Benefits of Vendor Managed Inventory

July 20th, 2015 • by Bill Madl
Bill Madl

Bill Madl

Bill Madl has been in the corrugated packaging industry for the past 47 years, with a graduate degree in Business Administration. He is also a certified “Jonah” from the Theory of Constraints, and a certified Carew Sales trainer.

Many companies, including craft breweries, are expanding their business growth at a rate that exceeds their ability to keep up with operations, especially maintaining an accurate inventory of raw materials and finished goods that will satisfy their customer demands. In many instances, there are shortages, obsolescence, aging, expediting and all sorts of time and energy related issues that reduce your bottom-line profits.

The benefits of a VMI (vendor managed inventory) program are many and apply to BOTH customer and supplier, especially if you package your products, either for direct sale or e-commerce. They include reduced clerical errors, faster order processing, improved service to and from the customer/manufacturer, and better planning – with more responsibility shifting to the supplier allowing the customer to focus on their business.

True partnerships are formed as visibility from the customer allows the supplier to forecast easier and more accurately predict inventory levels needed at both sites. This helps to establish supplier priorities, opens the door for two-way communication and helps insure stock outs are avoided and replenishment is timely. The manufacturer is now responsible for inventory and is more focused on servicing the customer, as the overall service responsibilities have shifted to them.

If your supplier doesn’t have a current VMI program with your company, especially if your business is expanding rapidly, consider a supplier who has a program that will keep unwanted inventory off your floor and help improve your bottom-line earnings!