Case Study

Vendor Managed Inventory ( VMI ) 


Situation:

  • Evolving expectations and increased demand for faster, more accurate inventory management and immediate product availability have prompted suppliers to incorporate more effective and efficient means of providing materials.
  • Warehousing, delivery logistics and timing are critical factors in streamling the process of getting goods from supplier to customer, when and where needed.


Goals:

  • Develop and implement an inventory management process that promotes efficiency (timeliness), cost-effectiveness, delayed title transfer and accuracy of orders delivered to the manufacturing location in the local just-in-time method.
  • Additionally, the system should provide increased visibility and accessibility to supplier owned inventory, fostering improved delivery, warehouse and ordering status from the order to delivery and in-stock management. 


Case Study: 

  • Suppliers participating in the STI VMI program retain title to the inventory until the moment the materials are pulled for delivery to the manufacturing or order fulfillment floor. 
  • Products are placed int eh STI Distribution Center (DC) close to the customer's manufacturing facility. 

STI VMI services include:

  • Management of material delivery to the manufacturing or order fulfillment floor.
  • Material preparation and configuration services
  • Supplier inventory visibility (Web access, supplier specific)
  • Comprehensive cycle count program.
  • The supplier provides updated product releases to the customer using RIMS via the internet.
  • This RIMS update provides visibility to the customer as materials are moved through the pipeline between the supplier and the STI DC.
  • The supplier has RIMS access via the internet to view current inventory levels and product calls the the DC.
  • Suppliers are provided reports on their consumption rates thus allowing them bettery forecasting for future usage and needs.
  • The key advantage to manufacturing consuming customers is to have immediate access to supplier-owned inventory. 


Results:

  • Accurate inventory and stocking management
  • Improved balance sheet performance due to improved inventory utilization and delayed title concepts.
  • Reduced duplication of efforts
  • Elimination of safety stock at suppliers
  • Greater efficiency and cost saving including warehousing
  • Enhanced technology for improved customer access and monitoring
  • Increased customer satisfaction through more timely, accurate order fulfillment
  • Customers have leveraged STI's VMI program to produce industry-leading metrics for inventory turns and Days Sales of Inventory (DSI)