Vendor-Managed Inventory (VMI). How Can this be in your Best Interest?
Vendor-managed inventory (VMI) is not a new idea, but it’s one that many industrial original equipment manufacturers still resist as part of their business approach. Yet, when done right, a vendor-managed inventory strategy can bring significant benefits to your business.
We will attempt to summarize what exactly a “VMI” is. Our objective will be to explain what your how your company can benefit using this type of program and how to proceed.
Vendor-Managed Inventory Defined
In brief vendor-managed inventory is a process where the supplier, your supplier’s distributor, maintains your inventory instead of you. It can be an extremely efficient and cost effective, when executed properly –Your big box stores thrived using this principal.
The standard way inventory is controlled.
This standard inventory control model is a challenge:
- How do you know what to keep on the shelf?
- If you overestimate your need. Ugh! Wasted $$$$
- One missing component can stop that machine form getting out the door.
We all know that excess inventory is a problem, but we also know you can’t finish the build if you don’t have all the required components. Traditional inventory management approaches can force you to purchase extra inventory to avoid any potential delay in a machine build. Which is worse? Too much inventory or too little?
Vendor-Managed Inventory Benefits
The goal with a vendor-managed inventory relationship is to make sure the machine builder only has on hand what they’ll need to keep production running a smooth pace. This is accomplished through maintaining closer contact with the supplier, aided by technology, so that they can purchase stock in smaller batches, more frequently.
Parker through there distribution partners has an integrated solution to maintaining vendor managed inventory
This program runs on your computer and lets you create your own bin labels by division for BPD, HPD, PFD, QCD and TFD fittings and adapters. This latest version brings you these advantages and more:
- Easy to use – create your own labels in minutes
- Import Excel databases – save time in creating your labels
- Add descriptions, alternate part numbers and barcodes to your labels
- Add your logo to further customize labels
- Receive automatic updates whenever you open the program