Question: Explain the significance of 'goods sent on consignment' in the context of stock management.

Answer:

Consignment refers to a business arrangement in which a manufacturer or supplier sends their goods to an agent or a third-party seller who retains the goods until they are sold. The third-party seller only pays for the goods that are sold, and the unsold goods are returned to the manufacturer or supplier. 'Goods sent on consignment' is a prominent part of inventory management in many businesses.

Significance of Goods Sent on Consignment in Stock Management:

1. Lowers Risks: Since the manufacturer or supplier retains ownership of the goods, it lowers the risk of loss for the third-party seller. The seller only pays for the goods that are sold, and the remaining unsold goods are returned to the manufacturer or supplier.

2. Increases Sales Opportunities: The third-party seller can sell a wide range of goods without having to invest in the inventory. This helps in increasing sales opportunities as the seller can offer various products that may not have been possible if the seller had to purchase the goods upfront.

3. Better Stock Management: The goods sent on consignment help in better stock management as the seller can rotate the stock and send back the unsold goods to the manufacturer or supplier. This helps in managing the inventory and reducing the risk of overstocking or understocking.

4. Cost-Effective: The goods sent on consignment are cost-effective for both the manufacturer or supplier and the third-party seller. The seller only pays for the goods that are sold, and the manufacturer or supplier can minimize the risk of loss.

5. Better Customer Service: The third-party seller can offer better customer service by providing a wide range of products without having to invest in the inventory. This helps in satisfying the customer demand and increasing customer loyalty.

In conclusion, 'goods sent on consignment' is an important part of inventory management in many businesses. It helps in reducing risks, increasing sales opportunities, better stock management, cost-effectiveness, and better customer service.