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Vendor Managed Inventory

Vendor Managed InventoryVendor managed inventory (VMI) has become the accepted practice in many industries for managing the manufacture, distribution, and stocking of parts and components. Vendor managed inventory was once considered almost a novelty but is now considered an effective and cost-efficient strategy for controlling inventory for a wide range of commercial, industrial, and retail companies, including distributors, original equipment manufacturers (OEMs) and even end-users.

In the fastener industry, studies have shown that 85 percent of fastener costs are directly related to inventory overhead activities such as administration, inspection, and over-ordering – a scant 15 percent of fastener costs is the cost of the products themselves. Vendor managed inventory services can help you significantly reduce inventory-related costs.

There are a number of benefits to a well-run vendor managed inventory program, 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

In the vendor managed inventory business model, the manufacturer is responsible for generating and maintaining the inventory plan. VMI 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 own replenishment order to provide just the right amount of inventory to fulfill pre-determined requirements.

Our vendor managed inventory service is managed by a dedicated VMI department that helps our customers by:

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

Our vendor managed inventory program has helped our customers streamline their supply chain operations, improve inventory turns, and increase sales. If you’d like to learn more about our vendor managed inventory program, contact Del Furbish at 888-890-7780 x 150.