VENDOR-MANAGED INVENTORY
Manufacturers and distributors always have faced the challenge of replenishing inventory in a timely, precise and cost-effective way, with friction often developing as they try to sort out who's responsible for what. The key ingredient is how close of a relationship the distributor has with the vendor involved. Size doesn't matter if the relationship is close, and the distributor is carrying a good proportion of the company's product. VMI in its simplest form allows manufacturers to replenish their distributors' inventory based on product usage and stock-level information fed to them by each distributor. "There needs to be a very trusting relationship between the distributor and the vendor," said Scott Stratman, President of The Distribution Team, a distribution consulting firm. Distributors gain most. "Although some distributors may be reluctant to allow a vendor that type of access to data, the distributor actually receives the greatest benefit from the relationship," Stratman says. "That's because this approach frees up the buyer or purchasing manager from having to analyze usage rates, manage cycle counting and his stock levels, and rely on the computer and his "guts" to know when and how much to order."

For more information, contact Scott Stratman, The Distribution Team, 4164 Austin Bluffs Pkwy., Suite 338, Colorado Springs, CO 70918, 719-592-1665.