alerts when the consignment inventory is running low.

End-of-Period Reconciliation

• Reconciliation: Periodically, both the seller and consignee need to reconcile the consignment inventory. This helps to ensure that the actual stock levels match the records in Cin7, and any discrepancies can be resolved.

Retailer (Buyer/Consignee)

Receiving Consignment Stock

• Receiving Consignment Inventory: The buyer (retailer/consignee) creates a purchase order and later receives the goods from the seller (supplier). The consigned items are transferred from the seller’s stock to the buyer’s location using the inventory transfer functionality in Cin7.
  • If you were selling in-store, it’s straightforward, but for an online store where you only have one location connected to the web store, you'll need to use bins to track which items are consignment stock. If your system runs multiple locations in Cin7, and the item is being sold on the web store, you'll need to manage the isolation at the bin level within that primary location.
  • When creating the purchase order, use a placeholder cost (e.g., $0.0001) because the price has not yet been determined. It will allow Cin7 to generate the PO without leaving the cost fields blank.
  • When the stock is first received, adjust the stock at $0.0001 (the placeholder cost), this allows the inventory to be recorded and managed without yet assigning a real cost. However, once the actual cost for the consigned items is determined, the stock value in the system should be adjusted to reflect the actual cost. The $0.0001 entry should only be a temporary placeholder.
  • Once the actual cost is known, update the stock value in the system to reflect the correct price.
  • As stock is sold, the corresponding quantity is reduced from the consigned inventory. The buyer only pays for the goods that are sold, not for unsold stock.

• Tracking Consignment Goods: The consigned goods are tracked separately in Cin7, ensuring they’re not counted as regular inventory. Consignment stock will appear in its own designated location within the system to avoid mixing it with standard inventory.

Selling Consigned Products

• Sales Transactions: When a consigned item is sold, the buyer (retailer) processes the sale in the usual manner. The sale is recorded in the system, and Cin7 will automatically reduce the consignment stock levels for the specific consigned product that was sold.
• Invoices and Payments: At the end of each month, or as agreed upon with the seller (consignor), the buyer (retailer/consignee) will provide a report detailing the quantity of consigned items sold, which the seller (consignor) will use to generate an invoice for payment by the buyer (retailer/consignee).

Inventory Management

• Stock Levels: Cin7 tracks and updates consignment stock levels in real-time. The buyer can monitor which consigned items have sold and which ones are still in inventory, ensuring they don't run out of stock or overstock consigned goods.

Reconciling Consignment Stock

• Periodic Stock Reconciliation: On a regular basis, the buyer needs to reconcile the consignment stock to ensure that it matches the records in Cin7. This includes verifying the stock levels and ensuring that any discrepancies are resolved.

Items to Consider

• Wink Reports: This platform can integrate with Cin7 Core which can be used to provide advanced and customizable reporting for various processes, including consignment stock. If you're interested, feel free to reach out, and we'd be happy to arrange a demo.