Do you believe that the vendor managed inventory concept fits your business needs? Neogrid provides the right Vendor Managed Inventory (VMI) technology to help the retailer’s supply chain get the most out of using this tool!
The solution allows the manufacturer to view its products in the warehouses of the next link in the chain, so it can balance its inventory at these locations by cross-referencing information such as inventory levels and consumption rates. This helps the supplier to conduct proper item replenishment, improving the turnover of warehouse products and decreasing rates for out-of-stocks and excess products.
“NeoGrid’s VMI platform makes consumption forecast calculations for stored items, safety stock for each item in each warehouse and what is the best quantity to be replenished, to ensure there is no product shortage or excess. This data can be seen and monitored by both the retailer and the manufacturer”, says Leonardo Guerin, Product Manager at NeoGrid.
That is, the system collects all the necessary data for the supplier to understand where there should be a replenishment and the quantity of products allocated for the location, always in line with the inventory policies agreed with the customer before the VMI service starts. “Through the platform, daily, the retailer shares information on the inventory consumption with the manufacturer so that it can monitor it. Therefore, when the product reaches the minimum level agreed between the parties, the manufacturer can replenish it in the proper quantities”, comments the expert.
But can any company that works applying these dynamics use the VMI solution? When is the time to start? According to Leonardo, in order to really have a win-win relationship between customer and supplier, the optimal scenario is for both the retailer and the manufacturer to be interested in starting the process and have the necessary structures to generate the expected results from the strategy – such as working with reliable data and having a relatively high level of maturity in supply chain management.
What does that mean? That if the supplier still does not demonstrat e internal operational excellence, when it starts to embrace external processes, there is a great chance that the results will be lower than expected for both parties. Leonardo mentions supermarkets as an example, which, depending on their size, may have hundreds of multinational, local, large or small suppliers involved in their supply chain. Thus, only some of them will be able to participate in the vendor managed inventory process, as they already meet the maturity requirements related to processes and computerization.
From the moment the retailer purchases the VMI solution, it may be connected to several suppliers, and NeoGrid has formats that can be started at both the retailer and manufacturer, after all, the initiative can come from either side. And the customer does not have to be concerned about project implementation, as NeoGrid is in charge of configuring the platform and making the necessary technical integrations between the manufacturer and the retailer to ensure the best possible experience in its use.
So that there are no doubts regarding the countless benefits that the Vendor Managed Inventory (VMI) solution provided by NeoGrid can offer, check the table below for a brief “before and after” with the main critical situations faced by the retail sector and what they become after adopting the vendor managed inventory technique:
|Critical situation||Result after VMI|
|Inventory out-of-stocks, generating lost revenue, customers and market share.||Increased sales, ensuring product availability.|
|Excess inventory, causing losses such as reduced margins as well as lost products in case of breakdown or expiration.||Properly adjusted inventories, avoiding the need for unplanned promotions and extra storage costs.|
|Working capital blocked due to low inventory turnover.||Optimized working capital.|
|High cost for shipping urgent orders in the event of out-of-stocks.||Reduced operational work and administrative costs with emergency freight.|
|Supplier/customer relationship based on discounts and “pushing” products.||Increased service level for the market as well as customer and consumer satisfaction.|
It is worth mentioning that Neogrid is always available to provide more information about the tool that will revolutionize the way you manage inventory and the entire supply chain involved in your business!