If your business is accustomed to self-managing its inventory, changing over to a vendor managed inventory (VMI) solution may seem like a challenging prospect. Many businesses need some type of inventory management, and the process can eat up a big chunk of a company’s balance sheet. Vendor managed inventory can introduce much-needed speed and efficiency into the process and lead to important cost savings over time. At Field, we offer Custom vendor managed inventory program that can enhance the efficiency of inventory management process for both suppliers and customers.
Implementing a VMI program involves the following steps, among others:
1. Develop Trust and Set Expectations
The first step is to develop trust in the customer-vendor relationship. Both partners will need to share a significant amount of data with each other which they normally keep in-house. This requires open and clear communication between vendor and customer with an understanding of each other’s objectives over the short and long-term. It also involves setting proper expectations and being realistic with one another about the benefits and risks to each party. The customer and vendor should discuss timelines for implementation, obstacles, who will be responsible for slow moving items, cash flow, inventory must-take terms, and more.
2. Get Organized
A properly organized and cataloged customer inventory will make the transition to a vendor managed inventory program much easier. If there are missing pieces in the customer’s inventory management system, the implementation of better practices such as labeling can help make for a smooth VMI transition.
3. Prepare Inventory Data
Implementing any required process adjustments to ensure the compilation of accurate data in a useful format for vendor and customer is essential. The effective implementation of a program for vendor managed inventory fasteners, for example, requires a consistent steady stream of useful, up-to-date data about inventory – this includes information about existing stock and how demand fluctuates over time.
4. Establish Efficient Information Transfers
In large part, the quality of information exchange determines the effectiveness of a vendor managed inventory program. Suppliers require complete visibility into the inventory and sales levels to ensure the pipeline of goods keeps flowing and inventory is managed properly.
5. Establish Targets and Create an Order Process
With a responsive and flexible VMI program you can achieve a leaner overall inventory with tighter time frames. This is made possible as the vendor follows a product replenishment process that is based on the customer’s actual projections and targets. Desirable VMI results such as accurate order quantities and inventory replenishment is made possible as all the parties have a clear understanding of past demand and future requirements.
To learn about the vendor managed inventory program we offer at Field, call us today at 815.637.9002 or reach us through our contact form.