Distributors: Consignment Inventory Management Costs Less Than You Think

For years, consignment inventory has had a mixed reputation among distributors. Yes, stocking products directly at a customer’s site can strengthen loyalty and boost sales. 

But many distributors have been reluctant to expand their consignment programs, instead fearing tied-up cash, bloated inventory levels, and greater business risk. That perception is changing.

Current tech, like eTurns TrackStock, makes it possible to manage consigned inventory with precision. Instead of overstocking "just in case," it’s time to use real-time usage data, AI-optimized min/max settings, and automated replenishment to right-size inventory at customer locations.

This results in faster cash flow, stronger margins, and dramatically lower carrying costs without sacrificing customer service.

In this article, we’ll show you exactly how consignment inventory can become a profitable growth strategy instead of a financial drag, and why distributors who leverage data-driven inventory optimization are winning more customer loyalty (and more business) in 2025.

Why Consignment Inventory Feels Risky But Doesn’t Have to Be

Consignment inventory can feel like a financial gamble. You’re putting thousands or hundreds of thousands of dollars in product on customer shelves, without immediate payment.

The most common fears are it won’t move, won’t be tracked accurately, or won’t be billed on time. Worse, many distributors overstock to “be safe,” tying up cash in slow-moving items that gather dust instead of driving revenue.

But the real problem isn’t consignment; it’s a lack of usage visibility. Most enterprise resource planning (ERP) systems weren’t built to track consumption at the point-of-use. They show what was shipped, but not what was taken from the bin, consumed on a job, or left untouched for months.

This blind spot leads to:

• Bloated customer stockrooms

• Delayed billing or lost revenue

• Wasted inventory sitting in limbo

• Poor ROI on your most valuable accounts

This means you avoid scaling consignment, even though it’s one of the strongest tools for customer loyalty and account growth.

Optimize One Consigned Customer and Invest the Savings Across 3 More Consignments

Here’s a real example: A distributor in Canada has $45,000 in consignment inventory at a customer location. We ran the numbers using eTurns’ optimum min/max settings in their eTurns TrackStock automated inventory replenishment app and found that they actually only need $10,000 in inventory at that site to serve their customers’ needs.

The numbers show that the remaining goods simply aren’t being used frequently enough or at all to justify the cost of stocking it at the point-of-use (POU). That means that based on actual usage over time by the customer, the distributor can remove $35,000 from their consigned, stocked items for that customer and spread the savings over three or so more consignment opportunities.

Why ERP Doesn’t Support Consignment 

Does your current ERP system have any way currently to determine how much cash you can save in your consigned customers’ inventories? Nope. ERP software doesn’t track on-hand quantities in your customers’ stockrooms or service trucks, and it doesn’t track your customers' consumption in real-time. 

Distributors can now offer consignment inventory to customers and be assured they have optimized supply levels and accurate billing.

Our eTurns TrackStock Automated Replenishment app with the Min/Max Tuning Dashboard lets you:

• Determine the precise consignment inventory distributors should be stocking for customers based on actual usage data

• Reduce inventory levels and annual carrying costs

• Have the ability to send accurate, consolidated invoices

As a result, you will be able to push the service out to other customers, who will reward you with increased customer spend, improved loyalty and greater profitability.

How eTurns TrackStock Solves the Consignment Challenge

eTurns TrackStock removes the guesswork and the risk by giving you real-time visibility into how much inventory your customers are actually using.

With features like the Min/Max Tuning Dashboard, you can:

• See actual product usage over time

• Set dynamic, optimized min/max levels for every SKU at each customer location

• Get reorder suggestions or trigger automated replenishment based on real data

• Send consolidated, accurate invoices tied to real consumption

It’s time to stop overstocking out of fear and start stocking based on facts. TrackStock empowers you to:

• Reduce excess inventory by up to 73%

• Reclaim working capital to invest in new consignment opportunities

• Scale your model with less risk and higher margins

• Prove value to customers with data-backed recommendations

With eTurns, consignment becomes an asset, not a liability.

How One Distributor Saved $900,000 In Excess Inventory

Many distributors underestimate just how much excess inventory is sitting at their consigned customer sites until they have the data to prove it. A recent case study with one of our clients highlights exactly how transformational the right technology can be.

This distributor had long provided consigned inventory to their customers but struggled with bloated stock levels. After implementing eTurns' TrackStock Min/Max Tuning Dashboard, they conducted a thorough review of just two of their consigned customer accounts. What they discovered was staggering:

Over $900,000 worth of excess inventory was sitting unused; far beyond what was needed for the past 3 month's operations.

With clear, data-backed insights from TrackStock, the distributor was able to go back to those customers with data that demonstrates that the excess inventory wasn’t necessary. Armed with usage data and optimized min/max settings, they were able to physically reclaim the surplus inventory, take it off their books, and improve the customer’s stockroom efficiency at the same time.

Rather than seeing customer dissatisfaction, the result was the opposite:

• Customers appreciated the data-driven approach.

• Stockrooms became leaner and easier to manage.

• The distributor immediately freed up nearly $1M in working capital.

Now, this same distributor is conducting a region-by-region review of all consigned customer locations using eTurns’ AI-driven dashboards; unlocking hidden cash, reducing carrying costs, and scaling their consignment programs smarter than ever before.

Turn Consigned Inventory Into Your Competitive Advantage

As a smart distributor, you aren’t avoiding consignment. You’re using it as a strategic leg up. With solutions like eTurns TrackStock, you eliminate unnecessary inventory, cut carrying costs, and provide your clients with unprecedented service and reliability.

Ready to see what real-time, data-driven inventory optimization could do for your bottom line? Start your free 30-day trial of eTurns TrackStock today and take the guesswork (and the wasted cash) out of consignment inventory for good.

 Learn more about eTurns TrackStock Min/Max Tuning for Consigned/Customer-Owned Inventory