Market Insights

4 Signs You Should Consider Vendor Managed Inventory (VMI)

August 1, 2019


No matter your industry or sector, proper inventory is crucial to your business’ success. With a streamlined inventory management process, your customers get the right orders at the right time—every time. But when the process breaks down, it can delay orders, cause your customers to jump ship and, ultimately, cost your company significant revenue. If you’ve ever misjudged your inventory volume requirements, you know how painful it can be to have critical cash flow tied up in more product than you need.

Between maintaining the right level of stock and fulfilling orders in a timely fashion, it’s no surprise that inventory is a sore spot for many businesses. By one estimate, U.S. retailers are currently sitting on $1.43 in inventory for every $1 of sales. And despite the promise of big data, inventory management continues to be a major headache for U.S. businesses.

Are you looking for new ways to solidify your competitive edge? Don’t overlook the power of smarter inventory management. Here are a few signs you should consider a Vendor Managed Inventory (VMI) program for your business.

3pl solutionsWhat is Vendor Managed Inventory (VMI)?

Vendor Managed Inventory (VMI) is a program in which you partner with an outside company to handle your inventory process. At Victory Packaging, we’ve designed our VMI program to optimize efficiency and costs across our customers’ total packaging supply chain. To optimize our customers’ inventory, we analyze usage, floor stock and lead-time, and then determine the model most appropriate for their needs: dynamic historical, min-max, input forecast or, in some cases, a combination of the three. We also inventory our customers’ packaging requirements and provide warehousing.

Related to VMI, Just In Time (JIT) is another program designed to help busy companies streamline their fulfillment. Victory Packaging’s JIT program helps growing businesses maximize their use of available floor space and cash flow. With this program, we hold a customer’s inventory and deliver it as needed over a 90-day period. This ensures our customers get the precise amount of inventory they need, exactly when they need it. 

Signs you could benefit from a VMI program

Would your business benefit from a VMI or JIT program? To start evaluating if these programs are right for you, look for these inventory warning signs. 

  • Too much inventory, too little cash flow: Is your cash flow tied up in slow-moving inventory? Do you have an issue with over purchasing, but no simple way to rectify the problem? If this sounds familiar, then it’s time to consider a VMI program. With a vendor managing your inventory, you’ll receive only the amount of inventory you need, when you need it, shipped straight to your loading facility. A high-quality VMI program will also help you prepare for production gaps and accurately forecast your true inventory needs. 

  • Shipping delays: Without accurate inventory management, your business can quickly find itself lacking the packaging needed to fulfill orders. This, in turn, leads to costly delays. With VMI, your packaging partner will manage your inventory levels so that you never have to worry about running out of packaging.
  • High costs: When it comes to packaging and inventory, every moving part costs money. To truly optimize your spending, it requires a partner who oversees every aspect of the packaging and fulfillment supply chain. This is one of the biggest bottom-line benefits of embracing a VMI or JIT program. At Victory Packaging, we calculate and optimize costs at every stage, from packaging design and engineering through the moment when your product reaches your customer’s door. 

  • Not enough time for what you do best: Whether you’re managing the process internally or working with multiple vendors, inventory is time-consuming and requires an unwavering attention to detail. If you find yourself without the time needed to perform your core job functions, it could be time to consider partnering with a VMI provider so that you can focus on what you do best.

Are you ready to embrace a more cost-effective, efficient inventory management strategy? Contact our Architects of Packaging Solutions to explore the VMI and JIT programs driving success for our customers.

Topics: e-commerce packaging, fulfillment, packaging solutions, supply chain cost management, 3pl solutions, sustainability, packaging trends, featured

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