Vendor managed inventory (VMI) is an effective tool business can use to increase the efficiency of various processes and ultimately improve their bottom line. With VMI, the vendor is in control of the customer’s inventory through close collaborations formed between vendors and customers. Through the vendor managed inventory services we offer at Field, we help businesses ensure their products remain available, lower overhead and other costs, reduce waste, and regulate inventory.
Some of the benefits of using a vendor managed inventory system include:
1. Better Inventory Management
Managing inventory can be a complicated effort. You don’t want to understock or overstock the supply. Understocking means you cannot fulfill orders in a timely manner, over even worse, cause a line down. Overstocking means you hold up capital and pay for storage or material expirations because of products exceeding their shelf-life. Vendor managed inventory services bring proper balance and efficiency to the process.
Improper inventory management can lead to issues down the supply chain. A VMI enables real-time monitoring of material inventory and also enables efficient restocking when needed.
2. More Efficiency and Lower Costs
In a VMI relationship, the supplier is in control of the inventory. This ensures great efficiencies in the system. This reduces the number of orders, the frequency or last-minute orders (which cost more), and reduces produce replacements and returns.
3. More Satisfied Customers
Delayed or missed orders result in unhappy customers. These issues not only affect your business but the businesses of your customers as well. You could very well lose customers over these issues. A supplier inventory management system significantly reduces delays and ensures you keep the trust of your customers.
4. Better Data Analytics
With VMI, the actual demand of customers is much better understood. The sophistication of a vendor managed inventory system accounts for the supplier’s data analytics and helps improve the performance of sales managers with customers. Suppliers gain better insights into customers’ behaviors and needs.
5. Increased Throughput
As VMI enables better understanding of customer behavior and demand, increased throughput is the likely result. You will know exactly what you have on hand and when you need ot order more to ensure you are maximizing throughput.