For many companies, a Vendor Managed Inventory program is a better way to handle replenishment.

The natural question for you to ask now is … why? What are the benefits of having a supplier manage MY inventory?  In a word … MONEY.

Now that’s obviously an oversimplification. But when you break it down and look at all the different parts of the replenishment cycle a VMI program can impact, it becomes easy to see the benefits.  

Let’s take a more detailed look.

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.

Are you a manufacturing company? If so, does your business depend on inventory to get by? If you answered yes to one or both questions you might be familiar with a two-bin system. A widely used inventory management system, a two-bin system basically deals with two bins to help you or your team keep track of inventory. It helps you determine when inventory is full, low, and needs replenishing. A two bin system often exists in production lines where multiple parts come together to create a new product.

If you’re considering vendor consolidation, you should consider that it is one of the easiest ways to control your supply chain. You are basically drastically reducing the number of vendors you deal with, therefore simplifying your business.

Let’s face it, there are a lot of things that need to get done, and only so many hours in the day to accomplish your tasks. When it comes to dealing with vendors, how do you manage this?

Why Do You Need Inventory Management Software?

Inventory management is a crucial part of your business and having a solid system in place to help you run business is as important as your inventory. If your business depends on inventory you need to be sure that you are running things smoothly. This means preparing for the future, having the correct levels of inventory, monitoring your supply chain and more. If you’re still doing things the old-fashioned way, it might be time to ask yourself: Why? Why deal with uncertainties, unnecessary business challenges, and headaches that ultimately cost you money when there is an easy solution for your business. If you’re using out of date systems like spreadsheets, two-bin systems, and anything else leaving room for error, it’s time to consider new methods for growing your business.

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.

What is Production Inventory?

If your business produces a finished good, then you may be familiar with the concept of production inventory. Simply put, production inventory is the amount of goods you have on hand to complete the manufacturing process. It’s all the parts and supplies your business needs to make your product. Production inventory is important to the manufacturing process and therefore important for your business.

To keep things simple; inventory management is the management of inventory and stock.  If your inventory is managed properly it will mean you always have the correct levels of stock on hand. This has a lot of benefits for your business. For some, this is easier said than done. However, having the right inventory at ALL times is a crucial component for your business.

Here are a few basics that help explain inventory management a little further:

Inventory 101:

If you are a business that sells or makes products, chances are pretty good that your inventory supply is the most important thing for your business. Sound like you? Your business depends on your inventory. Inventory is all the parts and products you have on hand at any given time. These could be for making goods, or actual products that you sell. The most important thing about inventory is having the right parts at the right time. Think of what would happen if you did not.

Now imagine a world where your inventory was always right, and you never ran out of parts. Sounds pretty good right? That’s where inventory management comes into play.

Click here to read 7 benefits to Vendor Managed Inventory.

We’re back from 2019’s NTEA aka The Work Truck Show in Indianapolis, IN. This year’s show was a success, and we were able to meet up with new and current customers, showcasing some of Austin hardware’s new and best products. In addition, we were able to lean in to our team members and product experts, available on site to represent Austin Hardware®. We always look forward to events where we can showcase our products, discuss what makes Austin Hardware® stand out among our competitors, and how we offer solutions for businesses. It’s also a great chance for our brightest minds to come together and showcase what makes Austin so great.