Tag Archive: increased revenues

VMI – What are the Benefits?

June 6th, 2017
vendor managed inventory

Vendor Managed Inventory is gaining in popularity as people realize the many benefits of supply chain collaboration.

Vendor managed inventory (VMI) can have many benefits – both from a strategic perspective and a tactical one. We are seeing that it is gaining in popularity as manufacturers and distributors and retail locations see the value of collaborating with supply chain partners to drive dramatic benefit across the supply chain.

Why VMI? See these 5 benefits:

1. Increased revenue– By partnering with customers on VMI and customer collaboration programs, you become a trusted and value-added partner. As new business opportunities arise, we’ve found that those who offer VMI typically have an advantage. First, the customer knows they will have what they need, where they need it and when they need it to satisfy demand. Next, the customer knows it is easy to work with a VMI partner and so will prefer to expand capabilities with them. And, lastly, the customer is likely to recognize these preferred suppliers.

2. Responsiveness & agility– By collaborating up and down your supply chain, you build a greater agility and responsiveness into your supply chain. With a greater access to information and a quicker view of market changes, responsiveness will increase throughout.

3. Improved customer service & reduced lead times– Often, this is the most critical benefit across the board. With VMI, there is better collaboration, information-sharing and visibility. In every client project, we dramatically improved service levels and reduced lead times.

4. Accelerated cash flow– As inventory is managed across the supply chain, inventory levels can be reduced while service is maintained or improved. We have frequently reduced inventory levels to the customers’ target level while reducing supplier inventory by 20-60%.

5. Improved margins– As the supplier is able to plan across the supply chain, he/she is able to optimize transportation, warehousing and production efficiencies internally while meeting service and inventory targets for the customer. We have seen rather significant improvements (around 20%) by pursuing this opportunity.

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What are the Benefits of SIOP?

January 7th, 2014
Companies that conduct effective Sales, Inventory and Operations Planning (SIOP) are able to balance supply with demand an exceed customer expectations.

Companies that conduct effective Sales, Inventory and Operations Planning (SIOP) are able to balance supply with demand and exceed customer expectations.

Sales, Inventory and Operations Planning (SIOP) is a process that manufacturers and distributors utilize to align supply with demand.

What are the key benefits?

•      Happy customers:  Lately, I’ve seen this objective rise in importance – customers want more for less NOW. Lead times must decrease! The SIOP process can have a direct impact on on-time-delivery percentages, past due dollars and lead times.

•      Increased margins:  One of the key benefits of aligning demand with supply is that it provides the opportunity to increase production efficiencies (because you have more time to plan effectively), increase logistics efficiencies (by having more time to optimize and through customer collaboration opportunities), reduce purchase spend (with a longer forecast, there is opportunity to develop contracts and collaborate with suppliers), and increase revenues (through customer partnerships).

•      More cash: By balancing demand with supply, you have more of the right items at the right place at the right time.  Thus, inventory levels can decline without negatively impacting service levels.  Thus, cash is freed up for better investments.

•      Improved teamwork: The SIOP process has also proven extremely effective in bringing cross-functional teams together to agree on one plan.  Although it doesn’t sound difficult, I’ve worked with countless companies that have multiple plans – one for Wall Street; one for sales, yet another one for production and potentially yet one more with new product development goals.  Once everyone is working from the same sheet of music, results follow and morale improves.

•        Increased revenues:  What else could you ask for to round out the benefits?  By collaborating with customers on their demand (and often on collaborative inventory programs), you become a dependable, more valuable partner.  I’ve seen volumes increase multiple times as a result.

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