Advantages of a Vendor Managed Inventory System

Employee Scanning Inventory into Swisslog Autostore at RadwellVendor Managed Inventory Systems can be a great asset for many types of businesses. For businesses that have equipment maintenance needs and can’t commit to cost prohibitive solutions, VMI might be a great answer. What is the definition of Vendor Managed Inventory? Vendor Managed Inventory (or VMI) is a business model in which the buyer of a product provides certain information to a supplier of that product, and the supplier takes full responsibility for maintaining an agreed upon inventory of the material. For many companies, vendor managed inventory is the next step in supply chain management. There are many benefits to vendor managed inventory.

Key benefits of the VMI Process:

Inventory Optimization and Control-Inventory control is about knowing where all stock is and ensuring everything is accounted for at any given time. An inventory control system or a computerized inventory system is a process for managing and locating objects or materials. For VMI customers who maintain inventory within their facility, this is a key benefit to having a VMI System. Inventory can be managed at either the vendor’s location or onsite at the buyer’s location but it can easily be managed effectively.

Supplier Owned Inventory-When a supplier owns the inventory, there is even less pressure on a business operation to maintain inventory levels and warehousing costs for storage. With a VMI system in place, suppliers can provide inventory needs with minimal client effort. Vendors can provide stock to VMI customers as needed.

Barcoded Inventory Bins at Radwell InternationalBarcoded Tracking of Equipment-Efficient tracking of equipment and inventory leads to better data analysis and potentially more cost savings. An organized and high-tech option for organizing inventory can only increase the efficiency of tracking equipment and product. Vendor Managed Inventory providers with automated material handling systems in place can only enhance and improve the process of managing inventory for customers.

Data Analysis and Customized Reporting-Software tools can be designed to analyze data as well as create customized reports for an organization to show where inventory efficiencies and inefficiencies lie. This type of analysis also allows a VMI Service provider to maintain inventory levels for VMI customers. Maintaining inventory levels at an agreed upon number is an important benefit to a successful VMI system.

Optimized Asset Uptime and Longevity-Equipment needs are ready for shipping and in optimum condition to keep asset uptime at the best level it can be and also to help machines last longer.

Support and Enhancement of Supply Chain Operations-Supply chain management is the management of the flow of goods and services. It includes the movement and storage of raw materials, work in progress inventory and finished goods from the point of origin to the point of consumption. VMI Systems enhance the management of supply chain operations by taking the details involved in managing inventory to the next level.

Cost Savings-For customers, less storage is required, less aging inventory is on hand and solutions are cost effective for keeping machines functioning optimally. This all amounts to cost savings for VMI Customers.

Lifecycle Asset Management and Preventative Maintenance-With a VMI Solution, equipment is preventatively maintained and managed for the duration of its lifecycle in the most efficient way possible. This prolongs the life of the equipment which in turn, reduces short term and long term operating costs.

Parternship handshakeConsistent Follow Up and Vendor Involvement-A dedicated representative who follows up frequently on inventory and provides client assistance is an important benefit to a VMI system.

Flexibility- A VMI System with flexibility and customization options is important for customers. This flexibility works for businesses because it provides a solution that is designed to fit their specific operation.

Commitment-Vendor managed inventory providers are willing to sign a contract with customers to offer them commitment in producing positive results with their VMI system. A VMI contract promises and commits to delivery of services.


Are you wondering if a Vendor-Managed Inventory System is right for you?

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