The ultimate goal of Vendor Managed Inventory (VMI) is cost reduction. VMI achieves this by better controlling material and information flow. In VMI, the supplier performs the function of planning inventory for the client. The information must be shared between the two parties to allow the supplier to manage a high level of inventory visibility at the client’s location. Rather than the client having to place an order when stock runs low, it is the supplier’s responsibility to…
Cooperation is necessary for any supplier agreement to be successful. However, successful cooperation in supply chain management relies significantly on effective contracts. Supply chain management contracts require clear, guidelines understood and agreed upon by all relevant parties. To create better contracts and manage them well, it’s necessary to carefully consider a few key elements.
Here at Falcon, we are big proponents of outsourcing functions that are not a core competency. It is how we help our customers every day since our core competency involves dealing with the details involved with purchasing and coordinating inventory levels for parts that cost pennies on the dollar. Through no fault of their own, the ability to source and manage these nuisance items effectively, typically falls outside of a purchasing manager’s proficiencies.
Likewise, more and more businesses are beginning to take a similar approach with their IT infrastructure. […]