The consignment stock of inventories: Industrial case and performance analysis

The “Consignment Stock” technique is a novel approach to the management of inventories in supply chains. It is based on an improved collaboration between the company and its suppliers, one that is acquiring growing importance in industrial environments, as the authors have found in Italy. The main aim of the present work is to describe the technique itself, thus underlining its potential benefits and pitfalls. The case proposed refers to a company manufacturing components for the automotive industry. Essentially, the company offered its suppliers the opportunity of stocking part of the items in its own warehouses, with the agreement that they would guarantee over time an inventory level between a set minimum and a maximum value.