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Both the customer and the supplier must review the accuracy of past historical data on those items under consideration. If there is nonexistent or sketchy infor­mation or the supplier is a new source of supply, inven­tory will require close review to prevent a stockout situation. The supplier may want to include some fac­tor into the agreement to protect himself from poten­tial stockouts since he must react instantly to any changes in the supply levels.

Personnel from all organizations including all par­ticipating customer locations should participate in the discussion and implementation of the VMI program. The team should include everyone involved including pickers, buyer/planners, receiving, engineers, accounts payable, warehouse manager, and cycle count supervi­sor from both organizations.

The customer may have a union in one or all of the locations. Exactly what the supplier may or may not do in regard to receiving, stocking, counting, etc. must be discussed and outlined as part of the VMI agreement. Also, often warehouse personnel feel the VMI program is a threat to their positions within the firm. This is an area that may or may not occur, but it must be watched for and managed so that everyone is working together to make the most of a potentially very effective process.

What material-handling equipment will be available for the supplier to use when delivering and stocking the storage area? Where will storage location be established, and will there be sufficient room to efficiently handle put away and pulling of material? Will the area accom­modate the growth of the product line?


Decisions need to be made on which products to in­clude in the program. The supplier and customer must determine the scope of the process. How many products are manageable in the beginning? When will additional products be added? A strategic plan for implementation should be sketched out and monitored for due dates.

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 14

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