7 tips for a successful VMI project


7 tips for a successful VMI project

Vendor Managed Inventory (or VMI) is a collaborative process by which a client partners with a vendor in order to improve supply performance.

The system depends on a distributor or industrial company’s availability of information about sales and stock movements. A vendor calculates consumption forecasts which are then broadened using a multitude of variables: stock, seasonality, sale, weather, transportation plans, etc. Lastly, an order proposition is calculated and sent to the client.

There are several benefits to using Stock replenishment software. These are quantifiable and split evenly between two parties. Some examples include low stock levels, improved turnover, fewer stockouts, greater sales volumes and logistics and transport services at a reduced rate, just to name a few. Stock levels can go down by as much as 30% and stockouts by 20% to 25%—a drop in stock levels of up to 30% can be expected. As for transportation costs, expect 5% to 10% decreases and a 2% higher sales volume.

The pooled supply management process first and foremost concerns products with high turnover such as fast-moving consumer goods (FMCG). It may also become necessary to handle a significant volume—40 to 50%—to take full advantage of VMI. Lastly, choice of clients is key when selecting with whom the pooling will be possible. They may be strategic clients with shared volumes and perspectives in the short- and long-run.