Managing Consignment Inventory with Epicor Prophet 21: A Complete Guide
Inventory, Inventory everywhere, and not a clue what to do. With overstocking, understocking, and tracking every shipment, inventory management is one of the most challenging aspects of running a business.
The good news? With the right ERP system, you can maintain control of every item in every location. One strategy used by many distributors is consignment inventory management, in which products are stored at a customer’s site rather than your own.
For example, a Bluetooth headphone supplier working with major retailers such as Staples or Walmart might store products directly in those partners’ warehouses. This approach, called consignment stock management, offers flexibility, shared risk, and better availability.
Let’s look at how it works, what to expect, and how systems like Epicor Prophet 21 make the process easier.
What Is Consignment Inventory Management?
In simple terms, consignment means the buyer pays the seller only after an item sells. It’s common in fashion resale and growing fast in distribution.
For distributors, consignment stock management means goods are delivered to and stored at the customer’s warehouse (the consignee), but ownership stays with the supplier (the consignor).
The customer pays only for what sells – and can return unsold products without charge. This arrangement builds long-term relationships and helps both sides cut storage costs while maintaining steady product flow.
How Consignment Inventory Works in Epicor Prophet 21
There are many ways for companies to handle their consignment. For some, a designated sales representative is tasked with going to the customer’s warehouse to review stock, whereas others choose to go digital and have the customer send a monthly inventory report.
For organizations that have an EDI (Electronic Data Interchange) within their ERP, the customer can automatically send usage and billing information in order for you to stay in control of inventory, whether it’s increasing or decreasing product shipments.
Depending on the contract that you have with your customer, the consignment agreement can differ from one business to the next. This is also the case for how you will use the system to manage inventory.
With Epicor Prophet 21, the process becomes fully digital. The system tracks product usage, replenishment, and invoicing across multiple customer sites. You can also connect Prophet 21 with Epicor Automation Studio to share data automatically between partners.
Setting Up Consignment Inventory in Epicor Prophet 21
Simply put, when managing inventory on the consignment level, the key is to determine who, what, when, and where.
Once that has been established, users can easily access the system to replenish inventory at locations in two ways:
- Generate transfer to move goods from your stock location to the customer’s location.
- Generate a special order to ship products ordered from a supplier to send directly to the consignment location.
How to Invoice and Track Consigned Inventory with Epicor Prophet 21
One thing to remember is that all items on consignment must be on a contract before any pricing, invoices, or usage is set up.
When it comes to creating contracts for goods and products there are three things to remember:
- An item can only have one consignment contract for each location
- A consignment location can have multiple contracts
- A contract can cover multiple locations
Epicor Prophet 21 automatically tracks usage and replenishment for each contract and generates accurate invoices when products sell. This level of automation removes manual errors and keeps your accounting clean.
Benefits of Consignment Inventory for Distributors
Stock consignment is advantageous for both the supplier and the customer. Due to these benefits, many companies have chosen to go with stock consignment to stabilize their inventory. It’s crucial, however, to note that this might not be the right choice for all vendors.
Let’s take a look at the key advantages of stock consignment to decipher whether you should go down this path.
Key Advantages of Consignment Inventory Management with Epicor Prophet 21
Properly managing consignment stock can be a strategic move for both suppliers and distributors.
When implemented correctly, consignment stock creates a balance between flexibility and control, helping businesses cut costs, strengthen customer relationships, and maintain product flow without tying up too much capital. Here’s how both suppliers and distributors benefit from a consignment approach.
Lower holding costs: No need to rent extra warehouse space. Better business relationships: Customers avoid upfront payments, lowering their risk. Improved cash flow: Consignees pay only after products sell.
Better business relationships: Customers avoid upfront payments, reducing their risk.
Improved cash flow: consignees only pay after the products have been sold.
Access to new products: Suppliers can test new items risk-free, and customers can offer new stock sooner.
Shared flexibility: Both parties benefit from reduced excess inventory and faster replenishment.
Common Challenges of Consignment Inventory Management
There are clear benefits, but also a few drawbacks worth noting:
- Supplier risk: Profitability can drop if products don’t sell.
- Unpredictable cash flow: Payments depend on customer sales.
- Customer effort: Some buyers may not prioritize promoting consigned goods.
- Transparency issues: Manual tracking can lead to errors or delays.
- Storage limits: Customers must have adequate space to store unsold stock.
A reliable ERP system can solve most of these issues by automating contracts, tracking, and usage.
If you’re upgrading or planning a new ERP rollout, check out our Epicor Implementation Checklist to guide your next steps.
Why Use Epicor for Consignment Management
Modern ERP systems like Epicor Prophet 21 simplify consignment management through automation and real-time visibility.
You can set up rules for invoicing, automate replenishment, and monitor product usage across all locations.
For distributors handling multiple warehouses and customer sites, Prophet 21 offers the control and scalability needed to reduce errors and maintain strong customer relationships.
Frequently Asked Questions About Consignment Inventory Management with Epicor Prophet 21
Talk to an ERP Expert About Consignment Management
Our consultants specialize in Epicor Prophet 21 and can help you streamline consignment inventory management.
Whether you want to optimize contracts, automate invoicing, or improve visibility across locations, we can help you find the right approach for your business.
Want to discuss your consignment management goals?