Vendor Managed Inventory (VMI)
What is VMI?
Vendor managed inventory is a business relationship where the supplier takes over the management of inventory for the customer. The supplier of the product will manage orders and fulfillment to ensure the customer has the parts on hand when they need them (JIT-Just-In-Time Inventory). Communication and relationship are very important for this system to be effective. Here are just a couple of benefits to our VMI program:
· Increased Customer Service: both face-to-face and electronic processes are available to ensure customers have what they need when they need it.
· Better Planning: Rather than guessing how much product a customer will need based on intuition or limited information, VMI gives both parties the right information needed to optimize the supply chain.
· Strategic Business Alliances: Both parties working together with the same data increasing the accuracy and efficiency of your inventory management while decreasing costs. This data can optimize the inventory at the customer site to reduce costs to the vendor and to decrease turn-around time when the customer needs new inventory.
· JIT Inventory: Just-In-Time Inventory focuses on only ever having enough inventory on hand to meet the customers needs. This depends on the type of product, how fast it turns (consumption) and lead time (replenishment). This process is very appealing as the customer can utilize more physical space by not having to keep minimum quantities on hand and by reducing costs. Which leads to much better forecasting for the supplier, and inventory levels can be optimized for both parties.
· Reduction of Sales Costs: Storage adds significantly to the costs of products. Customers incur costs waiting for parts, loss of product, and the human resources to manage products.
Vendor managed inventory is an excellent way to increase relationships, improve quality of product delivery, increase income and decrease costs. Patriot Fluid Power offers vendor managed inventory with different options to satisfy our customer demands. Call us today to discover how we can help increase productivity for you!