How to Know If Vendor Managed Inventory Works For You


Vendor managed inventory systems put your inventory in the hands of your supplier, making it a very convenient option for people who want to make sweeping changes to their supply chain. But how can you tell if it is right for your business or if it is working for a business that already has it?


Demand is the main factor behind every single decision your business will make. As customers change their preferences or new events and promotions launch, the demand for different products will change, meaning that they will be more or less desirable overall.

Through a VMI system, your supplies are managed by the supplier, so they can dynamically adjust what they are sending you to match these changes. If something suddenly increases in demand, then your supplier can send you more without needing a long meeting or phone conversation to arrange it.


One of the biggest things to consider with any kind of VMI system is the kind of product involved. The specifics of each product can dramatically change how well a VMI setup would fit, such as the products shelf life and whether or not they are perishable.

It is important to remember that not all products are equally popular or are needed in equal numbers. For example, you might sell more sets of headphones than you sell headphone splitters, so they are not going to be required in the same quantity, even if they make a similar amount of money.


It is a good idea to remember that VMI systems are still outsourcing, something that not all companies are willing to do. If your company makes sure to keep everything in-house, then you might not want to focus on going for a VMI supply chain.

On the other hand, a VMI supply chain can be a very useful option when you are trying to outsource your supply chain directly. Since VMI systems are basically a purely outsourced form of the supply chain, you hand over some internal work to a third party, taking the stress away from your own employees.


The vendor that you choose is also a major part of the process, so having a good vendor can make a big difference. If you choose a bad vendor, then it can directly impact the kind of results that you get from the arrangement, and awful companies can have an awful influence on your supply chain.

Look for suppliers that you know you can trust or ones that are used by other companies within your market and niche. The more time and effort you put into the search, the more possible results you might find, but it is important to not spend too long stressing over this point.

If you are not sure where to look, then using a dedicated VMI supply chain provider can be a great solution. It allows you to jump right into a working arrangement with only basic negotiations, skipping a lot of the busy work almost entirely and giving you near-instant results with your supply chain.


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