What is VMI?
VMI, or vendor managed inventory, refers to the process in which a vendor (supplier) manages inventory for a manufacturer. VMI promotes a leaner supply chain in which the supplier maintains a predetermined safety stock to prevent stock outages. Whenever the inventory reaches the threshold level, re-supply is done by the vendor through regularly scheduled reviews of the on-site inventory. The vendor closely monitors these changes and determines when to generate new orders for replenishment.
While there are a few different variations of VMI, they all operate under the same principle: by ordering materials only when they are needed, businesses maximize efficiency, minimize costs, reduce stock outs, and increase profits.
Some of the most popular VMI methods are:
- JIT or “Just-In-Time”
- Two Bin
- Remote Fill and Bill with Bag-n-Tag
Benefits of VMI
VMI has become the supply chain standard across many industries because of its undeniable business benefits. Not only does VMI enhance softer skills like strong customer service and long-term business partnerships between vendors and suppliers, but it also yields hard business results.
The most obvious benefits of VMI are time and cost savings. By keeping the right amount of inventory stocked at all times, suppliers and distributors reduce bottlenecks in production, minimize the risk of stock outs or emergency orders, ensure consistent refill and delivery schedules, and maximize profits with constant production flow and precise pricing.
Is VMI Right For Me?
To determine whether VMI is right for your business, you may need to ask some questions.
What is the volume that I have to manage?
Industrial suppliers, especially, are burdened with managing large quantities of small parts. VMI can streamline this potentially complicated and disorganized process.
How critical is efficiency and cost-effectiveness to my company?
There may be costly bottlenecks that you have not yet discovered. VMI can help to identify them and minimize costs both short- and long-term.
Learn More - Contact AFI Today
Assembly Fasteners, Inc. (AFI) is one of the top VMI providers in the United States. With over 30 years of experience, AFI has developed a wide range of customizable VMI solutions for your supply chain needs.