How Vendor Managed Inventory Can be Your Solution

Supply chain issues have been affecting businesses from the automobile industry to aerospace and everything in between. Since the start of the pandemic, the world has been in a constant state of trying to recover with the 900 largest companies in the U.S. and Europe averaging a loss of $184 million each due to supply chain issues. The biggest question that has been asked regarding this problem is “when will it end?” Although this is unclear, there are some preventative and progressive steps you can take to mitigate loss from supply chain issues.

Let’s look at VMIs.

What is a VMI?

A VMI (Vendor Managed Inventory) is an agreement made between vendors and buyers where the vendor will manage, maintain, and elevate an inventory in the possession of a buyer. Breaking this agreement down into simpler terms, a buyer will no longer need to initiate a purchase order. Instead, the vendor will manage stock and order when it needs to be replenished. Data is shared between the buyer and vendor to find a pattern or system that works best for the two of them. A VMI is a living, adapting system that can be changed or kept to best suit the buyer.

Why choose a VMI?

A VMI keeps you ahead of the game. It allows you to have the products you need, when you need them, without any hassle of keeping inventory or ordering. This allows you to streamline your business and reduces the time and money devoted to managing inventory.

• - Greater ability to track and control spend
• - Reduced responsibility/increased employee efficiency
• - Shorter lead times/stabilization of supply chain
• - Decreased number of vendors
• - Decreased number of POs and invoices/administrative costs
• - Decreased stock outs/stock overages/waste
• - Reduced freight costs/expensive emergency orders
• - Proactively avoid obsolescence
• - Assurance that products will be available when required
• - Ability to reassign resources to boost productivity
• - Decreased planning and ordering costs