Certified Supply Chain Professional (CSCP) Practice Exam

What is another name for consignment in inventory terms?

1. Supplier-owned inventory

2. Vendor-owned inventory

3. Customer-managed inventory

4. Order-controlled inventory

The correct answer is: Vendor-owned inventory

The term "consignment" in inventory management refers to arrangements where goods are placed in the hands of a retailer or other intermediary but the supplier retains ownership of the inventory until it is sold. This means that the supplier (or vendor) holds ownership rights even though the product is physically with the third party. The term "vendor-owned inventory" accurately describes this process, as it highlights that the vendor retains ownership of the items, making it a suitable synonym for consignment. In these arrangements, the retailer does not have to pay for the inventory until it is sold to the end customer, reducing the financial burden on the retailer while fostering better inventory turnover. In contrast, supplier-owned inventory, customer-managed inventory, and order-controlled inventory do not capture the essence of the consignment model. Supplier-owned inventory implies that the inventory is with a supplier, which would usually indicate that the supplier does not have control over its placement for sale. Customer-managed inventory suggests the customer takes responsibility for managing stock levels, which differs from the definition of consignment where the supplier retains ownership until sale. Order-controlled inventory refers to a system where inventory is managed based on demand-driven orders rather than ownership status. Thus, vendor-owned inventory stands out as the most accurate alternative name for cons