Consignment stock is growing in popularity in retail, especially local small business retail. Here is advice from our POS software company on handling consignment stock.
We have developed this advice following work with gifts shops, antique shops and other businesses offering consignment stock and using our POS software.
Retailers who sell consignment stock, or commissioned goods (typically from a local supplier or artisan) and want to keep track of the products through sales and potentially receiving/returning stock. There are a few ways to handle this in the Retailer POS software from Tower Systems, using different setups, with their own benefits and limitations.
Three of the ways for handling Consignment stock in the Tower POS software are covered here, and since they are not mutually exclusive, you could mix them together to get something that works for your business. For all three methods, you can also arrive/receive stock through Invoice Arrivals, and Returns of the item can be done through Invoice Arrivals, without much change.
When doing arrivals and returns of consignment products, consider the following. If you need to see quantities on hand of the product in the system when you sell, you will need to arrive, or manually adjust the product quantities. Then, process returns on the products later. Alternatively, you can sell into negatives, and only arrive the final quantities of product later.
Using Supplier
A particular supplier can be assigned as a consignment supplier (or multiple suppliers). You can differentiate them simply by adding ‘Consignment’ to their names (or in any other effective manner).
Many reports in Retailer (such as Supplier Sales Analysis and Stock Listing Report) can be set to run for and exclude certain suppliers. The same can be done in stock ordering so this may be the easiest one to implement.
The limitation is that certain reports like the Detailed Takings report cannot be told to include/exclude particular suppliers.
The benefit is you can continue organising stock in Departments and Categories that are mixed with other, non-consignment stock. Carrying a larger amount of consignment products is also fine with Department names and stock tags on reports still meaningful and descriptive of the product itself.
Using Department
A particular department can be setup as a Consignment department, specifically used for holding items on consignment. This department could be named to include the word ‘Consignment’ to differentiate it, and can also be marked as an Agency Department. Agency Departments have the added feature of being able to be excluded as a tickbox option on many reports (e.g. Detailed Takings Report).
This can mean that the Department name is not as meaningful or descriptive of the products, which should be fine for small numbers of consignment products that are quite similar.
Many reports can be run to exclude Agency Departments (if used here) which can be very helpful. This includes the very useful Stock Listing report, which gives you a total stock value on hand.
Using Stock Tags
Stock tags can be created to track products on consignment, and you can have as many as is meaningful to your business without impacting or bloating reports and information.
E.g. Kitchenware Consignment tag, Foodstuff Consignment tag, Fashionwear Consignment tag.
These will need to be assigned to the relevant products.
The main drawback with this is that reports are only going to be able to include these products based on tags. The reports cannot exclude items based on these tags so if you need to run particular reports and easily exclude consignment products, this method may not be suitable.
The big advantage in using tags is allowing your products to be assigned to meaningful Departments together with other product. Any reports that use tags (e.g. Stock Listing report, Detailed Takings report) will also find it easy to list these products, and potentially show subgroups of the consignment products (if more tags were added) or include other products that have similar tags.
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