Vendor managed inventory, or VMI, is a business model used within the supply chain that puts the supplier, or “vendor”, in charge of managing a manufacturer’s inventory. While it can produce a lean supply chain, reducing inventory carrying costs and increasing margins, the manufacturer must give up some control, relying on its vendor to determine the when/where/how much of their stock.
Do a Google search of “disadvantages of vendor managed inventory” and you’ll get back over a million results. What does that say about VMI? Is it really necessary to the modern supply chain?
Vendor Managed Inventory or Zirks?
We won’t argue that there is time and place for VMI. If your inventory has gotten wildly out of control and you’re spending too much time sourcing, processing and chasing orders, an agreement with a well-established partner might be an excellent solution.
But what if there’s a better way to manage inventory in-house while keeping costs down? Here are 3 ways Zirks can work better than VMI.
Meeting Market Demand
With VMI, vendors can streamline inventory processes. Since their main focus is the stock itself, they pay particular attention to reordering popular items or removing obsolete inventory.
But, as we’ve pointed out before, customers are fickle creatures. It can be nearly impossible to know when a customer will change their preferences. Being able to respond to market demand quicker – like buying new items while they’re on the water – can make all the difference between making and losing a sale.
As we alluded to above, manufacturers relinquish inventory control to the vendor. That requires a lot of trust. If the vendor can’t handle the volume or is unable to provide proper service, you run the risk of frequent stockouts.
With Zirks, we put the control back in your hands. You control your quantity. You control your timing. You can even control what parts we bring over next.
This one is two-fold: quality of the vendor and quality of product. Certainly, all businesses need to make money. Some dishonest vendors might even go so far as to ship too much of a product, whether you need it or not, in order to boost their sales. Additionally, a poorly run VMI can prohibit you from getting quality goods at lower prices if it means they’d need to change their internal system.
As a spin-off of master distributor Earnest Machine, we follow the high service standards our parent company set in place from the very beginning. We only work with overseas factories we know and trust, so you can rest assured you’re getting quality parts at a price that ultimately you choose, based on the quantity you buy and the time you buy it.
As they say, there’s more than one way to skin a cat (hopefully, not the Zirks cat). There are many ways to import goods from overseas. By weighing your VMI against the Zirks model, you just might realize a better, smarter way.
Form more information on the Zirks process, download our free guide on "Importing in the 21st Century," and learn how you can streamline your supply chain while simultaneously increasing profit margin on commodity items.
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