3 Benefits to Using Vendor Managed Inventory for Fasteners

Many manufacturers are looking towards using Vendor Managed Inventory (VMI) for their fasteners and C-Class components to maximize operational efficiency and reduce risk within their supply chain. Some OEMs experience overstocking of parts, due to anticipated shipping delays and lengthy lead times, and others are suffering from material and part shortages as a result of high demand.

As a result of these supply chain issues, manufacturers may find themselves struggling to keep track of stock, resulting in costly last-minute orders, obsolete parts on-hand and overall inefficiency.

To combat these problems, manufacturers are implementing vendor managed inventory solutions to minimize cost and risk surrounding their fastener usage, as well as to boost their productivity.

What is Vendor Managed Inventory (VMI)?

A vendor managed inventory service involves a supplier taking on all the responsibility for their customer’s parts, ensuring they always have the right parts at the right time to meet demand.

This service aims to reduce inventory as much as possible, resulting in minimal to no excess stock, which takes up valuable physical space and negatively impacts profit. The reduced amount of in-hand inventory contributes to a lower cost of ownership – a critical goal to try and achieve when using high-volume parts such as fasteners and C-Class components.

Accurate forecasting and demand planning data are crucial for the vendor managed inventory solution to work successfully. This will enable the supplier to have clear oversight of part consumption.

Optimas Inventory Management Solutions

We provide customized vendor managed inventory programs which enable manufacturers to establish automated fastener cycles. Our innovative OptiTech Inventory Management Solutions blend secure technology, market forecast and consumption data with just-in-time processes to optimize inventory levels for production.

The Benefits of a Vendor Managed Inventory Solution for Your Fastener Usage

1 – Cost Reduction

Manufacturers utilizing a vendor managed inventory solution for their fastener usage reap numerous financial benefits. Firstly, it reduces the manpower required. In a supply chain, the fastener part equates to only 15% of the cost, while the human resources required to select, manage and process those parts cost 85%.

Furthermore, the VMI process simplifies and reduces the cost of the ordering process, with the supplier assuming these costs and the associated risk of managing your supply chain. Partnering with a single supplier with dual sourcing capabilities can also reduce possible excess spending as you can collate your parts into a single, automated order.

2 – Streamlined Production

With continuous supply chain risks such as issues in the Red Sea or port workers taking strikes, it is more important for manufacturers to control their stock levels as best they can and avoid waste. A vendor managed inventory solution can use a variety of advanced technologies to automate and simplify the replenishment process, removing cost and unnecessary steps as well as minimizing supply chain risk.

A VMI service provider can also source products from a diverse range of suppliers for you. Some experts show that onboarding new suppliers can increase supply chain management costs by up to 15% of your operational expenses.

3 – Enhanced Supplier Relationships

When a fastener supplier implements a VMI solution into your operations, the close collaboration required to ensure the success of the service for your business can help improve and evolve the current level of communication and relationship you have. As a result, this improved relationship can allow for better alignment in your demand forecasting and production planning.

A supplier who provides vendor managed inventory services should also be able to help analyze your current forecasting and demand planning data and show patterns during times when they are not as accurate, not periods where the data aligns with one another. This process can help show areas where the data needs to be improved and maintains further communication that contributes to implementing a VMI service’s ultimate goals – minimizing risk, improving efficiencies, boosting productivity and reducing costs.

Learn More About Optimas’ VMI Solutions

Optimas is the leading global supplier of fasteners and C-Class components, as well as production-related solutions such as custom vendor managed inventory solutions for OEMs.

Our innovative OptiTech Inventory Management Solutions blend secure technology, market forecast and consumption data, and just-in-time (JIT) processes to optimize inventory levels for production, which increases efficiency and output.

EZI Metales, an international sheet metal fabricator, worked with us to improve its supply chain to ensure on-time part delivery and optimize on-hand inventory. As a result, our VMI solution helped streamline their supply base by 20%, reduce on-hand inventory by 45% and save 540 hours in annual labor costs.

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