Vendor Managed Inventory

Companies can reap huge benefits by switching from Customer Managed Inventory (CMI) to a pro-active Vendor Managed Inventory (VMI) business relationship with their customers. The benefits: For the customer: increased profitability as a result of reduced inventory and administrative costs as well as an ensured product availability For the supplier: increased profitability as a result of reduced operating costs and a foundation for long-term and strong customer relationships For both parties: increased asset utilization by optimized routing, improved information for planning (e.g. demand visibility), reduced planning time required to forecast, optimized deliveries and a closer, more effective partnership For the environment: less mileage, better truck fill, less CO2 per ton*km, better safety to compliance How to start with or optimize Vendor Managed Inventory? Introducing VMI changes business processes and the nature of the cooperative relationship with your customers. During such a change process, it is important to collaborate with partners that have experience with these kind of projects and that know how to align people, processes, technology and manage change in such a way that VMI is of direct value. From a logistics point of view, it’s key to find the right balance between achieving on-time delivery and maximizing drop size. Deliveries that are too late, can result in high penalties, while too early deliveries mean smaller drop sizes and thus higher long-term transportation costs. Advanced planning systems that are capable of handling sophisticated demand forecasting and order generation algorithms, prove to be the right vehicle and enabler to introduce VMI in your organization.