Is inventory the backbone of success for your business? Do you have trouble forecasting demand and maintaining correct inventory levels yourself? Do you have difficulty dealing with too many suppliers?
Managing large amounts of inventory and a multitude of suppliers requires daily monitoring, meticulous coordination, and careful planning, that may be difficult to do on your own. The ramifications of any missteps can be felt beyond the purchasing department, across your entire organization from manufacturing, to operations, to payables and more.If you’re having difficulty with any aspect of inventory management, it’s VERY likely you can benefit from a Vendor Managed Inventory (VMI) program.
4 Things to know about a VMI program
1. Too many suppliers can cause problems
The more suppliers you depend on means more opportunity for someone to let you down by not delivering inventory on time. For a manufacturer, this means an increased risk of a critical line-down situation. Even if that worst-case scenario never unfolds, managing too many suppliers always equates to added paperwork, a multitude of purchase orders and checks to cut, and a greater overall commitment of resources to managing inventory.
A VMI program will allow you to consolidate vendors and streamline the process. This reduces the amount of time you spend day-to-day on the mundane tasks of managing inventory and frees you to work on more productive projects.
2. You can (and should) start small
A good VMI partner will not pressure you to jump in with both feet. You start with a few items that you struggle to keep in stock, or that your business has a difficult time to managing.
A good starting point is to identify suppliers who are notorious for repeatedly running you short of parts, and get those parts into a VMI program. The peace of mind alone will be well worth it.
3. You Deserve Transparent Reporting
A reputable VMI provider takes pride in sharing your numbers with you. Buyer beware if quarterly audits and data reviews are not offered or available at your request.
A good VMI provider will also sit down with you to go over specific Inventory Management KPI’s such as fill rates, demand trends, over- or under-buying, and cost savings associated with their services.
4. You Need A Partner You Can Trust
A good VMI partner is more than just a service provider. They’ll foster a mutually beneficial relationship that will grow over time.
Most importantly, your VMI partner will provide an unbiased, outside perspective, to help identify inefficiencies in your processes that you may not have been able to identify on your own.
You may have heard horror stories about large suppliers who offer VMI services over-stocking bins. This is typically due to a business model where the service providers goals, both at the corporate and employee levels (i.e. commission rates) are based on ensuring bins are fully stocked all the time even if it means over-stocking or charging you more than your demand requires.
When it’s time for VMI, consider Austin Hardware®
A good VMI partner should not be looked at as a replacement for you or your department. Rather, it’s an extension of your purchasing department designed to help you achieve your goals and objectives.
At Austin Hardware®, our VMI services are customized to meet your individual needs. With programs across many different industries, serving both large and small businesses, including many OEM’s. We have an in-depth understanding of VMI and what it takes to become a trusted partner you can rely on. You’ll have confidence that we’ve implemented a program to help solve the inventory issues you might be facing.
We’ll have you walk before you run and will be with you every step of the way. We provide in-depth reporting that monitors your inventory and leverages trends in your buying patterns to forecast future demand. With a fill rate of greater than 96% we ensure you’re never over- or under-stocked. We customize our program for you, to help you meet your goals.
Interested in ABLE II™ VMI?
If you think you and your business could benefit from a Vendor Managed Inventory program, let Austin Hardware® help get you started.