There are a number of options, and plenty of decisions to make for companies considering a Vendor Managed Inventory (VMI) program. Depending on a company’s goals, budget, and available resources they’ll have to decide on the type of VMI program, to what extent the VMI provider’s personnel will be used, how products in your program are going to be replenished and accessed, and more.

We’ll look at a few of these options in this post.

There are essentially two types of VMI programs

• Non-Consignment
• Consignment.

Both Non-Consigned and Consigned VMI programs offer customers a similar list of benefits, which you can read more about HERE.

For many companies, a Vendor Managed Inventory program represents a better replenishment strategy.

Vendor Managed Inventory (VMI) is exactly what the name suggests. A program in which one of your vendors acts as a partner who takes on the day-to-day tasks and responsibility of managing your inventory.

For manufacturers, a VMI partner is usually a key supplier of component items, such as hardware, fasteners, or MRO products. Products for which it’s critical to strike the right balance between having enough to eliminate “line-down” situations, but not so much as to incur high carrying costs or run the risk expiration or obsolescence. The ideal VMI partner has the capacity to provide the majority of those parts which allows you to take greater advantage of the benefits of Vendor Consolidation.The VMI service provider works alongside you to implement a strategy based on your inventory management needs. They become an extension of you and your replenishment team, not a replacement.

There are two types of VMI program – Non-Consigned and Consigned.

Both Non-Consigned and Consigned VMI programs offer customers a similar list of benefits, which you can read more about HERE.

In a Consigned VMI program, the inventory is put in place, but the customer doesn’t pay for it until it’s consumed. You can learn more about a Consigned program HERE.* 

* It should be noted that the benefits of Consigned expressed here are relative to Consigned VMI, not simply Consigned inventory. One can have Consigned inventory absent a VMI program.

The more traditional of the two programs is Non-Consigned VMI. In a Non-Consigned program, the customer pays for the inventory as it’s brought in, and whenever replenishment is necessary.

Many manufacturers, whether they’re in a wheeled vehicle or other industrial market, have in common the need to find the right latch for their doors or compartments. But how do you know which type is best for your application, and what are the critical factors that go into the decision?