An All Around Approach. Part 5: Vendor Managed Inventory

This is the fifth post in a 7 part series entitled ‘An All Around Approach’.  We will focus this series on how we provide cost reductions for our customer throughout the entire organization.

To understand how VMI reduces costs, first we need to know how the VMI program runs at Field. VMI (Vendor Managed Inventory) is when Field manages the customer’s inventory with an onsite rep. We use a data-driven approach to VMI that’s proven to dramatically reduce costs, inventory, and overhead, while greatly increasing turns and availability, and improving manufacturing process efficiencies. Our VMI team uses customer service, technology, and communication to help our customers.VMI 4

The VMI team is data driven above everything else. We are able to obtain this data by the technology our onsite reps are armed with when they’re at the customer site. The scanners that the team uses, instantly uploads orders and we’re able to edit quantities on the fly. We use the data collected from our scans drive our decisions on appropriate replenishment quantities. We want to help create maximum inventory turns within the VMI system and with our data we are able to do just that. We adjust inventory levels based on our customer’s usage and that’s determined by the data from our scans.  The data we collect helps us make sure the customer is not getting inventory shipped that they are not using, and at the same time our customers have high moving parts when they need them. This eliminates line down situations that can be costly for our customer.

POU (Point of Use) allows the customers to have the parts when and where they are needed. This eliminates the use of part handlers which saves labor costs, stock out rates, and the errors that can occur as more people touch the parts. The Field onsite rep brings the parts right to the person that is using them. Field recently had a customer that had one central stocking location for all of their parts. While it had worked for the customer for a long time, Field saw an opportunity to help the customer create some cost savings. The customer was using two workers to take the parts to the line and they were constantly having shortage problems on the line. Field proposed to set up a POU inventory system to deliver the parts right to the employees that needed them. This immediately eliminated the shortage issues the customer was having. This also allowed the customer to take the two workers that were running parts all over the factory, and use them in another area. This is one of many examples of how Field looks to improve our customer’s inventory systems to provide cost savings.

When you have a Field VMI rep you won’t just have your average employee delivering parts. You’re getting a rep that is customer service driven and is there to run your VMI system. There are many examples of how our onsite VMI reps provide customer cost savings. In one example a Field onsite rep noticed our customer was using eight different sizes of zip ties on one line.  He proactively sought out to find if the customer really used all of the different zip ties, and if possibly one zip tie could replace seven of the ties. He then worked with the customer’s engineering team to see what they really needed and they were able to eliminate four of the zip ties. This type of proactive service provided a significant cost savings to our customer.

Our Onsite VMI reps don’t just fill bins, just like the rest of the organization they are trained to look for cost savings at every opportunity for our customers.

Author: Kyle Runte, Onsite Field VMI Rep