Vendor Managed Inventory: The Secrets to Success

Successful vendor managed inventory (VMI) systems are critical for the operational success of OEMs. They contribute to minimizing disruptions and can offer cost savings if managed correctly.

En nuestro último Charlas sobre la caja de herramientas de Optimas podcast, Paul Przyby (Senior Vice President, Sales, US) and Peter Stevenson (Vice President, UK) joined Stuart Katz (Director, Marketing, US) to share their secrets on how to successfully master VMI programs to optimize fastener replenishment cycles.

Peter Stevenson

Vice President, UK

Pablo Przyby

Senior Vice President, Sales

Estuardo Katz

Marketing Director

Continue reading to get a snippet of the latest podcast episode or jump in and listen to the full podcast below.

When does it make sense for a growing OEM to consider an externally managed inventory solution?

“There are many factors that trigger growing manufacturers to decide a vendor managed inventory solution will help them move forward,” said Paul.

“One main reason OEMs make this transition is because they want to gain better control of their replenishment cycles. This includes improved management of excess inventory.

“Also, a lot of time and energy goes into handling inventories and cycle counts, to ensure accurate and optimal levels. This is when having someone else manage that burden ultimately enables you to spend more time building quality products.”

What types of manufacturing environments would benefit most from inventory management?

“From automotive and aerospace industries to medical and even large retailers, there are many industries which utilize vendor managed inventory programs,” said Pete.

“Ultimately, VMI programs are most beneficial to OEMs with high SKU counts within their overall bill of materials (BOMs),” he added. “Furthermore, if you have a large waste build up due to your current inventory management, such as physical waste, time and even space, then vendor managed inventory programs can be a game changer.”

In addition, organizations with varied purchasing processes and even no-typical patterns in their demand cycle could see the benefits of implementing a VMI program.

Soluciones de gestión de inventario habilitadas por tecnología

Las soluciones OptiTech brindan acceso a informes personalizados en tiempo real para una mayor transparencia en sus datos de inventario y consumo. Cualquier configuración de OptiTech funciona con un sistema Kanban de uno o varios contenedores. Al usar EDI y herramientas web, OptiTech se integra en su ERP y sistemas heredados para facilitar el procesamiento de pedidos, notificaciones de envío y facturación.

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What best practices can you share of what a good vendor managed inventory program looks like?

“Continuity of supply and cost benefits are front and center of what any manufacturer is looking for with their replenishment cycle,” said Pete.

“I can recall one customer that came to us with challenges around their continuity of supply and excess and obsolete inventory.

“In order to match their challenges, a lot of analysis needed to be completed to understand their usage. This forms the basis for any inventory management solution, which can be implemented following afterwards. It is crucial to get this analysis phase correct to ensure a successful VMI program.”

los OptiTech Inventory Management Solution implemented was able to reduce on-hand inventory by 40%, dispositioning the manufacturers excess and obsolete inventory by 90% and delivered initial cost savings of over $130,000. haga clic aquí to learn how our experts improved production flow, automated inventory replenishment and maximized visibility into part consumption.

Paul added saying: “A good vendor managed program will help lower costs, reduce on-hand inventory and in some instances also streamline the supply base by utilizing the global sourcing capabilities of larger distributors.”

What advice would you give to OEMs just starting to refine their inventory management processes?

“First and foremost, start with a solid foundation,” said Paul. “Understand where you are currently and what you aim to get out of the project – the best suppliers will help determine what these goals will look like.

“Furthermore, ensure a dedicated implementation team are focused on refining your inventory management process; to enable the correct processes and solutions to be tailored to your needs.

“It’s also important that who you invest in has a system that is scalable to your future needs – it’s key to partner with a provider for the long haul.”

Pete continued saying: “I would suggest gradually introducing automation. You want to be able to prove to your organization that the benefits are going to occur as well as implement it successfully alongside your current systems.

“Also, communication is crucial. Work with a supplier you trust because with VMI you’re effectively going from 100 vendor relationships to one, so it will streamline your supply chain, but you will need to ensure contact is excellent between you and your VMI partner.”

Skip to [22:11] to hear all of Paul and Pete’s personal tips to refining the inventory management process for improved operational efficiency.

Partner with Optimas to transform your inventory management

Customized vendor managed inventory (VMI) programs empower manufacturers to establish automated fastener replenishment cycles. Our innovative OptiTech Inventory Management Solutions blend secure technology, market forecasts, consumption data and just-in-time (JIT) processes to optimize inventory levels for production. This results in increased efficiency and output.

Discover how our VMI solutions lowered total cost of ownership by $70,000 for one partner and connect with us today aprender más.