What is consignment in inventory management?

In inventory management, consignment refers to an arrangement where a supplier or consignor provides goods to a retailer or consignee, who sells the products on behalf of the supplier. The supplier retains ownership of the inventory until it is sold, and payment is made only after the sale occurs, allowing for reduced inventory costs and risk for the retailer. Consignment management often requires tracking stock levels and sales data to ensure proper inventory control.