Controlling operations so that you complete projects on-time (and hopefully under budget) means comprehensively managing your schedules and resources with accuracy and precision. However, when faced with modern supply chain complexities, that goal can seem impossible. Your inventory management system must adapt quickly to changes in buyer trends and customer needs, while simultaneously establishing a solution that lowers inventory amounts and improves on-shelf-availability.
Fortunately, technology is rising to meet that challenge. Advanced data interchanges that previously required costly equipment are now possible using cloud technology. As an affordable, automated communication tool, your inventory management system orchestrated though a cloud-based vendor managed inventory (VMI) program eliminates supply chain difficulties and lowers your costs.
The key to supply chain excellence is timely information. The development of the pull system greatly improved replenishment methods, and when utilized in conjunction with lean concepts it lays the foundation for streamlined operations. However, buyer fluctuations are difficult to predict and much depends on volatile activity at the point-of-sale. You need the information quickly in order to lower your inventory costs and improve productivity, but the majority of EDI systems rank far lower in actual performance metrics, such as fill rates and new product promotions, than software-based VMI platforms that coordinate and optimize data for maximum results.
According to a 2016 Gartner analysis, when comparing the difference between EDI and an inventory management system that deploys VMI:
- Retailers see a decrease in out of stocks by up to 2% with VMI
- Manufacturers realize 4% to 6% increase in vehicle fill rates with VMI
Reliable Forecasting and Reporting
Another reason an inventory management system fortified with a software-based VMI structure is so effective involves the reporting processes included. Point-of-sale information is seamlessly transmitted and combined with state-of-the art algorithms that produce accurate forecasting. Manufacturers understand buying trends better, reducing out-of-stock occurrences while improving on-shelf availability at the in-store level.
Reports that are shared between the supplier and the retailer include:
- Daily stock counts, units in transit, batches and outstanding orders
- Daily sales reports, which are intelligently incorporated with stock and order information
- Dispatching and logistics
Using an inventory management system that creates an ongoing, cooperative relationships among the members of your supply chain means that you can reduce finished goods inventory and lower your operating costs, all using a solution that offers a clear ROI within 12 months or less.