How Vendor-Managed Inventory Improves your Bottom Line

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In today’s business world, it is more important than ever to maintain a well-run inventory. Not only can it help you save money, but it can also help improve your bottom line. Vendor-managed inventory (VMI) allows you to do just that and have more control over your inventory.

VMI is a process where the vendor creates and maintains an inventory plan for the distributor. This means that the manufacturer is responsible for generating and maintaining the inventory plan based on data received from the distributor. There are several benefits to VMI, including:

  • Reduced data entry and ordering errors
  • Greater right-product/right-time percentage rates
  • Purchase orders are automatically generated on a predetermined schedule
  • Decreased stock-on-hand due to more efficient planning, reducing money and space tied up with unnecessary inventory

In the fastener industry, studies have shown that 85 percent of fastener costs are directly related to overhead inventory activities such as administration, inspection, and over-ordering – a scant 15 percent of fastener costs is the cost of the products themselves. This means that VMI can be a great way to reduce costs and improve your bottom line.

For the vendor-managed inventory business model, the manufacturer is responsible for generating and maintaining the inventory plan. This doesn’t change inventory ownership, just how it’s managed. The manufacturer sees how much inventory the distributor carries and related sales activities. Based on data received from the distributor (now often using cloud-based applications and user-defined dashboards), the manufacturer generates its replenishment order to provide just the right amount of inventory to fulfill pre-determined requirements.

By using VMI, businesses can streamline their supply chain operations, improve inventory turns, and increase sales. In today’s business environment which is driven by online sales and global distribution, VMI provides a way to manage inventory more efficiently and keep costs down. Compared to the old traditional way of managing inventory, VMI can save businesses a lot of money and time through its automated ordering process.

At Electronic Fasteners, we are experts in VMI. We can help you streamline your supply chain operations, improve inventory turns, and increase sales. We offer several services to our customers, including:

  • Invoicing on a monthly basis
  • Barcode labeling all bins and stocking locations
  • Supplying parts to avoid running out or overstocking
  • Delivering products according to a prearranged schedule
  • Designing a stocking plan optimized to specific inventory requirements
  • Providing customers with comprehensive management reports
  • Stocking product at our warehouse as a backup to on-site customer inventory

If you’d like to learn more about how VMI can work for you, call the experts at Electronic Fasteners at 1-888-890-7780. We’d be happy to answer any questions you have or help you find the right solution for your business needs. Take your business to the next level with VMI from Electronic Fasteners and increase your bottom line while reducing your inventory overhead costs.