Consignment stock is inventory held at a buyer’s or third-party location where legal ownership remains with the supplier until the goods are consumed or sold, improving product availability while deferring payment obligations.
In trade practice
In food and agri trade, consignment stock arrangements are used for ingredients such as frozen fruit, dried pulses or oils where a buyer wants guaranteed availability without committing capital upfront. The supplier and buyer must agree in writing on stock rotation rules, minimum and maximum holding quantities, reporting frequency and liability for spoilage or damage while goods are on consignment. Regular stock reconciliation reports, typically monthly, are exchanged so the supplier can invoice accurately for consumed quantities. Failure to define responsibility for product that expires on-site is a common source of disputes.
In a specification
A consignment stock agreement should specify the transfer-of-title trigger, the reporting format and frequency, and the party responsible for insurance and storage costs during the consignment period.