The relationship between companies and their suppliers is more important than ever in nowadays dynamic and selective marketplace. To create and maintain competitive advantage, companies must collaborate with their suppliers in the search for innovative ways to handle pivotal issues such as inventory policies and management. In the world of inventory, an effective, novel approach that is quickly gaining ground is the consignment stock technique. Based on an improved collaboration between a company and its suppliers, consignment stock means that a company stores a supplier's raw materials in its warehouse, close to its production lines, so that it can draw on them daily, according to need. The materials are formally purchased by the company only at the moment of their consumption.
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