Tag Archive: responsiveness

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.

Did you like this article? Continue reading on how to strengthen your Eagle Eye:

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Why My Best Clients Focus on Responsiveness

November 10th, 2015
accelerate cycle times

As customers continue to demand shorter lead times, it becomes imperative for manufacturers and distributors to become more responsive and improve order fulfillment cycle time.

I’ve been working on my book The Amazon Effect lately, and it brings to mind the critical importance of responsiveness. There is no doubt that a large part of Amazon’s success is due to responsiveness – quick deliveries, Amazon Prime within 1-2 days with no freight, Sunday deliveries, same day deliveries and now they are even looking at options to deliver in hours or minutes.

I work with a cross-section of manufacturing and distribution clients. Aerospace and building products industries have been a focus area of late as both are growing. I work with the best and help make them even better. What I’ve seen is that these clients prioritize responsiveness. Speed matters!

For example, one client in the building products industry turns around a vertically-integrated manufactured product within 24 hours as a worst case scenario. The vast majority leave their facility on the same day they are ordered. This is one of the reasons they are #1 in their particular industry. Another client in the building products industry delivers within 2 days, and 80% are actually shipped within one day. It is obvious that one of the reasons their customers continue to order from them is their rapid delivery. Everyone is geared to this end. In a third example, another building products industry client also ships within 24 hours. In their case, they are upgrading their system to better support this continued focus as they continue to double their business every few years.

My aerospace clients sing the same song yet lead times are longer with these more complex products. For example, in one aerospace manufacturer of items in the cockpit, customers are demanding quicker deliveries. Although their lead times can range from 13 weeks to 9 months, demands for radically reduced time frames continue to occur. In another aerospace client that produces door frames and larger parts of the plane, they won new business partially because customers knew they could support increased volumes on quick lead times for their industry. The aerospace industry is quite collaborative; thus, supply chain partners work together to reduce the overall supply chain lead time.

What metrics can we use to measure responsiveness? Typically cycle time metrics rule the day in this area. I find that order fulfillment cycle time is the best measure of success.

Did you like this article? Continue reading on how to be the Strongest Link in your supply chain:

Slashing Lead Times to Support the Amazon Effect

How to Accelerate Cash Flow through Supply Chain Innovations