Vendor-managed inventory (VMI) is a fairly recent business model strategy that features a pro-active vendor/customer relationship in which the vendor actively maintains a level of product in stock for the customer, eliminating concern for running out of a particular product. VMI works for industrial and commercial companies as well as retailers.
Properly maintained vendor-managed inventory can be critical for manufacturers, distributors, and assembly houses that depend upon having the right number and size of parts in stock, enabling them to maintain a constant production level. Poorly maintained inventories can result in the additional expense of overstocking, or expensive production downtime when inventory runs out.
Retailers can also benefit from VMI, taking advantage of the supplier’s resources to ensure that inventory is properly maintained at all retail locations. Often they’ll even help determine inventory levels, suggest product lines to stock, and even help control displays and maintain point-of-sale programs (POS) to boost sales.
For original equipment manufacturers, assembly houses, and distributors, processes, market conditions, and product lifecycles can have a significant effect on inventory demand. It’s important for suppliers and customers to maintain effective communications and establish stocking processes that enable inventories to be efficiently managed. Often that means integrating vendor/customer enterprise resource planning (ERP) systems for seamless inventory monitoring and management.
In fact, a well-run vendor managed inventory program provides customers with a number of benefits, including:
- Reduced data entry and ordering errors
- Improved purchase order timing – POs are automatically generated on a pre-determined schedule
- Improved service – greater right-product/right-time percentage rates
- Decreased stock-on-hand due to more efficient planning, reducing money and space tied up with unnecessary inventory
At Electronic Fasteners, we have a comprehensive vendor managed inventory program that makes it easy for you, the customer, to help control exactly how much and how often you receive the parts and products you need. Our VMI program can help you reduce costs and streamline your supply chain while boosting productivity for greater output and profits.