Vendor Managed Inventory
Definition of Vendor Managed Inventory
Vendor Managed Inventory: A means of optimizing Supply Chain performance in which FloChem™ is responsible for maintaining the customer's inventory levels.
FloChem™ has access to the customer’s inventory data and is responsible for generating purchase orders. To further define it, let’s look at two business models:
Typical Business Model
Under the typical business model, when a customer needs product they place an order with FloChem™. The customer is in total control of the timing and size of the order being placed. The customer maintains the inventory plan.
Vendor Managed Inventory Model
With a Vendor Managed Inventory (VMI) model, FloChem™ receives electronic data from a satellite that relays the customer's stock levels. FloChem™ is responsible for creating and maintaining the inventory plan and under VMI FloChem™ generates the order rather than the customer and confirms delivery date.
Benefits of Vendor Managed Inventory
The Benefits of VMI are numerous for both FloChem™ and the Customer.
Dual Benefits
- No phone or internet required. All you need is simply a 110V to "Plug & Play".
- Data entry errors are reduced. Speed of the processing is also improved.
- Both parties are interested in giving better service. Having the correct amount of product in stock ready for use.
- A true partnership is formed between FloChem™ and the Customer. Both parties work closer together and strengthen their ties.
- Stabilize the timing of Purchase Orders - PO's are now generated on an as needed basis or blanket PO’s can also be used.
Customer Benefits
- The goal is to have an improvement in Fill Rates from FloChem™. Also, a decrease in stock outs and a potential decrease in inventory levels.
- FloChem™ will deliver less often resulting in fewer orders being received by your personnel.
- Planning and ordering costs will decrease due to the responsibility being shifted to FloChem™.
- The overall service level is improved by having the right product at the right time.
- FloChem™ is more focused than ever in providing great service.
- There is no cost to the customer, FloChem™ provides the satellite dish and electronic monitoring as a “Value-Added Service”
FloChem™ Benefits
- FloChem™ can better manage their distribution costs resulting in “Best Case” pricing to the customer.
- A reduction in customer ordering errors.