Vendor managed inventory (VMI) has been around for a while. Those who previously used VMI and those who never have, might want to do some research to see if it’s right for them — especially during the parts crunch.
For the uninitiated, VMI “is a system where the supplier manages replenishment to the location based on mutually agreed to objectives and goals,” says Amanda Baldwin, industry support manager for Datalliance’s VMI solution in the industrial space. TrueCommerce’s Datalliance is a third-party software provider that hosts the application and provides data and subject matter expert support.
Baldwin says the “really cool thing” about VMI is Datalliance gathers information from the supplier and the distributor and then Datalliance adds its own calculations or, as Baldwin says, the company’s “secret sauce.” Orders placed will follow the parameters agreed to by the supplier and the stocking location. “Obviously, the distributor’s locations are quite capable of placing orders on their own, but what they can’t do is see what’s going on at the supplier [level],” she says.
Doug Bethea, vice president, supply chain solutions and general manager of the Datalliance division of TrueCommerce, adds, “With our solution we’re creating this collaboration platform by which we’re taking data from both the supplier and then we add in the data coming from the distributor. We’re taking the data into this hosted solution, and we do our magic — we run our model that produces these recommended replenishment orders.”
The case for VMI
Stone Truck Parts has used VMI for over a decade and says the service “has come around 180 degrees from 12 to 15 years ago,” says Don Purcell, partner. “We use vendor managed inventory and Electronic Data Interchange (EDI) with several key manufacturers. We use VMI and we review the order and once we approve it, we send the order electronically back to them and then the order is shipped. It’s electronic payment so it’s a combo of VMI and EDI,” he says.
