Monday, March 12, 2012

Why VMI Solutions with Integrated Supply Chains are Better For You

You want to expand your vendor managed inventory (VM I) program but you have a wide variety of component types that need to be added to the program. Your current VMI supplier for hardware is a reliable supplier but they don’t carry the other component s you really need:

1. Do you work with the current supplier to take on new lines?
2. Buy from other distributors?
3. Do you create a second and maybe a third VMI program to cover all your bases?

This a common problem many purchasing departments face when the success of the business drives the purchasing activity for “C” and “expense” items beyond the capacity of the team. What many procurement professionals do not know is that there is a third alternative. The third alternative is a VMI solution using an “integrated supply chain.”

You may be wondering what an integrated supply chain is and how it enables the VMI solution provider using it to outperform a conventional single commodity VMI program. Let’s look at it more closely.

Integrated Means Linked
An integrated supply chain means the wide variety of part types, i.e., Hardware, PVF, Electrical, Electronic, Bearing and Transmission, Motion Control, and Fluid Power, etc., sitting in bins on metro racks on your production floor - or on shelves in your MROP cribs - are linked to bar codes and connected via the internet to databases housing item masters and servers routing replenishment orders to approved Tier 1 suppliers. This configuration enables a one-to-one business relationship wrapped around a one-to-many supplier replenishment process.

What this means to you is you no longer have to make the tradeoff between extending a single commodity supplier like the reliable hardware supplier trying his/her best to also provide electrical parts, which by the way will cost you a premium to do so or creating multiple VMI programs throughout your production and maintenance facilities.

The Six Compelling Reasons
Here are six compelling reasons to investigate VMI programs with Integrated Supply Chains.

1. Because the “spend” for integrated solutions is higher than single commodity solutions the business relationship between the two parties is better balanced.

2.The integrated suppliers carry approved lines for the commodities they represent. You will never pay a markup because they had to go somewhere else to get the part.

3. They carry inventory for the lines they support so rapid replenishment is expected.

4. They are experts in their fields and provide technical support should the need arise.

5. You will have only one point of contact managing one highly scalable VMI process within your four walls, which means closer communication, less complexity, less confusion, and better results.

6. Because a high volume of transactions from many suppliers can be handled through the VMI program, the monthly summary invoice dramatically reduces the Procurement and Accounts Payable time required to review and approve payment.

When it comes to multi-commodity VMI programs, make no mistake about it. VMI solution providers with integrated supply chains provide lower cost component and supplies and simplify business processes without sacrificing quality or service levels.

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The iPower Distribution Group of New England is a leader in VMI programs. iPower delivers the widest breadth and deepest supply of Tier 1 commodities in the Northeast. Our supply chain provides $800m annually of industrial components, supplies, and packaging materials. To learn more visit us at http://www.ipowerne.com.

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