Vendor Managed Inventory (VMI)
Vendor Managed Inventory (VMI) or Real Time inventory is the process of having your vendors (suppliers) keep
inventory ready to ship as needed in response to customer or Master Schedule demand. The Internet
can be used to institute electronic real-time supply orders on a daily or weekly
bases. The net result is the reduction
of paperwork (PO's) in the system, lower on-hand
inventory levels and timely receipts of raw material in response to changing demand patterns. This is done using your existing MAX/MFW
or other MRP system without purchasing additional modules.
Implementation of VMI is a learning process for you and your
suppliers. Training and a good understanding of the VMI process must exist prior
to starting this project. Agreements and procedures must be in place for:
Click here for
an example of a VMI report.
- Over/Obsolete stock and what to do if it exists
- Large variations in customer orders from what is expected
- Promotions that can change forecast orders
- Testing of the communication systems
- Training of all employees involved in the process so they
fully understand and accept this new way of doing business.
- An understanding of "who owns the inventory" in
the suppliers stock?
As with all our projects we recommend a phased approach to
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- Phase 1 is 2-day
system audit to establish VMI potential and review initial requirements.
here for additional audit information.
- Phase 2 is the development of a pilot project with 1 or 2
suppliers to establish procedures, training requirements and "iron out
the kinks". This also includes the accounting function and how the
receipt of goods are processed.
- Phase 3 establishes performance indicators for monitoring
the VMI process. Inventory levels, turns and on-time delivery performance
are an example.
- Phase 4 is the deployment of additional suppliers into the
For more information on Vendor Managed
Inventory please contact us at:
Phone: 727 642-4677