Consignment Inventory for Contractors: Pay Only for the Jobsite Material You Use
Loeb Electric supplied two similar electrical projects, each worth about $1 million, for the same small-to-mid-size contractor. On the first, the job wrapped with roughly six truckloads of unused material that the contractor had to expense. On the second, one Loeb truck picked up the leftovers and the contractor received immediate credit.
The difference was consigned jobsite inventory, tracked with consignment inventory software that both the contractor and the distributor trusted. Here is how that model works, what it changes about project profit, and how to set up your first consigned jobsite.
Key Takeaways
Consigned material stays the distributor’s property until a crew pulls it, so the contractor pays only for what is actually used.
Unused material goes back at project close for credit instead of sitting in a yard or getting written off.
Accurate usage tracking is what makes consignment work. Every pull is scanned against a job, so billing matches reality and job costs come from actual usage.
Distributors benefit too. Contractors who run consigned jobsites with their distributor tend to stay. Loeb Electric has kept some of these customers for more than seven years.
Why Contractors Overbuy Material on Almost Every Project
Under the usual customer-owned model, the contractor orders material for a job, pays for it, and owns it the moment it lands on site. Nobody wants a crew standing around waiting on wire or fittings, so estimators pad quantities. Foremen order extra to cover rework, theft, and the change order that always seems to come.
The result is predictable. Material shows up early, gets moved around the site, and a share of it is never installed. At closeout, the leftovers either go back to the shop to be stored, get returned at a restocking cost, or get written off. Before eTurns, M&L Electrical described its own version of this problem as buying more material than each job truly needed, driven by hand counts and eyeballed estimates.
Consignment flips the model. Material is ordered and staged up front, but it is paid for only as it is used, and anything left over is returned unused.
How Consigned Jobsite Inventory Works
The distributor drops a stocked conex or trailer on site
The process starts with the distributor. Working from the project’s material list, they stock a conex, trailer, or locked clamshell with the consumables the crews will need and deliver it to the jobsite. The material stays on the distributor’s books. Each bin or shelf location gets a QR label, and each item gets a min and max level so the distributor knows when to restock.
On large projects, one central hub or prefab shop can serve several job numbers at once. Our work on jobsite inventory on data center builds uses this setup, with one consignment room feeding many work orders and billing only on use.
Online and ready to scan within 30 minutes of drop-off
Our distributor partners can have a newly delivered conex online in TrackStock and ready for crews to scan within 30 minutes. The item list, locations, and min/max levels are loaded before the trailer arrives, so there is no setup work on the contractor’s side. Crews download the app and start pulling material the same day.
Crews pull items and usage posts against the job
When an electrician needs material, they scan the bin with a phone or rugged scanner and enter the quantity. Scanning pulls at the point of use does three things at once: it lowers quantity on hand, it records which job and user took the material, and it captures user-defined fields such as phase, building, or cost code. If a site holds both customer-owned and consigned stock, TrackStock can burn off the customer-owned material first before drawing from consigned inventory.
When quantity drops below the minimum, TrackStock builds a replenishment order and sends it to the distributor’s ERP. The conex gets restocked before anyone runs out.
What Consignment Changes About Project Profit
You pay for what the crew actually used
This is the core of consignment. The contractor is billed for pulls, not for deliveries. At M&L Electrical, a Graybar customer, the team scans material as it comes off the trailer and pays only for what it uses. Jason Barron, M&L’s Field Operations Manager, put it plainly: “I don’t see how you could track consignment inventory with any degree of accuracy and ease without eTurns.”
Unused material goes back at project close
At closeout, whatever remains in the conex goes back to the distributor. There is no restocking negotiation over material the contractor never owned, and nothing lands in a yard waiting for a future job that may never need it. Barron again: “Where eTurns has saved me the most money is that it lets me give my inventory back to my vendors at the end of every job because it provides accurate consignment usage reporting that my vendors and I can trust.”
Fewer rush runs and less unbilled labor
A stocked conex with automatic replenishment removes most emergency supply house runs. Crews are not leaving the site to pick up fittings, and foremen are not spending the end of the day counting what is left. Barron used to spend at least two hours a day counting materials for the next day’s jobs. With TrackStock, that dropped to five minutes every two weeks, and M&L went from sending five or six purchase orders a week to one.
Billing volume falls too. Consigned pulls can be batched and consolidated, so a week of pulls on one item becomes a single line instead of dozens of invoices. Our write-up on consolidated invoicing for consigned inventory shows how this cuts PO and invoice costs by over 95% for both sides.
Frequently Asked Questions
In most consignment programs, the distributor owns the material until a crew pulls it, and the contractor is billed at that point. The exact terms are set in the consignment agreement.”Anything not pulled by project close remains the distributor’s property and goes back to them.
The distributor picks it up and the contractor receives credit for anything that was delivered but not used. On the Loeb Electric project described above, one truck collected the unused consigned material at closeout and the contractor received immediate credit.
Consigned material is billed on usage. Each scan records the item, quantity, job, and user. Pulls can be invoiced as they happen, held in a batch, or consolidated so each item appears once per billing period, which cuts invoice volume dramatically.
There’s no fixed threshold, and each distributor sets its own. Loeb Electric has made consignment pay off on electrical projects of about $1 million, while a services manager at a national electrical distributor puts the sweet spot at a $3 million to $6 million electrical package with at least $50,000 a year moving through the program. Both distributors explain their reasoning in What Size Project Justifies a Consigned Conex? Two Distributors Weigh In.
Accurate usage tracking and billing. If pulls are not recorded, the distributor cannot bill correctly and the contractor cannot trust the invoice. High pull volume creates a second problem: one invoice per pull buries both sides in paperwork. Scanning every pull against a job and consolidating invoices solves both.
Job Costing From Actual Usage Instead of Estimates
Most job costing on material is built from what was ordered. On a consigned jobsite, it is built from what was pulled. Each scan carries the job number plus user-defined fields such as phase, building, floor, or cost code, so project managers can see material spend by job phase without walking out to the trailer.
Loeb Electric sends this job costing data to its contractor customers automatically. Its contractors use the custom fields to record what was pulled, where it was used, and how it lines up with the job budget. TrackStock can also pass these fields to the distributor’s ERP so they appear on the invoice. That gives estimators real usage numbers for the next bid instead of padded quantities from the last one.
How One Contractor Avoided 6 Truckloads of Leftover Material
Loeb Electric is a family-owned electrical distributor that has served contractors in central Ohio since 1912. Geno Bringardner, Loeb’s Manager of Contractor Services, compares two similar projects of about $1 million each for a small-to-mid-size electrical contractor.
On the first project, the contractor bought material the traditional way. When the job ended, roughly six truckloads of unused material were left over, and the contractor had to expense it.
On the second project, Loeb ran the jobsite as consigned VMI using TrackStock. Crews pulled what they needed, every pull was tracked against the job, and Loeb replenished from the usage data. At closeout, one Loeb truck picked up the unused consigned material and the contractor received immediate credit.
“The customer didn’t carry any excess material costs at the end of the project, and that made a huge difference,” Bringardner said.
You can see how Loeb runs this across its accounts in how Loeb Electric stocks every jobsite, including keeping five to seven days of inventory in front of each contractor.
What the Distributor Gets Out of the Arrangement
Consignment asks the distributor to carry inventory on someone else’s site, so it has to pay off for them too. It does, in three ways:
First, it keeps customers. Bringardner says contractors who use Loeb’s consignment services with TrackStock stay loyal, some for over seven years. When the distributor’s app is running the jobsite, the contractor has little reason to price shop the next project.
Second, it gives the distributor real usage data. Min and max levels are tuned from actual pulls, so the distributor can keep lean quantities on site without risking a stockout. Loeb reports lower daily delivery costs and faster picking by shipping more full cases.
Third, it removes billing disputes. Every pull is logged with a timestamp, user, and job number, so the invoice matches what crews took. Our consigned inventory software supports both VMI and CMI models, so the distributor can manage the conex or hand the scanning to the contractor’s crews.
Setting Up the First Jobsite
Most contractors start consignment with a single project and a distributor they already buy from. A practical sequence:
Ask your distributor whether they offer consigned jobsite inventory. Many electrical and industrial distributors already run consignment programs and need only a tracking tool both sides trust.
Pick a project with steady consumable demand. Wire, fittings, connectors, fasteners, and other high-turn items are the best candidates.
Build the item list and min/max levels together. Start from the material takeoff and adjust once real usage comes in.
Agree on billing terms. Decide how often pulls are invoiced and whether they are consolidated by item, job, or work order.
Label the conex and train the crew. Scanning a pull takes seconds, but crews need to know the rule: nothing leaves without a scan.
Review usage at closeout. Return what is left, compare actual usage against the estimate, and carry the numbers into the next bid.
Our construction inventory management page shows how contractors run TrackStock across jobsites, clamshells, conexes, and trucks. For a one-page summary you can share with your distributor or project managers, download TrackStock for contractors.
If you’re comparing jobsite inventory apps, see how TrackStock and Sortly compare for contractors.
