The purpose of Vendor Managed Inventory partnership programs is to electronically share information between members of the supply chain resulting in shorter lead times, reduced inventory, reduced obsolescence, and more efficient manufacturing. The up-stream member of the supply chain (the supplier) takes on more decision making for what to supply to the customer. The result is a more leveraged relationship for the supplier and improved service for the customer.
- Shorter lead times
Sharing information means knowing what your customers need in advance, allowing you to plan accordingly and deliver promptly
- Reduced inventory
Having a future view into clients’ needs allows you adequate time to plan for what is needed and move towards a ‘just in time’ business model. Reduce obsolescence - less likelihood of holding on to excess stock that could become obsolete, and less inventory. Less money tied up in the warehouse
- Increased sales
Having the ability to offer VMI to potential customers is a huge benefit and service offering. Companies offering VMI are better able to manage their ordering and customer delivery – increasing service levels. Being able to offer shorter lead times and timely delivery help you stand apart from your competitors. The system/software becomes a sales tool – show customers what you can do and provide proof that you manage an efficient business.
- More leveraged relationship for the supplier
Clients are less likely to look elsewhere because your service is exemplary
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