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Independent IFS Cloud practice · Inventory
The stock in your racks that the books say you do not own yet
Consignment stock sits on your floor and behaves like yours. You can see it, pick it, build with it. What is different is who owns it. Title and the payable move only when the stock is consumed or drawn down, and that transfer depends on a transaction firing at the right moment. When the consumption is not reported, or the ownership move does not post, the consignment balance drifts away from reality. You are either holding value you should already have paid for, or you have used value that never became a liability. Either way, the number nobody is watching is wrong.
Key takeaways
- Consignment stock changes ownership on consumption, not on receipt. That single difference is what makes it drift silently, because the physical move and the financial move are separate events that can fall out of step.
- This is not goods received not invoiced. There the stock is yours and the liability already exists, waiting for an invoice. In consignment the liability is not supposed to exist yet, so the risk is the transfer that should have fired and did not.
- It is also not a stale reservation. A reservation locks availability. A consignment mismatch misstates ownership and value, which reaches the balance sheet, not just the plan.
- Consignment stock that never gets consumed is a second trap: it looks free because you have not paid for it, so it escapes the usual slow-moving and obsolete reviews and ages unseen.
- The on-hand consignment balances and the consumption transactions both live in IFS Cloud, so a read-only monitor can compare them and surface the positions that stopped reconciling.
1.Why a consignment position drifts without anyone touching it
Consignment is a good deal precisely because ownership sits with the supplier until you use the stock. That deal depends on the moment of use being captured. When a part is issued to a job, or picked for an order, the system is meant to record the consumption and move title, which creates the payable. If the issue is reported against the wrong stock, if consumption is entered late, or if the ownership move fails to post, the physical stock has gone but the consignment record still says it is there and still says the supplier owns it.
The reverse happens too. Stock arrives on consignment, gets counted, and then simply sits. It does not show up in a spend report, because you have not spent anything. It does not trip the usual value alarms, because on your books it carries no owned value. It is real stock taking real space, invisible to the reports that would normally question why it has not moved.
So the leak is not a broken posting rule. Consignment works as designed. What is missing is the periodic reconciliation: nothing compares what the consignment balance says against what was physically consumed and asks where the two stopped agreeing.
2.Where the cycle from consumption to payment stalls
A healthy consignment position turns over: stock comes in, gets used, ownership transfers, the supplier gets paid. The value is in finding the positions where that cycle stalled.
| What you see | What it usually points to |
|---|---|
| Consumption recorded, but no matching ownership transfer | A stock you have used and owe for, still sitting on the books as the supplier's, so the payable never formed. |
| Consignment on hand with no consumption for a long period | Stock aging outside every value review because it carries no owned cost, quietly filling space. |
| A consignment balance that no longer matches the physical count | A reporting gap between what was drawn down and what the record shows, growing every cycle it is not checked. |
| Own stock placed on consignment at a customer, with usage reports lagging | Revenue you have earned but not recognised, because the customer's consumption has not reached your records. |
The first row is the one that reaches finance. The stock is gone, the job is built, and the obligation to the supplier is real, but nothing on your books shows it until a reconciliation or a supplier statement forces the question. Read across many parts and sites, that is a liability you are carrying without seeing.
3.Reconciling consignment balances against consumption, read-only
The consignment on-hand balances and the consumption transactions are both available through standard OData projections, so they can be read without touching a record. Detection looks across consignment stock and checks two things:
- Consumption without a transfer - where stock was issued or picked but no ownership move followed, so the payable that should exist is surfaced before a supplier statement finds it.
- Balances that stopped moving - consignment on hand with no consumption over a period you set, so stock aging off the books is seen the same way owned stock would be.
Because it is a read-only monitoring pattern, it runs beside inventory and writes nothing back to IFS. It adds no object inside the client system, and an R1 or R2 release leaves nothing of ours in your IFS to retest. Before each release I check that the standard projections it reads still match, as part of the subscription. It hands the inventory and finance owners a short list of consignment positions to reconcile, and the correcting entry stays with the people who own the books.
4.Rolling it out without noise
- Start with your largest suppliers - reconcile the consignment agreements that carry the most value first.
- Dry-run first - log which positions would have been flagged across a full period before anyone acts on a line.
- Separate consumption from idle stock - keep the list of consumption with no transfer apart from the list of balances that have gone quiet.
- Read only, no footprint - standard OData reads, nothing written back, no new object inside IFS Cloud.
Related reading
5.Frequently asked questions
Does IFS Cloud not keep consignment ownership straight on its own?
Ownership moves when a consumption transaction posts correctly, so the risk lives in the events around it: consumption reported late, issued against the wrong stock, or an ownership move that does not fire. When that happens the consignment record and the physical stock disagree, and comparing consignment balances against consumption is what shows the drift.
How is this different from goods received not invoiced?
Goods received not invoiced is owned stock: the liability already exists and is waiting for the supplier invoice. Consignment is the opposite starting point. The stock is not yours until you use it, so the risk is a transfer that should have created the liability on consumption and did not. One is a missing invoice against a known debt, the other is a debt that never got recorded.
Why does unused consignment stock matter if we have not paid for it?
Because it takes real space and can obsolete like any other stock, but it hides from value-based reviews. Slow-moving and obsolete reports usually key off owned cost, and consignment carries none on your books, so it ages unseen. Watching consumption rather than value brings it back into view.
Does this monitoring write anything to IFS Cloud?
No. The consignment balances and consumption transactions are read through standard OData projections and compared outside IFS. Nothing is written back, so there is no upgrade footprint and no new object inside the client system. Any correcting entry is made by your own team.
6.About the author
Dariusz Myśliwiec brings 18 years hands-on with IFS (Apps 7.5–10 and IFS Cloud). IFS Certified Associate Consultant. PRINCE2® 7. Based in Kraków, delivering remotely across Europe and globally as an independent practice, so you talk to the consultant who builds it.
Selected clients: Fugro · LGC · BVI Medical · Betafence (PRÆSIDIAD) · Barlinek · NGK Ceramics · Newag · Oleofarm.
IFS is a registered trademark of IFS AB; this practice is not affiliated with IFS AB.
Know what you owe before the supplier statement does
Tell me which consignment agreements carry the most value and where consumption tends to go unreported. On a 30-minute fit call we check whether a rule comparing consignment balances with consumption fits your data. The SCM Automation Pack runs three rules today (unconfirmed purchase orders, late deliveries, stock below minimum), so this would be an additional rule built to order, with a dry-run week before anything reaches your team.
