VMI: Improving Supplier & Customer Relationships

VMI: Improving Supplier & Customer Relationships

IntelliTrans Vendor Managed Inventory

Vendor Managed Inventory (VMI) has been heralded by many industries, including automotive, consumer products, retail, and more recently healthcare and pharmaceuticals. However, that’s just the tip of the iceberg. VMI has a multitude of applications in a variety of industries, each with unique needs. For example, the IntelliTrans Global Vendor Managed Inventory℠ (GVMI) solution is used by many large manufacturers and consumers of bulk chemicals, plastics, grains, and oil & gas to gain visibility and control of their supply chain.

GVMI is a web-based solution that utilizes sensor technology and six sigma data analysis to optimize supply chain and operations management. Our customers save money by reducing inventory and shipment costs. Sensors in storage silos retrieve information via telemetry and project that information back to the suppliers of the product in those silos. With that knowledge, the supplier knows how much product their customer has, how fast they are using it, and when to send more. This reduces the total cost to serve their customers AND associated working capital.

Keys to successfully implementing VMI

Look for automation that goes beyond measurement.

Game-changing VMI will have the capacity to integrate electronic order creation and send replenishment orders directly from the VMI application to your ERP. Such solutions will exchange the necessary purchase order information to create the transaction, and then monitor quantities delivered against that purchase order.

A VMI solution should be tailored to meet your needs.

If you have a short lead time supply chain with relatively simple replenishment logistics, then your solution should allow you to set high, re-order, and safety stock inventory levels. It should obtain readings multiple times per day and send alerts to your customer service team to drive order fulfillment. Have a longer lead time in your supply chain?  Integrated Collaborative Planning, Forecasting, and Replenishment (CPFR) solutions integrate a demand forecast, silo inventory, and in-transit inventory tracking to provide a forward-looking replenishment plan. These features will ensure the customer always has enough product, while the supplier always has enough lead time to fill the order using the preferred mode and transportation provider.

Ensure “buy-in” throughout the organization.

Regardless of the industry, successfully implementing VMI will require senior management support, collaboration, trust, great technology, and a willingness to rethink the traditional ordering process. Without these essentials, VMI initiatives often fail. However, if those basic building blocks are in place, you are set to reap the rewards: improved inventory turns, service, and sales.

What all this means is that the supplier has a lower cost-to-serve, inventory on-site is maintained at a lower level than before, and the relationship between supplier & customer evolves from transactional to strategic.

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