Q & A with Connor Arney, Austin Hardware and Supply National Sales Manager for VMI
AH: Can you explain vendor-managed inventory (VMI) and how it works?CA: Vendor-managed inventory is an arrangement between the customer and supplier in which the vendor takes responsibility for managing and replenishing stock levels of agreed-upon parts and products at the customer's customer's location.
CA: "Benefits of VMI include; Reduced stockouts, improved inventory accuracy, lower inventory carrying costs, and better supply chain visibility.
It can lead to stronger collaboration between vendors and customers, streamlined operations, and enhanced customer satisfaction."AH: What are the key challenges businesses and suppliers face when implementing a VMI system, and how can they overcome them?
CA: "VMI requires trust in the Vendor/customer relationship, effective communication, and robust data-sharing mechanisms between the vendor and customer. Also, setting up the appropriate MIN/MAX quantities is essential for a well-stocked VMI program."
CA: "VMI is great for all industries, specifically manufacturing, where products are regularly used and consumed.
Manufacturers, wholesalers, distributors, retailers, automotive, healthcare, and food services can all benefit from VMI programs. Ultimately, any industry or business that relies on effective inventory management, timely replenishment, and collaboration between suppliers and customers can benefit from VMI. It reduces stockouts, lowers inventory costs, optimizes supply chain processes, and improves customer satisfaction by ensuring the right products are available at the right time."
CA: "VMI is growing fast. New software provides ease of use ordering and detailed analysis of product usage. Vending equipment offers a wide range of solutions to fit any customer's needs; RFID is also a newer technology to VMI that simplifies ordering and inventory audits."
CA: "Providing customers with fill rates and usage reports allows us to grade how we are performing for them and let them track their usage and unearth potential trouble spots.
Other metrics that can be used include inventory turnover, stockouts, order accuracy, lead time, cost savings, customer satisfaction, process efficiency, and more. Specific metrics can vary depending on the industry and a company's particular goals.
Businesses should define their Key Performance Indicators (KPIs) based on their goals and regularly monitor them to gauge the success of their VMI program."
For them, and if so, how would they go about that?
CA: "A CMI (Customer Managed Inventory) program is a great start for customers looking into VMI but not ready to make the plunge. CMI programs provide customers with the tools, equipment, and systems to simplify and simplify managing their inventory. Another possibility is to select a pilot project, whether a specific product or location, for the initial focus. This allows for a controlled and manageable test environment.
No matter the program you choose, we'll help you clearly outline the specific goals and desired outcomes of your program and work with you to define both parties' scope, responsibilities, and expectations. We'll then help ensure the necessary systems and technologies are in place to facilitate seamless data sharing.
Once implemented, we'll consult with you to evaluate the results and adjust, so you can make an informed decision as to how far you would like to go with the program."
Learn more about Austin Hardware's VMI program here: Austin Hardware's Vendor Managed Inventory