It began several decades ago, when big box vendors such as Wal-Mart found themselves running into difficulty when it came to stocking their entire inventory, not on account of a lack of goods, but rather on account of there being simply too many. The solution they pioneered, the vendor management system, revolutionized the way a distributor sold consumer goods: the manufacturers who produced the excess number of goods would hold onto a certain number at their own facilities. If and when the distributor needed more of a certain item, all the distributor would have to do was notify the manufacturer to supply them with more of those products. That way floor-space was saved without disrupting the supply chain.
What once was considered to be a bold experiment in redefining the relationship between manufacturer and vendor has steadily become an accepted norm. Vendor management programs, where affiliated manufacturers are responsible for maintaining a certain previously agreed-upon number of parts or products for a particular distributor or higher-tier manufacturer, have become one of the chief models for doing business in this country.
At Production Materials, we offer vendor managed inventory programs tailored to our customers’ needs. For example, a valued client of ours, a leader in the grooming industry, wanted to cut down on some of the carrying-costs of the inventory we supplied them with, as well as improve their production efficiency. We performed a trial run for them where we supplied specific inventory parts for a robotic production system manufacturing cell. The initial program was a success, and now they’ve added an additional 15 parts to the program.
When our inventory is running low on a certain part, our own tracking software program alerts us to this fact. We are then able to replenish our stock in timing with future bin rotation. The “symbiotic relationship” between our two companies continues to grow; we’re now at a point where we are working with new potential clients to build vendor managed inventory programs.