What is Vendor Managed Inventory (VMI)?
In the traditional inventory control model, you, as the customer, would determine your necessary inventory levels, frequency of orders and the quantity of each order. Under a VMI model, you share your inventory level data with suppliers, and they agree to hold that amount of inventory at your disposal. (It means the responsibility of inventory control is passed to them.)
This way, the supplier can optimize production volumes and delivery strategies, and the customer needs less working capital and warehousing space. This ultimately aims at reducing costs for all parties.
What are the benefits of VMI?
More efficient inventory control and raw material handling for the supplier; this allows for reduced costs and the chance for the supplier to adopt a leaner approach to manufacturing.
降低了客户的库存和产品短缺的风险(for example, at the retail level). When products go out of stock, this is a direct loss of potential revenue. VMI provides sales data on seasonal trends, promotional effects, special offers and general day-to-day stock movement which allows the supplier to be in-tune with product demand.
Stronger buyer-supplier relationships may be built, which in turn allows both parties to become stronger and better in the business relationship (better communication, better new product introduction opportunities…).
随着时间的推移改进的流程as the supplier will have input into your inventory management process as well as achieving more efficient ordering and accurate data between all parties.
Who is Vendor Managed Inventory for?
In order to make VMI work, the implementation needs to be carefully planned out. Here are some guidelines that will help you implement yours (these are the best practices that we follow when setting up VMI):
- What each party can expect from implementing VMI?
- What timescales will be involved before benefits are likely to be seen?
- The amount of safety stock the supplier should be holding while the system is being matured?
- What needs to be done before implementation?
Clear communication is essential throughout the implementation of VMI and beyond. All parties need to communicate on a regular basis, the best way is to have a communication plan where all parties meet at scheduled times:
- Determine how data is communicated, again this is an essential element of VMI and must be as accurate as possible for VMI to work correctly.
You should also:
- Improve reliability of forecasting and continuously improve stock management and product delivery.
All these points will help you while planning the implementation of VMI. Remember, this is a long term strategy and不是a quick win play. VMI needs to be implemented carefully. You can assume there will be issues along the way, but this is where clear communication is critical and all parties come to an agreement on moving forward.
是的, we can set up VMI with your supplier/s as a part of ourValue-Added Procurement Office in Chinasolution if that’s something that your project requires. We will address this on a case-by-case basis.
If you need any help with implementing VMI, reach out to team to discuss in more detail.