How Vendor Managed Inventory (VMI) Reduces Supply Chain Waste-1-of-7-Transport-Handling-Waste

Transport and Handling Waste is all material movement that is not directly associated with a value adding process. This can be movement of materials from suppliers to inventory, to production line and every step involved in the process (poor layout of material, large batch sizes, multiple storage locations, poor packaging, distance between storage location and final usage location.)

How VMI Services Reduce Transport & Handling Waste
Depending on the VMI program implemented, a supplier can offer significant reduction in transport and handling waste. This is especially
true for low-dollar production components (or Class “C” production components) like fasteners.

Often, these small parts make up a large portion of an OEM’s SKUs and are purchased from a number of suppliers. By moving these items to a single distributor within a VMI program, the distributor becomes the control point for the rest of the supply chain (in both directions). For example, they may be able to find sources who can manufacture multiple parts to be shipped together to their warehouse from the supply side. Or, before the OEM customer ever receives their first shipment, they can reduce transport and handling waste by:

  1. Breaking bulk
  2. Providing kitting services
  3. Providing subassembly services
  4. Shipping numerous replenishment items together from their warehouse

On the customer-facing side, a distributor can reduce transport and handling waste by:

  1. Providing initial inventory set-up to improve or reduce:
    1. Quantity of parts kept on hand (less is more!)
    2. Proximity of inventory to point of use
    3. Setting up working inventory at point of use with a visual cue for replenishment. (called Kanban)
  2. Delivering parts on a daily, bi-weekly, weekly, etc. basis to a:
    1. receiving area [least significant impact]
    2. central stock location (or locations) within a manufacturing facility [more significant impact] or,
  3. Providing an onsite employee and in-plant store to receive, stock, and replenish inventory at the point of use on a regular schedule. [most significant impact]

Any of these VMI Services can, in some way, impact and improve transport and handling waste. The benefit of a VMI program is to offset the OEM’s internal investment and resource allocation to tasks that detract from what Toyota defined as a value-added activity. By outsourcing the ordering, receiving, stocking and replenishment functions to a credible and reliable distributor, an OEM can ensure that their internal labor efforts are more aligned with the actions needed to bring value to their customer. Some may argue that an onsite solution simply passes the waste to the vendor. However, many VMI service providers will, themselves, use lean practices to refine their processes and establish the most efficient methods through continuous improvement efforts / kaizen events both internally and at the customer location.

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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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2018-11-08T16:41:48-04:00November 5th, 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