Streamline Facility Operations through Vendor Managed Inventory (VMI)

Within the Maintenance, Repair, and Operations (MRO) space, inventory management is a recurring and commonplace issue. In many cases companies are operating purely on a tactical basis. Forecasting is limited and orders are only placed when parts run out. Worst case a part runs out that is needed to maintain facility operations and the buyer or warehouse manager is forced to halt production while attempting to obtain it. This is typical in the manufacturing and industrial space and produces countless wasted man hours. Problems like this are difficult to manage since the part needed may never have even been ordered before. However, there are solutions to a large portion of the issues. Analyzing purchasing patterns and historical data can help to alleviate future problems and suppliers are more than happy to assist you. One way to optimize your inventory management is to set up a vendor managed inventory program or (VMI). In a perfect world facilities could get exactly what they need, when and where they need it, without maintaining excess inventory, while keeping accurate record of the transaction. This is not always feasible but VMI can certainly look to streamline your operation.

By working with the vendor you can review previous years of purchasing history to understand the approximate quantities of items you order a year, determine how much excess inventory you have on hand and gauge at what point you should be reordering each item. This way your purchasing patterns are proactive rather than reactive. Typically within VMI after you review the data you work with the vendor to establish what you feel is appropriate from a core item and quantity standpoint. The vendor will then put a system in place to review the number of items in stock and at what inventory level that item should be reordered.

For example, the supplier creates a database of the items by manufacturer part number tied to client part number and price along with the particular bin or cabinet the item is stored in. When a specific preset reorder point is reached it alerts the supplier that the item needs to be restocked. Conversely, if you would like to keep it in house the system can be configured to either automatically send out a PO request or alert the warehouse manager that an item needs to be re-ordered. The product is then shipped out from the warehouse to the local supplier location and then arrives at the facility to be restocked (either via freight or local representative). All transactions are recorded by the supplier and readily accessible for the client to view. 

Most suppliers are more than willing to help setup VMI because it is mutually beneficial. It entrenches them within the organization, helps them to allocate inventory for their clients and solidifies purchases. It's a simple concept, if they are assisting in the management of the inventory and establishing reorder points, the reordered items are going to be pushed through them yielding increased revenue.

This is just one of many industrial VMI solutions, each solution can be custom tailored depending on the company's needs and operations. Industrial vending machines are another common form of VMI for smaller common use products such as gloves or disposable ear plugs. Vending machines are just another form of efficient, controlled, just-in-time automatic replenishment.  Remember to utilize your suppliers as resources and let data drive your decision making.