Having consignment stock means that you have access to products which still are owned by the supplier. You will not be charged until the products are used or sold, i.e., moved out from the consignment stock. This functionality is preferably used when the relationship between the customer and supplier is close and the consumption of material is frequent.
When you transfer consignment handled parts between inventory locations, you have a choice of whether to consume the parts. Information concerning the consumption will be created and entered as the issue from consignment stock takes place. When you issue material from the consignment stock, you could notify the supplier that you have bought the material and that you expect an invoice. If the supplier is in charge of the refill of the consignment stock (the V.M.I option on the inventory part is enabled), the supplier could use this information to determine when a refill is required. If the supplier does not require any notification in order to refill your consignment stock and invoice you the consumed parts the consumptions can be left in Entered status i.e. no supplier notification is required in order to match the consumptions to supplier invoices.
Note: If the Notify Supplier of Consignment Consumption option is enabled on the Company/Supply Chain Information/Procurement tab, it indicates that the supplier notification is a mandatory step. That is, when a consignment stock is being consumed, the consumed stock will not appear for invoice matching until a notification to the supplier has been sent.
Whenever the report is generated, the supplier is considered as notified. The line status is changed from Entered to Supplier Notified. The summarized list and the notify supplier report are identical with one exception: the line status is changed when the notify supplier report is printed.