Vendor Managed Inventory, or VMI, is a process where the vendor creates orders based on demand information that they receive from their customer. The goal of VMI is to provide a mutually beneficial relationship where both sides will be able to more smoothly and accurately control the availability and flow of goods.
The benefits of a VMI system may include better inventory accuracy, forecasting, and service, though it can present challenges in communication, cultural resistance and setting clear lines of responsibility.
Other benefits include:
- Enhanced visibility for vendor
- Reduced costs throughout the supply chain
- Reduced order lead times
- Reduced inventory throughout the supply chain
- Elimination of stock outs
- Simplified planning processes
- Elimination of purchasing administration costs and errors
- Lower order volatility
- Managed risk
In order to make VMI work, we need to clarify, first the expectations. Second, vendors and customers need to agree on how to share information. The customer should be willing to share production schedules and/or forecasts to provide some visibility for the supplier. And finally, keep communication channels open. Once a VMI program has been activated, each side needs to understand that there are going to be some miscues. These miscues need to be studied as opportunities for learning and then used to avoid repetitive problems in the future.
Our Folding Carton Divisions, Stuart Packaging and G2 Printing, have spent almost 30 years designing VMI programs for our pharma and cosmetic clients. Through our Vendor Managed Inventory program, we can help handle all your folding carton, label and insert needs. Our VMI program will take the stress out of your packaging supply chain and will provide all parties with the needed visibility. We will replenish your inventory seamlessly and on demand.
Please contact us (firstname.lastname@example.org) to discuss your particular needs and we welcome the opportunity to show you how we are implementing VMI systems for our largest customers (over 100 different carton SKUs).