The benefits of using VMI with a WMS

Vendor managed inventory, or VMI, is a supply chain management principle in which the supplier of goods (often the manufacturer) is responsible for optimizing the inventory ‘owned’ by a customer. Although the concept has been around for a few decades now, it has seen something of a resurgence in recent years. 

What is VMI? 

VMI is a system that allows you or your customers to build replenishment orders to manage inventory easily and effectively at the customer’s site, assembly line, Kanban, or stockroom using a simple handheld scanning device. The orders are then electronically placed within your warehouse. VMI lets customers order your products without having to call a salesperson or log into your website. 

How does VMI work? 

A robust warehouse management system (WMS) will offer VMI modules that can greatly streamline cumbersome paper-based processes. With a VMI module, the WMS creates customer orders on the handheld device. The orders are immediately relayed back to your WMS where the items and quantities are validated for fast, accurate fulfillment. 

VMI is simply a fast and easy way for both distributors and their customers to achieve an efficient item restocking process that is error-free and convenient. When salespeople (or the customers themselves) run low on stock of your products, they can build a replenishment order using simple barcode scans of your products in their store or warehouse. 

What are the VMI benefits? 

Regardless of your organization’s circumstances, VMI offers distributors and their customers several key benefits: 

1. Eliminate human errors: Human-caused errors on customer replenishment orders are costly. Eliminate mistakes introduced through the lengthy process of handwritten customer orders by using easy-to-scan, specially generated barcode labels on your products onsite at customer locations. 

2. Place orders faster: All that’s needed is to scan a product’s bar code. The order is electronically transmitted back to your WMS, and then on up to your ERP for processing. You can set up minimum, maximum and order point quantities to ensure reordering of the proper stocking levels. 

3. Give your customers some control: Perhaps your sales force is stretched thin, or maybe you prefer a more hands-off approach to managing customer orders. Fortunately, a WMS that accommodates customer-managed inventory allows your customers to place their own replenishment orders via a web portal or scanning a product’s ID. 

4. Customize your order processes for simplicity: WMS-based VMI modules are highly customizable, so exact processes can vary depending on the business practices at your warehouse and at your customer sites. Regardless of how you decide to implement VMI, you’ll find that it offers vast improvements in replenishment order efficiency, customer satisfaction, and error elimination. 

Other value-add benefits include custom barcode labeling with the customer part number, description, pictures of the item, etc., which are commonly managed and printed by the WMS. The result is faster and more accurate reordering of product with lower cost for the vendor. 

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Eric Allais

About the author…

Eric Allais, president and CEO of Washington-based PathGuide Technologies, Inc., has over 30 years of experience in marketing, product management and sector analysis in the automated data collection industry, including warehouse management practices in wholesale distribution.

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Eric Allais

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