Thursday, June 4, 2009

Secrets of a Highly Effective VMI

Our Blog is dedicated to helping purchasing professionals like you gain control of their domain through the use of effective business management solutions.

A Vendor Managed Inventory (VMI) certainly qualifies as an effective solution for part of the supply chain challenge. While many VMIs are in place today, how many are truly performing more than just a material handling function? To be truly effective a VMI solution must have the following characteristics:

- vendor consolidation
- master data management
- expanding spend under management
- inventory/stock-out/down-time reduction
- ongoing cost reduction projects

Our approach to the subject and presentation of the content is shaped by four axioms:

1. All good men (and women) are hardened in life's crucible.
Purchasing is a hot seat. Common artifacts of daily work life such as hot lists, MRB reports, rush requisitions, credit holds, and PO-Packing slips-Invoice mismatches stoke the furnace and increase the pressure. In this world, you are deemed only as good as the date and time of your last red shipment. The good news is that if you fumble a hot delivery redemption is usually less than 24 hours away. This Blog will help you better understand the inner workings of Vendor Managed Inventory Solutions because when done right they are both a pressure relief valve for an overworked purchasing department and contributors to the bottom line.

2. Do not let formal education get in the way of your learning process.
Mastery of purchasing skills has been and still is more experiential then academic. We will provide you with real life examples and time tested tools to help you assess the condition of existing or contemplated VMIs and point you in a better direction if required.

3. All Work is a process.
As we see it, the scope of the VMI (continuous rapid replenishment) process starts with the supplier(s) inventory management (not the conventional starting point) and ends with customer invoice payment (very conventional end point).

4.Work without a plan is a hobby.
Enough said.

So let's get to work. Assessment is the first step in the process to either restart or build a new VMI. We have constructed a simple matrix to help others think about the condition of their existing or contemplated VMIs. Read more here.

While there are many issues impacting the effectiveness of a VMI, the biggest concern is the openness of the business relationship. We measure openness by accessibility to critical data at both the part and transactional level. If your key VMI suppliers are holding the data cards close to his/her chest. You need to rethink that business relationship.


We'll talk more about this in future blogs. Write to me anytime.

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