Over the past years, the Langerbrugge site of Stora Enso in Ghent has always been leading the way when it comes to working on process improvements and cost savings. This has also included closely examining its management and payment model for supplier stock. One of the ways it sought improvement was by introducing the consignment model for the labels and ribbons that it purchases from PHI DATA. This model is commonplace in the retail sector but has so far been rarely used for management of stock in production environments.

Consignment in action

The consignment model entails that the supplier makes stock available to the customer, and this stock remains the supplier’s property until the time that a product is used by the customer. The supplier also replenishes the stock according to the restocking points that were jointly agreed and following an automated order (SAP) from the customer. This guarantees stock for Stora Enso Langerbrugge without the need for capital increase in its warehouse, given that unused stock is the property of the supplier. On the penultimate working day of each month, self-billing takes place on the basis of consumption and the agreed price. This is also initiated by the customer via SAP.

This way of working requires close collaboration, open lines of communication, and a strong bond of trust between the customer and the supplier, not only when it comes to logistics processes and financial settlement, but also the automation of stock management within this model. However, under EU provisions, the customer requires PHI DATA to carry out a physical stock check at least once a year. For the rest, the consignment model runs completely automatically as explained above.

Conclusion

The consignment model operated by Stora Enso Langerbrugge offers many advantages for the supplier and the customer: a reduction in working capital for the customer and full automation of the purchase-supply process via settings in SAP, which have been agreed by mutual consultation. This avoids administrative time losses for both parties, while enabling PHI DATA to manufacture and deliver in order to support the production process at Stora Enso Langerbrugge.