Blog

What is the difference between consignment and Kanban?

These two common supply concepts are similar, but they also have a few important differences!

But first. How are they the same?

One of the similarities between the two supply concepts for C-parts is that the goods requested by the customer are provided as bulk goods in containers. The customer specifies which parts are needed and should be included in the concept. There are at least two containers of each item. If one container becomes empty, another full container remains on site while the other container is refilled at the supplier.

The items that are included in the supply concept are usually located on a shelf in the customer’s production facility, so that the parts can be accessed quickly and easily.

The difference and what to keep in mind:

The main difference is the way in which billing is carried out, but there are also other differences. In a Kanban concept, if goods have run out and are replenished, the invoice for the replenished parts is enclosed with the delivery of the goods. This means that the goods immediately become the property of the customer. Because of this, the supplier may try to deliver the highest possible quantities, even of lower-demand items, in order to keep invoice amounts higher.

With a consignment concept, goods are only invoiced after they have been consumed. This means that the goods on site belong to the supplier until they are removed from the container and used. There are obvious advantages for the customer: Goods don’t have to be pre-financed, and only the current demand is financed. As the calculation is only done after the goods are used, the supplier is naturally interested in keeping the concept as effective as possible. This means that we don’t supply the highest possible quantities, but only the optimum amount, precisely adapted to your requirements.

Find out more about our consignment supply concepts today!