So, what exactly is Consigned Vendor Inventory Management? Let’s break it down into two parts – Consigned Inventory and Vendor Managed Inventory.
Consigned Inventory is inventory that is still owned by the supplier, but the customer has on hand. When the customer uses or sells the inventory, the supplier THEN gets paid. There are a few reasons why this works, but a big one is that the customer frees up capital that would otherwise be needed to purchase the inventory in advance. This creates a form of financial security and freedom for the customer.
Vendor Managed Inventory is a form of supply chain management that can help solve many of your business’s challenges by taking the burden of inventory management and replenishment off your shoulders and putting it into the hands of the supplier.
When you pull them together, you get a cost-effective and highly efficient form of inventory control. It is important to understand the customer’s core objectives when entering any business relationship. It’s at this intersection of this understanding that it can be determined if a consigned VMI program is right for your business.
VMI Solves Major Inventory Concerns
What are the major concerns involved with inventory management?
Overhead, market uncertainties, and cash on hand, just to name a few. When you work with the right VMI partner, you can solve many of these common issues by reducing the cost of doing business as well as inventory levels.
When you add consigned inventory to the mix, you don't have to pay your supplier until the product sells, thus freeing up capital to handle other aspects of your business.
It allows you to have adequate stock on hand to test the waters without the financial risk of tying up funds.
Inventory Replenishment is Always Accurate
Another way a reliable VMI partner helps to solve the major issues of replenishment is through an accurate accounting of current stock levels.
Having trust in your VMI provider to monitor your inventory data not only helps ensure you have the right stock levels but also saves you time, money, and valuable resources.
The one thing you can always count on with an Austin Hardware® VMI program is accuracy because there is nothing worse than NOT having the right amount of stock on hand, either for your assembly line or for fulfilling a customer’s order.
Creating Long-Term Success for Your Business
A VMI program should be designed to help you solve the big issues of inventory management in the long term, including:
- Maintaining correct stock levels
- Insuring manufacturing lines are kept running
- Reducing overhead and improving cash flow
- Consolidating purchase orders
- Reducing the cost of writing checks
Imagine the peace of mind you’ll have from not having to reorder inventory, explain why a production line was shut down, or justify the overstock of parts that might not be used for several months.
We understand that every VMI program is unique, which is why we leverage our technology and forecasting tools to provide you with a custom solution that meets your specific needs.