Vendor Managed Inventory programs can greatly increase sales and customer satisfaction if done correctly. However, the success of the program depends on the VMI partner that your company chooses. That partner will have a great deal of access to information and take over much of the responsibility of managing your inventory. It is imperative that you choose the right VMI partner. Here are three things to look for in a VMI partner.
Success Rates and Statistics
Having a VMI partner with experience in your industry can be highly beneficial. The most effective way to find a good partner is to examine its history through performance statistics. Ask the VMI company for information on its previous performance and success, particularly through inventory and revenue improvements. VMI companies track their ability to influence stats like customer satisfaction, order volume, and inventory size. A good VMI service will be able to provide evidence of a long history of continued success through multiple partnerships.
Focus on Planning
VMI partners should have the ability to effectively plan a program for your company that looks deep into the future rather than a try-and-see approach. Your company will only see the benefits of working with a VMI partner if the program that is developed for the two companies to work together is successful. VMI companies need to be proactive in every aspect of their operations to ensure that your company has the inventory and logistics in place to make customers happy. This requires a focus on thinking ahead and forecasting the needs of its partners as much as possible to ensure that everything goes smoothly.
Every partnership will have a slightly different plan. One way to determine if a VMI partner will be a good choice is to assess its willingness to adjust its plans to meet your needs. A VMI company that is willing to go the extra mile to analyze the inventory and sales data, and to create a specific plan for your company may be a good choice. This shows that as you handover control of product inventory, the company can be trusted to proactively find the best solution based on the available data.
When a VMI partner takes over control of an item’s inventory, it is critical that the VMI partner has the capacity to match the orders that you are experiencing. If the partner does not have the capacity to keep up with incoming orders, it could cost your company time, money, and customers. Before committing to a partnership, investigate the VMI company thoroughly to understand its capabilities and reliability. This will save you from a potentially business-ending mistake by choosing the wrong set of VMI partners.
To effectively gauge a VMI partner’s capacity, look for future plans to grow and previous projects with similar capacity limits. For example, a VMI partner that works with a big box retailer like Walmart likely has the capacity to handle other big box stores. However, a big box store should not choose a VMI partner that has never worked with a big box store or any store remotely close to its size.
If your company is considering jumping into the VMI space as a means of promoting growth, then make sure that you do extensive research first. There are many VMI companies available with their own unique skills and specialties. Contact npn360 to discuss new VMI partner opportunities.