Tag Archive: Vendor managed inventory

Let’s Manage Inventory for Our Customers

May 16th, 2019

inventory managementAmazon is propelling this age-old topic into a new realm. Since the CEO of the Ontario Airport Authority used the phrase “last mile” has become “last minute” on a panel I facilitated last year, I have shamelessly reapplied his brillant quote.

If customers don’t even know what they want, how can we? Interestingly, we have found that many customers, even the seemingly most confused and  volatile ones, have a pattern to their demand. If we take a holistic view of their demand and inventory planning processes from beginning to end and from high level to the minute detail, solutions emerge.     

One strategy that has proven quite effective is to “remove the middleman”, the customer himself. Instead, with access to demand information direct from the customers’ customer or end user, you can not only manage the extended supply chain inventory better for a happier customer but you also can improve margins, efficiencies and cash flow to boot.

In consumer products circles, this strategy often termed, vendor managed inventory is usually dictated by the “big guys”.  In aerospace, it is also expected but termed differently, customer based ordering, min max and other names. It is also common in healthcare as we won “supplier of the year” for two years in a row because of what we accomplished with VMI for Cardinal Healthcare when I was VP of Operations at PaperPak. We decided to make it a strategy for key customers at PaperPak, even though Cardinal is the only one who requested it. Should you consider a strategy like this to get ahead of your customers’ demand?  It is just another aspect in creating a resilient supply chain. Check out our series on the topic.


Vendor Managed Inventory (VMI) – Success Depends on People

June 27th, 2017

Vendor Managed InventoryAs with almost every topic our clients call about, Vendor Managed Inventory or VMI and supply chain partner collaboration programs are no different. Success directly correlates to people.

Questions You Should Ask When Coordinating VMI

1. Do your employees and partners understand VMI and the benefits of VMI? Undoubtedly, success is better when people understand how it matters.

2. Do your employees have relationships with their VMI counterparts? Do they have a good relationship with their suppliers and/or customers related to Vendor Managed Inventory? Have they met them? It goes a long way to meet a few key contacts.

3. Do your employees understand what is expected of them on a daily, weekly and monthly basis? Don’t assume if your customer requested VMI that they have clarified how the process works. Make sure the processes, systems/technologies, and communications are clearly understood.

4. Do all VMI parties understand the measurements? Often, we see scorecards used as a way to track performance. Do you understand what goes into the calculations? What is important to your customers? Have you explained what is important to your suppliers?

5. Have you set up check points? One of the keys to success is to set up time to talk with all VMI-related parties to see what’s working, what’s not working and how you can improve the process and results. 

Did you like this article? Continue reading on how to Profit Through People:
The 4Ps to Collaborative Customer Program Success

 Results Follow People


VMI – Do You Need Software?

June 20th, 2017
Vendor Managed Inventory (VMI)

A Vendor Managed Inventory (VMI) initiative will improve services levels and may not require supporting software.

Vendor Managed Inventory (VMI) – do you need software? Of course, the answer is “It depends.”

A few items to think about to determine if you need software to support a VMI initiative:

1. Are you interested in doing VMI with your suppliers, customers or both? For suppliers, the focus is on the transfer of data. For customers, you’ll need to create orders and transfer data at a minimum.

2. How many suppliers and/or customers and customer locations do you plan to pursue with VMI? If there are few, manual will work just fine. We have achieved vast success with aerospace clients using portal data and manually creating orders.

3. How integrated do you need VMI to be with your ERP system? For example, when I was VP of Operations at PaperPak, we implemented VMI with our #1 customer, Baxter Healthcare/Shield Healthcare and so we figured out what to send to their locations throughout the U.S. We provided such excellent service that we won supplier of the year two years in a row! However, even better, we were able to gain huge benefits on our side with inventory turns, logistics efficiencies, gains in business etc. In our case, VMI was separate; however, the orders had to be visible in both systems, and the forecast had to go to ERP as well. However, we didn’t have to physically scan items at our customers’ locations which might require a direct connection depending on your setup.

4. Are your suppliers/customers EDI capable? Do they use portals? If they use portals, does your ERP system have portal capability? Or do they send spreadsheets? Or emails? Technical capabilities will play an important role.


Did you like this article? Continue reading on how to become a Systems Pragmatist:

Leveraging Your ERP System

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VMI – Supply Chain Collaboration on Steroids

June 13th, 2017
VMI - Supply Chain Collaboration

Vendor Managed Inventory (VMI) experts can implement Supply Chain Collaboration programs with minimal disruption and maximum results.

Supply chain collaboration is in vogue. Customers have figured out that if suppliers have access to more information on what they need and what is important to them that they’ll typically do a better job of meeting those needs. Suppliers have figured out that the more they understand customers, the more likely they’ll be able to delight them while minimizing spending. And this type of thinking carries over to your suppliers’ suppliers and customers’ customers and all supply chain parties in-between such as transportation and logistics partners, trusted advisers and more.

So, what are some of the ways supply chain partners collaborate?

  1. Sharing of customer preferences– the more your supply chain understands about the end customer (whether a consumer, patient, manufacturer etc.), the better served the customer will be.
  2. Sharing of forecasts– the better your supply chain understands your production schedule or sales forecast, the better they can ensure you have what you need when you need it at the lowest cost.
  3. Sharing of inventory– key to VMI is the sharing of inventory information. The best way to maximize performance of the supply chain is to provide access to inventory information in combination with trust. For example, if your supplier can save $1000 by temporarily reducing your inventory until an already-scheduled truck is available to deliver the next day and you will not run out for 5 days, why not save $1000?
  4. Sharing of resources– vendor managed inventory experts can help set up these types of programs with minimal disruption and maximum results. Not every supply chain partner will have the same type of resources. Why not share to better the entire supply chain? For example, one of our clients had a technical guru, another had a spreadsheet guru and another had a VMI guru. If they had access to all three for the implementation of VMI, it would be a win-win-win.

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

Vendor Managed Inventory Is Making a Comeback

Supply Chain Collaboration


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:

4 Keys to VMI

Cross-Supply Chain Opportunities