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    What is Vendor Managed Inventory (VMI) and is now the time to consider it as a solution for your business?

    Posted by Austin Hardware on Feb 29, 2024 1:37:18 PM

    VMI Blog Image

    For many companies, a vendor-managed inventory program represents a better replenishment strategy.

    Vendor managed inventory (VMI) is precisely 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 companies not ready to commit to a full-blown VMI program or may not qualify, there’s also the option of a CMI program, which can be explored HERE.

    The natural question for you to ask regarding vendor managed inventory is: why? What are the benefits of having aProduction Inventory - 1 supplier manage MY inventory?  

    A VMI program gives you a dedicated, expert set of eyes to monitor your inventory. You’ll rest assured knowing that you always have proper inventory levels while spending less time managing it.

    Inventory Costs Money. No kidding. Having the right amounts of inventory is essential. But having EXCESSIVE inventory is a waste. With the right VMI program, the supplier is responsible for managing and replenishing your inventory on an AS-NEEDED basis, thus reducing the need for substantial safety stock. The reduced inventory improves your cash flow and can lead to overall cost savings across your business model. Plus, keeping your inventory tight requires less warehouse space and fewer resources, which have real monetary value.

    For manufacturers, a VMI partner is usually a key supplier of component items, such as hardware, fasteners, or MRO products. These are products for which it’s critical to strike that balance between having enough to eliminate “line-down” situations but not so much as to incur high carrying costs or run the risk of expiration or obsolescence.

    The ideal VMI partner can provide most of those parts, which allows you to take greater advantage of the benefits of Vendor Consolidation.

    Beyond straight cost considerations, the VMI service provider may undertake any number of daily tasks, including:

    • - Monitoring inventory levels
    • - Analyzing and forecasting future needs
    • - Making automatic inventory adjustments
    • - Placing replenishment purchase orders
    • - Physically restocking inventory
    • The right VMI partner becomes an asset working alongside you to implement a strategy based on your company’s needs, serving as an extension of you and your replenishment team, not a replacement. A VMI program is the perfect example of how a supplier can become much more than JUST a supplier and create a synergy that drives results you couldn’t achieve alone.


    VMI employee with boxSome of the additional benefits of a VMI program include:

    • - Improved fill and in-stock rates
    • - Improved time management
    • - Reduced line-down situations
    • - Better data and more qualified inventory specialists monitoring
    • - Custom packaging and kitting programs
    • - Enhanced quality inspection
    • - Reduced errors
    • - Reduce Theft
    • - Support “Green” initiatives

    A VMI program is not a cookie-cutter, one-size-fits-all solution. Instead, every plan implemented is designed to support the customer based on their specific needs and goals.

    Austin Hardware® should be your next call if you believe a VMI program could benefit your business. Our VMI programs offer transparent reporting, quarterly audits, and value-added services like custom parts kitting. We have all the tools and the experience necessary to be the VMI partner you need.


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    Topics: Vendor Managed Inventory, Warehouse Management, inventory management