International Journal of Advancements in Research & Technology, Volume 3, Issue 3, March-2014 142 ISSN 2278-7763 Copyright © 2014 SciResPub. IJOART TOPIC: The comparative study of consignment and vendor managed inventory with special reference of cost structure 1 POONAM LAKRA, 2 Preeti Bedi 1 Department of Commerce: Assistant Professor Bhagini Nivedita College. University Of Delhi (India) lakra.poonam@yahoo.in 2 Department of Commerce: Assistant Professor Bhagini Nivedita College. University Of Delhi (India) Preetibedi90@gmail.com Abstract The rapid development of the Internet has dramatically changed the traditional definitions of manufacturer, suppliers and customers. Traditional way of business has gone through changes and now a day Vendor Managed Inventory (VMI) and consignment serve as a centralized link between suppliers and customers that enables faster and less complex transactions. This research is focused to compare the performance of a VMI supply chain with a consignment chain and the aim of this paper is evaluate the impact of these two alternative structures on the cost structure and inventory of the business. Keywords: consignment, vendor managed inventory, cost structure, inventory Introduction arlier the distribution chain of the products so long that the manufacturer lie at one edge and consumer on other edge and lots of middlemen between them but now the scenario has change. Traditional method change into consignment and vendor managed inventory. You’re beginning to see the pattern: your customers want to increase their profits at your expense. Instead of paying for product within 30 days of delivery, the two who want a consignment program want to delay payment until after using or selling your product. The third wants to go one step further - they want you to plan their inventory! It’s obvious how these moves will benefit your customers, but is there any benefit for you? wal-mart, e-bay all these new ideas of business occupy a very big space in market place and build a very good image by using consignment/VMI without taking much risk like as manufacturer and earn huge profit and fulfill there motive. Now what is vendor managed inventory and consignment Meaning of consignment The word consignment comes from the French consigner, meaning "to hand over or transmit", originally from the Latin consignare "to affix a seal", as was done with official documents just before being sent Consignment is the act of consigning, which is placing any material in the hand of another, but retaining ownership until the goods are sold or person is transferred. When a trader sell goods directly to consumer, whether they are in his home country or overseas, these are ordinary sales. However, a trader may send goods to an agent to sell them for him. these goods are said to be end on consignment. Consignment may be done for shipping, transfer of goods to auction, or for sale in a store (i.e., a consignment shop). In case of consignment goods are sent to the agent for the purpose of sale. The agent sells the goods on behalf of the sender, according to his instructions. The sender of goods is known as consignor and the agent is known as the consignee. For example suppose Mr.A consigns a laptops to Mr. B, who offers to sell it for him at his store. Mr. A (the consignor) and Mr. B (the consignee) have not exchanged any money no purchase was transacted, and Mr. A still owns the laptop. One day a customer purchases the laptop at Mr. B’s store. Mr. B gives the proceeds to Mr. A, less an agreed-upon consignment fee for Mr. B's service as the seller. In procurement on a consignment basis, your vendor delivers certain materials to you that you handle in the consignment stock of your business. The consignment stock remains the property of the vendor until you remove material from the consignment stores. Once you have withdrawn materials, you will have liabilities towards the vendor that you need to pay in periodic settlements (for example, monthly). You and your vendor can agree on a time period after which you E IJOART