Manufacturers are always looking for ways to simplify operations and cut costs. In a busy facility with assembly processes and multiple teams, inventory management can be challenging to manage. One of the strategies companies use to manage costs and ensure efficiencies is using Vendor Managed Inventory (VMI), where suppliers help manage and optimize inventory levels. VMI streamlines operations and also provides lower cost options for inventory and supply.
Cost-Saving Advantages of using VMI
1. Reduced Carrying Costs for Inventory
Holding inventory is one of the biggest expenses for facilities. Costs include warehousing, insurance, potential depreciation, and the risk of overstocking. Using VMI minimizes costs by only replenishing inventory when needed. You can avoid over or under-stocking when you have a supplier managing the stock levels.
2. Fewer Stockouts and Lost Sales
Running out of a product or component can lead to production line disruption. VMI reduces your risk of stockouts by using real-time inventory data. This ensures your products and components are always available to prevent work stoppages or negative impacts on customers.
3. Streamlined Logistics and Shipping
Using consolidated shipping and delivery schedules, VMI helps reduce your overall transportation and delivery costs. Your supplier manages deliveries more efficiently, so you don’t need to spend money on expedited shipping or partial shipments.
Benefits of using VMI
There are many benefits of using VMI to enhance your supply chain.
• Collaborating with suppliers can help you reimagine your inventory process, reduce time and labor spent on ordering or searching for parts, and respond to real-time changes more effectively.
• With inventory managed by your supplier, you can focus on operational enhancements instead of monitoring stock, which allows your internal teams to concentrate on growth.
• Fluctuations in demand can lead to over or understocking critical components you need. Using VMI allows your team to be more adaptable to changes and quickly make adjustments in real-time.
Embracing VMI in your Operations
As technology advances, VMI systems are becoming more sophisticated using AI systems and real-time inventory tracking tools. These technologies make it easier for you to save money, improve efficiencies, and stay ahead of your competitors. Gexpro Services provides a wide range of custom VMI solutions with unique setups based on your specific requirements. Talk to our team today about simplifying your production with our VMI solutions.