What is Vendor Managed Inventory, and Can It Help My Business?
No business owner wants to be surprised by a lack of inventory. The sudden discovery that a tool, equipment element, safety gear, or other critical item is missing can slow, or worse, halt operations and negatively impact a company’s bottom line.
On the flip side, maintaining large inventories of items can also hurt profitability, because resources must be diverted to acquiring and maintaining storage space. Businesses also face the possibility that inventory necessary today may become obsolete tomorrow, and if that happens, their capital will be tied up in unused and useless stock.
A good Vendor Managed Inventory (VMI) partner can help business owners avoid these pitfalls and focus on what they do best – running their companies.
So, what exactly is VMI? A VMI system is one in which a supplier manages a customer’s inventory at that customer’s worksite. The stocking of MRO, production, and other items by the supplier is based on ongoing analyses of every product’s use, guaranteeing that a business will not run out of stock or be stuck with unneeded items. It is a model that allows businesses to maximize their profitability and prevent disruptions in their production lines.
There are several ways in which a VMI partner can help their customers. Industrial Supply Company, for example, offers customized industrial vending machines that provide point-of-use personal protection equipment, small operating supplies like metalworking tools, and other frequently used items. The machines allow for better control of spending and more accurate tracking of inventory and budgets, all while giving employees access to a wide variety of products.
With bin stocking services, an Industrial Supply representative manages and maintains the inventory levels at a customer’s worksite, making sure that a business will never run out of an item. Through use-tracking and data analysis, we can determine the correct type and quantity of stock our customers need onsite, so they have exactly the amount necessary to run their businesses efficiently.
When seeking inventory management support, there are three essential qualities businesses should look for in a potential VMI partner:
1. Strong vendor relationships
A good VMI partner has long-term relationships with a diversity of vendors, and has developed supplier engagement and loyalty, both of which allow it to successfully navigate supply chains and find high-quality products at the best prices. For example, during the Covid pandemic, Industrial Supply relied on the established relationships and open communications with our vendors to find new ways for our customers to get hard-to-find products.
2. Customized VMI plans
Critical to effective VMI are service plans that are tailored to meet the individual needs of each customer. VMI is not a one-size-fits all, and it is important that business owners find a partner who will really get to know their company and create plans that are appropriate for them. Industrial Supply accomplishes this through worksite visits, regular communications, analyzing usage data, and constant re-evaluations of customer VMI plans.
3. A local presence
Having a VMI partner who is based in the same geographic area of the businesses it serves makes it possible for a quick response to changing inventory demands. Because Industrial Supply has locations near our customers, we can provide a level of personal attention that allows us to meet with them more frequently and really get to know their inventory requirements. Our customers benefit from fast access to the more than 100,000 products that are stored at one of our seven locations throughout the Intermountain West.
Businesses have enough on their plates without worrying about their inventory levels. Finding a trusted partner who can provide customized VMI services for their operations ensures that they can focus on the more important things, like keeping their employees productive and their businesses profitable.
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