How do you keep track of consignment inventory?

Consignment inventory tracking requires carefully monitoring, tracking and shared trust by supply chain partners. Manual spreadsheets, while easy to set up, are prone to errors and lack real-time data. For accurate tracking, specialist inventory management software is the best solution. Using an automated inventory tracking system can provide instant inventory visibility of the stock on hand and ensure all parties get the real-time inventory vision they need for smooth consignment management.

Effective consignment inventory management needs to ensure two vital data capture points are effectively managed - storage cabinets and stock rooms, as well as the point of use. If automated supply management systems are used to monitor stock stored in cabinets, smart cabinets and on store room shelving, as well as at the point of use, then this closes the supply chain loop and ensures accurate stock levels and consumption data - both vital for transparent consignment managment between providers, vendors and distributors.

How do you account for consigned inventory?

Healthcare providers using consignment inventory, may access the supplies on site but they don't technically ""own"" these supplies. The vendor/distributor retains ownership of stock that is generally stored at the provider's site. Items transfer ownership, and require payment by the provider, once they are used at the point of care.

There are often disagreements between providers and distributors as both can have different data on items in stock and utilized. This means that billing disputes are common and take time to resolve. New technology that gives shared vision to all supply chain partners is ensuring much smoother consignment management as everyone has access to central stock data for easier accounting and management.

What is the consignment inventory method?

In healthcare, the consignment inventory method allows providers to stock medical supplies and equipment without upfront purchase costs or responsibility for potential expiry wastage. Vendors or distributors essentially ""loan"" these items to the facility, retaining ownership until they're used. This frees up valuable working capital for hospitals and clinics, while enabling them to have a wide range of items at hand.

Providers get access to necessary supplies without a large upfront investment, and vendors have the advantage of having their products on site, potentially leading to increased sales volume.

What is the problem with consignment inventory?

The consignment inventory system in healthcare, while offering benefits, isn't without drawbacks. One key issue is potential for inaccurate inventory tracking. Since vendors retain ownership, healthcare providers might not prioritize meticulous record-keeping for consigned items. This can lead to discrepancies between what's physically present and what the vendor believes is on hand, as well as disagreements over consumed products. These discrepancies can result in billing issues or shortages when supplies are needed most.

Technology is bringing supply chain partners togethery with shared inventory vision, so that all parties can work closer together with transparent data.

How is consignment inventory reported on the balance sheet?

Consignment inventory throws a curveball at traditional balance sheet reporting for healthcare providers. Unlike typical inventory purchases listed as assets, consigned items are ""loaned"" to the provider by the vendor or distributor. They are not stock items as they are not owned by the facility, therefore, they don't appear as assets on the balance sheet.

Instead, consigned inventory finds its place on the other side of the equation – as a liability. A specific account called ""consignment payable"" reflects the current amount owed to the vendor for the unused consigned goods. This account essentially represents a future payment obligation for the supplies until they're used by patients and the commission is paid to the vendor. The issue is that providers and vendors may not agree on which items have been used, which commonly triggers disputes. Automated inventory and consignment management systems are now being used to provide shared data for more synchornicity between consignment partners.

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