Ever have a VMI program that didn’t work?
It is time consuming to make supplier decisions and then find out the expected results were not achieved. With VMI programs designed to provide value through inventory reductions, ensure optimal production efficiency, while freeing up company labor for more important tasks, it is even more critical to select the right supplier.
The first critical part of implementing a Supplier Managed VMI Program is converting suppliers in live time (this is a reason companies will remain with their current supplier even if they find additional value from another supplier). It is important to select a supplier that provides reliable service while introducing additional value and savings on a continual basis. Here are 10 topics to learn about when you are considering a VMI supplier:
#1. A Solution That Is Tailored To Your Needs
The more structured the supplier is with their VMI offering the less likely it will be the most effective solution for your company. Evaluate potential suppliers on their ability to create a custom solution tailored to your specific needs. Their offerings must connect effectively and efficiently into your business and systems. Otherwise they could fall short of your expectations.
#2. A Proven Track Record
The saying “Past Performance Is Indicative Of Future Behavior” is very appropriate when it comes to supplier-provided VMI programs. It is worth the time and effort to look at their case studies, customer testimonials, meet with more than their sales representatives, and ask to visit one or more of their VMI customers. What documentation do they offer to support their abilities?
#3. A Good Supply Base
Your supplier will need a great working relationship with manufacturers that can produce quality parts used in your production. Using a supplier who regularly audits and evaluates their suppliers reduces your risk of supply chain issues (i.e. quality parts, on time deliveries, and pricing control). Ask your supplier/s how often they evaluate their sources or if they are members of any industry affiliations that do so.
What technology do they utilize to manage your inventory needs? Bar code scanning tools have been around for decades now, look deeper into how technology helps the supplier manage inventory throughout the entire supply chain, and how they provide you visibility to that inventory.
#5. A Comprehensive Integration Plan
An effective VMI program for your production components requires the supplier to manage important parts of your business that have been managed internally and/or by other supplier/s. Inspect to make sure the VMI supplier’s integration plan covers; existing inventory that is in your stock, committed inventory at the supplier, and how they plan to manage this inventory while seamlessly integrating their services into your operation. Skilled VMI suppliers will understand this and work to make sure there is no impact on your ability to produce products in a timely manner.
#6. Inventory Stocking Location/s And Product Packaging
A good VMI supplier will devote time to analyze your current inventory stocking location/s to determine if there are opportunities to re-locate inventory to improve production efficiency. They should understand your packaging needs per part (i.e. weight limits, quantity amounts, and pallet quantities on high volume parts).
#7. Dedicated Account Management
Your supplier should have a skilled Account Manager dedicated to your business who knows your production schedule/s, your preferences for ordering, receiving, and stocking inventory. Ask them to provide a written service plan, along with their back-up plan in the event this individual is off work (for any reason).
#8. Clear, Defined Quality Process
Good VMI suppliers will take the time to fully understand the process for new product approval and ongoing product quality approvals. Have they included time for their Quality Leader to meet with your Quality Team to fully understand and follow your specific guidelines?
#9. A Commitment To Continuous Improvement
Your VMI supplier should devote time on a regular basis to inspect their service model for cost saving improvement opportunities through schedule Lean Events that should involve your participation. Do they perform 6S events to maintain the products in your plant they are managing?
#10. Supplier Performance Reviews
Your VMI supplier should provide regularly scheduled reviews that measure your listed performance metrics. They should provide documentation that captures the value of their overall cost savings and the cost-drivers they have eliminated with their VMI program.
After looking at these 10, are there other areas that would be important to you?