What do you call the procurement process where a payment liability arises only when material is removed?

The procurement process where a payment liability arises only when material is removed is referred to as consignment. In a consignment arrangement, the supplier retains ownership of the goods until they are actually used or consumed by the buyer. This means the buyer does not pay for the materials upfront but only when they take possession of the stock for use. This type of arrangement can provide significant benefits, such as reduced inventory carrying costs and a lower level of financial commitment for the buyer until the goods are needed.

In contrast, other procurement methods involve different payment and ownership dynamics. A purchase order typically signifies an agreement to buy goods or services, resulting in an immediate obligation to pay upon delivery or invoicing. Direct procurement pertains to the purchasing of goods or services that are immediately consumed and require direct payment. Standard procurement is generally associated with traditional buying processes where transactions become payable upon delivery or invoicing, lacking the delayed liability characteristic of consignment.