Vendor Managed Inventory (VMI) – Visibility is the Key

VMI - Visibility   VMI (Vendor Managed Inventory) is the one of the best Inventory Management tools that will reduce the inventory carrying cost. By making your suppliers carry the inventory on behalf of you, you are reducing the risks and costs of inventory obsolescence.

In VMI process, the supplier is expected to carry the inventory and make it available as and when it is needed. Customer pays only the for the inventory they have pulled or consumed.

VMI Location

The vendor managed inventory may be located inside the customer’s manufacturing premises or at the Vendor’s premises or with a common 3PL (3rd Party Logistics) provider. In all cases, it is common that the inventory is located very close to the manufacturing location so that the transit time is very short. Also generally the inventory is exclusively reserved for the customer.

Visibility is Important

As VMI Inventory is a common inventory, it is necessary that both customer and supplier are able to see the current inventory position. But in almost all the cases, customers and vendors are using two different systems that may not be talking to each other in real time. So, the only option left is sending the snapshot of inventory by email and spreadsheets. But this is is not a very efficient method due to human errors or lost information

Visibility Portal for Vendor Manged Inventory

One simple solution to get this visibility is to have a common system or portal that is in between both customer and supplier and that has the current information on inventory. Both customer and supplier will be able to access the portal to update and view the current status of inventory. This common system also can generate alerts whenever the inventory needs replenishment or expiration etc.

Data Integration for Inventory Visibility

Data integration is the primary method to get the current inventory position updated in the inventory visibility portal. Electronic Data Interchange (EDI) , Application Programming Interface (API) or a simple Excel file upload can get the inventory systems connected to the portal to get the real time inventory integration

Outsourced  Inventory Visibility Portal

While it is possible to develop such inventory visibility portal, it may not be the optimum use of your IT resources or it could be like re inventing the wheel. There are instance solutions like TPSynergy VMI Portal

that can be launched very quickly to get quick inventory visibility solution

Just In Time Electronic Kanban for VMI

Sending replenishment signal to the Vendor or 3rd party logistics provider (3PL) is a key component of the VMI process. Electronic Kanban (E-Kanban)

can be combined with VMI system to get a complete real time collaborative inventory system.