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Vendor-Managed Inventory
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In reviewing the supply base to determine who is capable of working with the organization on planning out and implementing a VMI program, responsible personnel must look at several factors—completeness of product line, re­sponsiveness, expertise of supplier management, experi­ence in providing VMI service, financial stability, sufficient labor pool to handle rapid and on-site delivery, data bank capabilities, computer analysis processes, willingness to add to product lines to meet future customer requirements, commitment to the development of an alliance for cus­tomer service, and reduction of inventory. Trust on both sides is a critical component of a supplier-managed inven­tory program. The supplier will be spending a great deal of rime at the customer's facility working with the buying and planning department on the development, implemen­tation, and maintenance of the inventory management pro­cess. This is not an arrangement to be taken lightly. It would be a shame to do so much up-front work to learn that the supplier is not large enough or well-staffed enough to pro­vide the level of service required. This is a warning for both the supplier and customer. Both should take a careful look before jumping into the water together. The customer must feel sufficient confidence and trust in the supplier's orga­nization. It is important to remember that the supplier will take on managing the company's inventory, and the buying and planning functions must take on managing the supplier.


A supplier-managed inventory program begins with iden­tifying all the critical issues as noted in the previous para­graphs—discussing and coming to an agreement on these details, and then documenting the management of these items. This initial phase requires a team, a team made up of all contributors from both organizations, meeting to­gether and planning out the VMI program.

It is also urgent that the team plan for the mainte­nance, the continuous improvement, and the growth of the program. During the first year, meetings are a must to review the status of the vendor-managed inventory program and to correct breakdowns in communication and feedback channels. No VMI program will succeed unless responsive parties periodically review and update steps. With all players on board, vendor-managed in­ventory will have all of the input needed for success. Without all of the questions and answers, VMI is just "flying by the seat of the pants" management.

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

Lean Manufacturing Articles and click on Series 14

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