How to Quote Consignment Inventory Jobs

Customer-supplied material sounds like a win: no material procurement, no inventory carrying cost, and a faster path to production. But when that material arrives as consignment inventory — where you hold and process stock the customer still owns — the quoting dynamics shift. If you treat it like a standard job, you risk underpricing liability, overlooking handling costs, and misallocating capacity.

What Makes Consignment Inventory Different

In a typical job, you buy material, you own it, and you bake the full cost (plus markup) into the quote. With consignment, the customer retains title until the finished parts ship. You’re providing labor, machine time, expertise, and floor space — but not the raw stock.

That distinction changes three core quoting inputs:

• Material cost drops to near zero, but material risk does not.
• Handling and inspection effort often increases.
• Throughput allocation must reflect the true constraint, not just machine hours.

Step 1: Separate Material Risk from Material Cost

Just because you didn’t buy the bar stock or powder doesn’t mean you’re insulated from loss. If a CNC crash scraps a $5,000 customer-supplied billet, the conversation gets uncomfortable fast. Your quote needs a risk surcharge or a clearly defined liability clause.

Two practical approaches:

• Waiver-based: Customer signs a hold-harmless for material damage during processing. Your quote reflects only labor and overhead.
• Insured surcharge: Add a 2–5% line item on the material’s declared value to cover your insurance deductible and administrative overhead.

Pick one and codify it in your terms. Don’t decide per job.

Step 2: Quote Receiving, Inspection, and Segregation Time

Consignment material doesn’t magically appear at the work center. Someone must:

• Receive and count against the packing list
• Inspect for damage, certs, heat lots, or contamination
• Label, segregate, and track in your MES/ERP as customer-owned
• Manage partial consumption and returns

That’s 30–90 minutes of admin per shipment. If you’re not charging for it, you’re subsidizing the customer’s supply chain. Add a consignment handling fee per PO or per lot — not buried in setup.

Step 3: Model Throughput on the Real Bottleneck

Consignment jobs often run interleaved with your own-material work. The machine doesn’t care who owns the billet. But your scheduler does.

If consignment jobs have unpredictable release dates, variable quality, or partial lot sizes, they introduce variability. That variability eats capacity buffer. When quoting, ask:

• Is the material on-site or inbound?
• Are certs and first-article requirements pre-approved?
• Will the job run in a dedicated block or fragmented slots?

If the answer introduces scheduling friction, apply a complexity multiplier to machine time — 1.1x to 1.3x — to protect throughput predictability.

Step 4: Define Scrap and Yield Ownership Upfront

Who owns the chips? Who owns the failed print? With your material, scrap is your cost. With consignment, scrap is a contract negotiation.

Your quote should specify:

• Expected yield range (e.g., 92–96% for CNC, 85–90% for PBF)
• Scrap disposition: return, recycle, or destroy with documentation
• Re-work policy: who pays for re-machining a customer-supplied part?

If the customer wants you to absorb scrap risk, price it. If they retain it, document it.

Step 5: Build the Quote Template Once, Reuse Forever

Consignment jobs shouldn’t be one-off spreadsheets. Create a quote template with these dedicated lines:

1. Consignment Handling Fee (per lot/shipment)
2. Material Risk Surcharge (or waiver reference)
3. Incoming Inspection Time
4. Machine Time × Complexity Multiplier
5. Scrap/Yield Assumptions & Disposition
6. Return Logistics for Remnant Material

When the next RFQ arrives with customer-supplied stock, you drop in the numbers and send. No reinventing, no missed lines.

Conclusion

Consignment inventory jobs can fill gaps in your schedule and deepen customer relationships — but only if the quote reflects the real work and risk. Separate handling from machining. Price liability explicitly. Template the structure so your estimators don’t have to think from scratch every time.

Solvi’s quoting engine lets you build custom templates with conditional line items, risk surcharges, and throughput multipliers — so consignment quotes are as fast and accurate as your standard work. See how it works.