Consumable Consignment Stock Agreement
How does it work?
Aerotechnic will be liable to keep stock on pre define quantities of consumable material on behalf of the client.
This stock is the property of Aerotechnic and therefore the client can decrease its own stock accordingly. No cost is involved for the client. It is very important to note that the client and Aerotechnic, through such an agreement, operate on a partnership basis.
Goals, advantages and steps
- To define a consumable stock listing with annual usage that will be held available at all time by Aerotechnic for the duration of agreement.
- Location of consigned material: some items could be consigned at the client’s premises and/or at Aerotechnic's premises.
- Compile a price list (valid for a calendar year) for the said consumable listing. This will ensure that the consigned stock will be economical (taking into account freight charges and location/availability).
- Process saving. No more time spent by buyers sending out RFQ to various suppliers as price list / availability are predefined for a calendar year.
- Freight saving. Material on consignment is offered EXWORKS (Aerotechnic facility) which can be consolidated on a weekly basis.
- Cost rationalization. Your stock can be totally depleted and gradually taken out of your books as the consumable consignment stock does not belong to the operator. This also reduces the operator's taxation level (due to reduced stock).
- As soon as you will draw material from the consumable consignment stock listing, Aerotechnic will be responsible for invoicing/shipping/replenishing this stock. You will have more time to focus on core activities (such as repair, etc.). Effectively, deliveries will occur on a just-in-time (JIT) basis to the operator.
- Consumption report. The client will have to supply Aerotechnic with a weekly or monthly report for stock consigned at the client premises. Aerotechnic will then replenish this stock automatically and will invoice the client accordingly.
- To prevent critical or AOG situation for consumable items, and therefore save time and money (due to grounded aircraft or additional freight charges). For the purpose of budgeting and financial planning, such an agreement faciltates the provisioning process, as all parameters are predefined at the start, and remains fixed for the duration of the agreement.
- Flexibility, the consumable consignment stock listing can be amended and items could be added or quantities increased.
- Liability, the operator has to buy all the agreed parts listed on the final consumable consignment stock from Aerotechnic.
It is important to note that there is no major binding rule under the consignment stock agreement. The only penalty could be a cancellation of the agreement, this would obviously impact both the operator and Aerotechnic, as the main frame principle is based on a partnership.
We invite you to contact the closest Aerotechnic outlet to discuss and review the consignment stock agreement and visit our facilities to assess the Quality Level.