What is Vendor Managed Inventory? (VMI)

What is Vendor Manged Inventory

(VMI) Vendor managed inventory is an inventory management process in which a Supplier of goods is responsible for the management and optimization of the inventory held by the customer or end-user.

The 2-bin system

One of the most widely used methods of VMI is a 2-bin, Kanban style system. Kanban is a workflow management process designed to help you maximize your efficiency. The primary goal is to reduce costs while creating more value for the customer. The Kanban system utilizes two physical bins with a min and max inventory level assigned by part number. It allows you to manage your inventory critical parts (such as O-rings, seals, custom seal kits, gaskets, etc…). The min and max levels are established by number of turns, the critical assignment and lead time. This is a relatively simple system because the parts are contained in two rotating bins. Parts are pulled which are used to fill orders or provide components to various workstations or departments.

For example, employees pull parts from one bin (front bin) until it is empty. Next, they rotate to the second bin (back bin). They scan the bin label with a phone or other scanning device. Thus, placing an order with Patriot Fluid Power to replenish the inventory in the first bin. This ensures that there is little to no risk of running low or out of stock due to normal usage.

VMI Technology

Vendor Managed Inventory requires a communication link between companies. Typically, the link is the internet or (EDI) electronic data interchange. The link provides the customer’s sales and inventory data to Patriot Fluid Power, to place a restock order.

  • What are some benefits to VMI?

    There are several benefits of a Vendor Managed Inventory system (VMI):
    – Patriot Fluid Power dedicates its resources to managing your inventory so you don’t have to
    – Detailed reports on number of inventory turns
    – Stocking level accuracy
    – Forecasting and cost analysis reports
    – Elimination of data entry errors through scanning of labels
    – Cost savings due to the elimination of factory minimums
    – Cost savings illustrated by the elimination of down time
    – Elimination of overnight shipping and expediting charges

  • Patriot Fluid Power Vendor Managed Inventory Label

VMI Works!

We can offer solutions for VMI tailored to your needs. First, Patriot will setup your facility by cataloging your parts. Next, we will recommend min and max levels based on usage analysis and create scanable code labels for easy reorder. In addition, we will help monitor your usage and recommend adjustments. Finally, Patriot can supply you scanable paperwork and labels so parts can be scanned into your ERP eliminating human data entry errors.

Please contact Patriot Fluid Power so we can recommend a Vendor Managed Inventory (VMI) system that would be right for you!

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