The Benefits of Vendor Managed Inventory

The Benefits of Vendor Managed Inventory


In this article, I.B. Moore explains the many benefits of Vendor Managed Inventory. Click here to contact us today for all of your industrial manufacturing needs!

Vendor managed inventory (VMI) is a method based on supply chain integration and management. This approach varies from the traditional style of inventory management. It is an optimized supply chain that assures that customers receive what they need when they need it, but spending the smallest amount of money possible. This method makes the vendor the decision-maker. A retailer reports their inventory data to the vendor, who then determines what the necessary order size is to be. 

The vendor is given the responsibility for the ordering cost for the retailer, whereas the retailer must pay only for their own holding cost. This strategy eliminates stocking unnecessary  inventory, allowing for a reduction of costs that will not net a return. There are numerous benefits for this system of cooperation between retailers and suppliers. 

The symbiotic relationship utilized by VMI decreases the amount of inventory in the supply chain, while also lessening the chances of a business running out of stock. Another positive effect is that the vendor representatives ensure that the store staff understands the features of the products and that they are properly displayed in an organized manner.

The vendor benefits from this arrangement by having increased control over the displays. Their employees also have more contact with the customers. On the retailer’s side, they have reduced risk regarding their inventory. Additionally, their staff in the stores is able to have better knowledge of the product lines, improving the brand loyalty for the retailer and the vendor. 

The customers ultimately benefit from VMI as well. The employees at the stores can provide more in-depth information about the goods for sale, and help customers select the products that best fit their needs. Customers are able to be given accurate, detailed product descriptions so they can find items that are most suited to them. 

Manufacturing is another industry that improves due to this inventory management procedure. VMI ensures that the warehouses do not suffer from either an excess of goods or shortages. It also reduces the costs associated with labor, accounting, and purchasing. Since businesses are able to attain appropriate inventory, this leads to faster processing with lowered labor costs. Manufacturers also have access to the point of sale data of customers, which makes it easier for them to forecast.

I.B. Moore is a distributing and manufacturing company that provides vendor managed inventory services for our customers. We specialize in O-rings, seals, gaskets, rollers, and a variety of other elastomer products to suit a wide array of industrial needs. and Indianapolis.  We have over 40 years of experience and can help you with any of your various industrial needs. In addition to our kits, we also make o-rings, gaskets, rollers, cords, and many more custom urethane and molded products. We are conveniently located in Lexington, Kentucky, but we also proudly serve the surrounding areas with easy access to major transportation hubs and unparalleled logistical access to all of the United States and and other international customers. Click here to contact us today.

Phone: (859) 255-5501