Consignment items are inventory items or tools that are kept in a storeroom on-site and owned by an external vendor. The vendor retains ownership of the consignment items until they are used by the organization that is storing them.
Consignment items are not included in the inventory cost calculations of an organization. Consignment items have an impact on inventory costs only when they are consumed, at which point, payment must be made to the item vendor.
Some inventory materials can be used intermittently, but must be available at short notice. An organization can have an arrangement with a vendor to stock items that they can pay for on use.