Consignment looks simple until you count how much money you have sitting at a customer and at a supplier at the same time. After that, it looks different.
In small and mid-sized businesses, consignment usually shows up for one reason: a big customer or a big supplier dictates the model because it works better for them. An automotive parts supplier keeps a "two-week buffer" at the OEM. A fastener manufacturer ships to a distributor who pays only after retail sale. A pharmaceutical wholesaler keeps stock on chain-pharmacy shelves and settles against POS scans. Each of these setups is consignment — and each does exactly the same thing in the books: ownership on one side, possession on the other, settlement only on consumption.
The catch is that the standard ERP in an SME (Comarch Optima, enova365, Subiekt GT or nexo) does not get this out of the box in a way that "just works". You have to make several configuration decisions — and if you do not make them deliberately, the system will make them for you. Usually badly.
What consignment actually is
In the simplest terms: the goods physically sit at the other party, but remain your property until they are consumed (sold, drawn down, used). The invoice is only issued after that consumption, usually reported weekly or monthly.
This solves two real commercial problems. From the customer's side: they have stock at hand, no cash is tied up in it, and they pay only when they sell or use it. From the supplier's side: shorter lead time for the customer, more loyalty, more predictable sales. From the accountant's side: consignment stock is still part of your current assets, even though you physically do not have it.
In Poland this model is standard in four industries: supply chains into automotive (the OEM mandates a buffer on site), construction (a developer keeps steel on the building site), FMCG on retail-chain shelves (rarer, but it happens), and pharmacy (chain pharmacies carry consignment stock). If you are in one of these industries, or you are breaking in as a second-tier supplier, consignment will arrive sooner or later as a contract condition.
Signals that your consignment is not in the ERP
"Not in the ERP" does not mean you don't have it — it means it lives in people's heads, emails and spreadsheets, and the ERP only knows a slice. Three symptoms we see over and over:
Symptom one — warehouse says "we have it", accounting says "we don't". The goods physically left the premises, so the warehouse clerk took them off stock in the WMS. But no invoice was issued, because the customer hasn't drawn down yet. The accountant looks at inventory and sees a negative figure in consignment stock. Or doesn't see consignment stock at all, because nobody split out that category. Every month there is a 50–150 thousand PLN argument.
Symptom two — the stocktake report misses by 5–15% month after month. Always on the shortage side. Always "the customer must have used it and not reported". Nobody really knows. You post stocktake corrections to cost of goods without blinking, because "that's just this industry".
Symptom three — the same stock in two places at once. Consignment inventory at customer A is simultaneously stock available for sale to customer B, because the sales rep sees it in the ERP as "available". It blows up the moment customer B orders against a specific project and the goods aren't there — they are sitting 300 km away at customer A.
None of these are human error. They are missing configuration decisions in the ERP. Once you make them, the symptoms disappear within one settlement cycle.
How this is set up in a typical SME ERP
Most Polish ERPs (Comarch Optima, enova365, Subiekt, Microsoft Dynamics NAV/BC, smaller Polish systems) do not have a "consignment mode" you toggle with one checkbox. They do have the building blocks. Three decisions to make:
- A separate logical warehouse for every consignment location. Not one single "consignment warehouse" — one per customer, or per specific site (if the same customer stores in several locations). This gives you separate stock levels and separate movement history. In Comarch Optima that is a few minutes of work; same in enova365. Naming should be consistent, e.g.
KONS-ABC-WAWfor consignment at customer ABC in Warsaw. - Inter-warehouse transfer (MM) as the shipment document, not an invoice. The goods leave the main warehouse and arrive at the consignment warehouse. No invoice, no cost posting — only the physical location changes. The accountant sees that the inventory is still yours, because the total across all warehouses hasn't moved.
- The invoice comes only after the usage report from the customer. The usage report (or in a simplified version, the end-stock report — difference = consumption) comes in weekly or monthly. Only then do you invoice for the consumption and remove the quantity from the consignment warehouse. This step is worth automating, because keying 300 line items by hand every week is asking for trouble.
A fourth, often forgotten element: **the "available to sell" view must reflect that consignment stock is not available to anyone else**. In most ERPs you either need to exclude the consignment warehouse from the "available to sales" calculation, or create a separate field "commercial stock = main warehouse only, without consignment". This is the small gotcha that often gets missed and generates symptom three above.
A concrete example
With one of our clients — a 35-person manufacturer of fasteners and specialty bolts supplying automotive — consignment had been in place forever. Three large customers (one OEM in Germany, two distributors in Poland) required a two- or three-week buffer at their premises. The total value of consignment stock oscillated around 800 thousand PLN — roughly 20% of their total inventory.
Before cleanup, the configuration looked like this: goods shipped to the customer disappeared from Comarch Optima as "sales against report", consignment-stock positions were tracked in an Excel file on a network drive, updated once a week by one person in the sales department. Every month, during the OEM settlement, there was a negotiation: "we have 12,400 units in consumption, you are invoicing 13,100, where is the rest". The usual answer was "it must be in one of our bins, we'll look". Concretely: a steady 4–6% monthly variance, which the company absorbed as "natural loss". In money: 25–40 thousand PLN per month, around 400 thousand per year.
The rebuild took three weeks and stayed under 25 thousand PLN of budget: separate consignment warehouses per customer in Optima, MM transfers as shipment documents, usage reports arriving from customers once a week as CSV (simple integration — position mapped by SKU). On top of that, sales reps stopped seeing consignment stock in the "available" field — which immediately revealed that "available" stock was 20% lower than everyone had assumed.
Three months in, monthly variance dropped to 0.5–1%, mostly from genuine transport damage, which was now visible as specific line items for claims rather than melting into the overall mass. The finance director cut around 30 thousand PLN per month from costs that had previously been written off as "shortage". The whole thing took about 60 consulting hours plus 20 hours from their accountant, including configuration, testing and hypercare.
What to avoid
Three patterns we see often and that always come back to bite.
- "One consignment warehouse" for all customers. Gives you a total; doesn't give you per-customer stock. When stocktake time comes, you don't know who has how much — and back to Excel. Create a separate warehouse per location, even if there are only two.
- Usage reports "once a quarter, because that works for us". Consignment requires settlement discipline, otherwise after three months nobody remembers what happened. Monthly minimum, weekly better. If the customer can't send a report, that doesn't mean consignment can't be settled — it means you have to build them a simple web form or integrate with their system.
- Consignment without a written contract, because "we've been working with Marek for years". Legally, consignment is custody with the right of consumption. Without a written contract that states who bears the risk of damage, theft, fire, what happens at the end of the relationship and how long the customer has to pay after reporting — you are in a vacuum. The ERP will organise invoicing; the contract will organise risk.
What to do this month
If you have any form of consignment — on the customer side or the supplier side — and you recognise even one of the symptoms above, start with three steps that don't require a big project.
- Count how much money is physically sitting at customers or suppliers as consignment stock. Order of magnitude. If it is more than 10% of your total inventory — consignment is big enough that it has to live in the ERP.
- Try creating one pilot consignment warehouse in your ERP — for one specific customer — and move your last shipment to them with an MM transfer instead of a sales invoice. See what happens to reports, to the "available" field for sales reps, to the stocktake.
- Agree with one key customer on a weekly usage report in a fixed format. CSV, Excel, anything — the key is that it is regular and uses the same fields as your SKUs.
After one settlement cycle (usually a month) you will know whether it hurts or not, and what the real variance looks like. Most companies discover the variance was larger than they thought — and that once things are organised, it simply starts to balance.
What next
Consignment is not magic — it is just a commercial model where ownership and possession sit in two different places. ERP will handle it, provided you show it to the system deliberately. If you leave the ERP to its own devices, it will do what it knows — treat the shipment as a sale and the consignment stock as a shortage — and quietly chew 2–5% off your margin, month after month.
If you don't know where to start in your own system, we're happy to look at the specific configuration — Optima, enova365, Subiekt, Dynamics, or something smaller and Polish — and tell you which of these decisions have already been made (well or badly) and which haven't yet.
Consignment isn't lost stock. It is stock in a different place — and if the ERP doesn't see it, that doesn't mean it isn't there. It means you are paying every month for what you don't know.