Manufacturers rely upon a variety of processes, materials, and components to all come together in the right place at the right time to produce a finished product for market. Effectively managing this complex relationship is known as supply chain management (SCM). Simply put, supply chain management is the active coordination of every aspect, organization, and element necessary to produce and sell an end product.
Within SCM is an optional organizational subset called vendor managed inventory (VMI). This is an inventory management strategy that reverses what might be considered the traditional model in which the manufacturer manages their own inventory, ordering raw materials and components from vendors when they see fit. The VMI model reverses the roles – manufacturers commission suppliers to monitor and maintain inventories of their components based on their requirements and needs. VMI strategies are also used by retail businesses to better manage their in-stock inventories of consumer goods.
The benefits of VMI in supply chain management include:
- Improved inventory supply, reducing over- and under-purchasing
- Data entry error reduction
- More accurate budgeting and timely purchases
- Closer, more efficient customer/supplier relationships
The goal of VMI in supply chain management is to reduce inventory in the pipeline, keeping in-stock inventories at minimal levels for just-in-time manufacturing and to help retailers meet customer demands without the cost and risk of over-purchasing or under-purchasing during peak seasons. In all cases, VMI — as a key component of supply chain management — involves a third party, other than the retailer or manufacturer, taking responsibility for elements of inventory management, including setting and managing inventory levels, re-ordering, and replenishing.
At Electronic Fasteners, we offer two inventory management programs: full-service VMI in which we make regular visits to your facility and scan and replenish your inventory and U-SCAN, a do-it-yourself inventory management program in which you scan your own inventory and electronically upload an order to us, which is shipped the next day. Determining which one is right for you depends on the size, scope, and volume of production or sales for your organization. The supply chain management experts and VMI specialists here at Electronic Fasteners can help you make the right decision for your inventory. Contact us today to learn more.