You should do an inventory of what was initially accepted into the store and keep a copy both parties with signatures. This way when the big question of "what happened to the 100 items I dropped off?" comes up and you say "There was only 50", there's at least some accounting for it. As to the issue of "shrink", theft unfortunately happens, usually the risk lies to the individual willing to part with their inventory by putting it up for display (if a store buys and sells items, they can't go after the manufacturer if their items get stolen). It should be outlined where the responsibility lies before accepting the goods though. I'm sure there are templates you can find, usually I just typed up a quick agreement type thing though.
I have pretty much moved away from consignment in my retail store though, usually if I don't have enough faith in the product to buy it for resale, it's hard for me or my employees to sell it. It also creates less confusion when dealing with store specials/coupons and the like.