How Vendor Managed Inventory (VMI) Reduces Supply Chain Waste-6-of-7-Over-Processing

Over-processing waste is defined as expending more energy to produce items than needed through wasted movement and time.

How Vendor Managed Inventory (VMI) Services Reduce Over-Processing Waste
The most obvious way that VMI Services reduce over-processing waste is through vendor consolidation. Consider the time and energy Purchasing spends on:

  • sending parts out to quote
  • qualifying and choosing a new vendor>
  • going through the sample approval and quality control process
  • reordering or following up on the whereabouts of the part(s)
  • making payment on invoices

Now, multiply this by the typically large number of SKU’s for all the class C components needed throughout a manufacturing plant and the variety of different suppliers currently needed to fulfill each of those orders!

A VMI partner takes all of those nuisance items from Purchasing’s list, providing them with one, comprehensive invoice that breaks out all the necessary monthly purchases in one place. This allows Purchasing to focus on the higher-cost (A and B) production parts whose cost reduction would have a more significant impact for their organization while still saving money on the overall cost of the class C items.

The Cost of Generating a Purchase Order (PO)
The cost of generating a purchase order varies by organization. You need to know the salaries of each individual involved in the process; amortize the price paid for systems by the number of purchase orders generated over the life of the systems; know the telecom and/or paper costs; factor in overhead costs, etc. Experts suggest saving time by using a number in the range of $100 – $200. A properly developed and deployed VMI program can significantly reduce your PO cost.

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Reliable Stock™ Lean VMI Solutions by Falcon

Falcon’s Reliable Stock™ lean VMI program delivers 100% production uptime efficiency and reduces your lead times, while lowering your overall inventory investment in class C production components and fastening supplies. Download the Reliable Stock™ brochure today to find out how you could be saving time and money.
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2019-01-02T09:33:36-04:00December 10th, 2018|Categories: Inventory Management, Vendor Managed Inventory (VMI)|

About the Author:

Aaron is the Marketing Director at Falcon Fastening Solutions, Inc. He is focused on sharing Falcon's unique approach to fastening and class C production component supply chain solutions with equipment manufacturers.

Fasteners and Class C Component Supply

Falcon supplies fasteners and inventory management services to manufacturers in North and South Carolina, Kentucky, and the surrounding areas.

Charlotte Office

10715 John Price Road
Charlotte, NC 28273

Phone: 800.438.0332

Mobile: 704.588.4740

Mailing Address

P.O. Box 7429 | Charlotte, NC 28241-7429

Phone: 704.588.4740

Fax: 704.588.5753

Kentucky Office

11536 Commonwealth Drive
Louisville, KY 40299

Phone: 502.266.6292

Fax: 502.526.5567