What Is Consignment Stock?
Consignment stock is inventory owned by the vendor but stored in your warehouse. You only pay for items when they are consumed (sold or used in manufacturing). Until then, the vendor retains ownership and bears the carrying cost. This arrangement reduces your working capital requirements while ensuring product availability. Odoo handles consignment through its owner tracking feature on stock.
Benefits of Consignment
For the buyer, consignment reduces inventory investment, eliminates the risk of obsolete stock (unsold items go back to the vendor), and maintains product availability without purchase order lead times. For the vendor, consignment ensures shelf space and priority placement, provides visibility into real consumption patterns, and builds a deeper relationship with the customer. It works best for high-value items with unpredictable demand, slow-moving but essential spare parts, and new products during market testing.
Odoo Configuration
Enable Consignment
Go to Inventory → Settings and enable Consignment under the Traceability section. This adds an Owner field to stock moves and quants, allowing you to track who owns each unit of inventory in your warehouse. Consignment stock appears in your warehouse but does not affect your inventory valuation until consumed.
Owner Tracking Setup
Create the vendor as a partner in Odoo. When receiving consignment goods, set the Owner field to the vendor's partner record on the receipt. This marks those specific units as vendor-owned. Your warehouse shows two types of stock — company-owned (your regular inventory) and vendor-owned (consignment). Both are physically in the same location but tracked separately in the system.
Receiving Consignment Goods
Create a receipt (stock picking) with the vendor as the owner. Do not create a purchase order — consignment receipts are stock transfers, not purchases, because no purchase transaction occurs at receipt. The goods enter your warehouse with the vendor marked as owner. Inventory reports can filter by owner to show consignment quantities separately.
Consumption Tracking
When consignment stock is consumed — sold to a customer or used in manufacturing — Odoo changes the owner from the vendor to your company. This ownership change represents the economic event. At this point, you owe the vendor for the consumed quantity. Track consumptions over a period and settle with the vendor through a purchase order or bill at agreed intervals.
Settlement Process
| Step | Action | Odoo Document |
|---|---|---|
| 1 | Track consumption over period | Inventory report filtered by owner change |
| 2 | Generate consumption report | Stock move report |
| 3 | Create vendor bill | Vendor bill with consumed quantities |
| 4 | Vendor confirms quantities | Bill approval |
| 5 | Process payment | Payment against bill |
Inventory Valuation
Consignment stock has a unique valuation treatment. In your books, vendor-owned stock is not an asset — it belongs to the vendor. Only when consumed does it become a cost (cost of goods sold). Odoo handles this automatically through the owner tracking. Inventory valuation reports can be filtered to show only company-owned stock for accurate balance sheet reporting.
Return of Unsold Stock
If consignment stock is not consumed within the agreed period, or if the vendor requests it back, create a delivery order shipping the goods back to the vendor. Since the stock is still vendor-owned, there is no financial transaction — it is simply a physical return of the vendor's property. Odoo reduces your on-hand quantity without affecting your cost of goods or valuation.
Best Practices
- Clear agreements — Define consumption settlement periods, minimum stock levels the vendor maintains, and return conditions in writing.
- Regular reconciliation — Reconcile consignment stock levels with the vendor monthly to prevent disputes.
- Separate reporting — Always filter inventory reports to distinguish between owned and consignment stock for accurate financial reporting.
- Security — Treat consignment stock with the same care as your own inventory. You are responsible for loss or damage even though you do not own it.
DeployMonkey + Consignment
Deploy Odoo on DeployMonkey and configure consignment stock management with AI assistance. Track vendor-owned inventory, consumption, and settlement accurately from day one.