Supply chain management is all about tracking goods as they move through an intricate process. One of the key stops in that process is through vendor warehouses or distribution centers. You aren’t in control of the whole supply chain at every moment, so you need a means to keep a close eye on things moving through vendor nodes. That’s what vendor managed inventory (VMI) is all about.
Vendor Managed Inventory
Inventory is the most visible part of a supply chain, but it isn’t necessarily the easiest to balance. You are essentially pitting supply against distribution. Even with inevitable transparency, it’s easy to get this balance wrong. That leads to bottlenecks, shortages or surpluses, all of which can hurt your supply chain. VMI exploits the visibility of your inventory to highlight trends and streamline this aspect of the supply chain.
There is purpose behind the idea of mixing powerful software into a visible component of the supply chain. That purpose is real-time analytics. Consider vendor inventory from the 70s. In order to check supply, you would either have to send someone to physically count it, or you would check the most recent sheet with written counts. In either case, there is lag between your inquiry and your reported supply, and it’s easy for the real supply to change before you can get that information. Real-time inventory management is about having exact counts on hand at any time so the adjustments you make are as accurately informed as possible.
When you have persistently up-to-date inventory reporting, you can track changes down to the most minute detail. This allows analytical approaches to run much deeper than in systems with less-reliable inventory tracking. Those analytics can anticipate seasonal changes, instantly optimize the supply chain for new customers or orders and generally improve the reliability of your entire system. Additionally, VMI software can apply real-time tracking and deep analytics to store fronts, distributors and manufacturers in a single system. Everything you need is readily available at all times.
VMI is a powerful tool that can add to any warehouse management software suite. It’s important to understand exactly what VMI can do in your supply chain in order to strategize as effectively as possible.