I have two suggestions to choose from as follows:
1.) You can set them up as vendor managed inventory and have the vendor control replenishment, inventoring, and billing
2.) You can set these items up as Type 3 Kan Bans which will auto-generate replenishment blanket order releases upon transacting P3157 Kan Ban Check Out. And furthermore, if you choose suggestion two, I would also set these items up to pay on consumption (as supposed to upon receipt as you suggested) if vendor will allow. This can be easily be facilitated in EnterpriseOne via the R43800/R470412 Evaluated Receipts process.
Not a plug really (lol) but if you want to learn everything there is to know about consignment, I will be facilitating "Implementing and Managing Supplier Consigned Inventory in EnterpriseOne" at Collaborate 2010 in Las Vegas.