Retailers often have difficulty managing their inventory properly. This can negatively affect semand/supply planning and possibly even their revenue. Therefore, lack of a good managed inventory system can be costly. Using a vendor managed inventory system means a business can run smoothly and seamlessly, as well as adjust to various factors, both externally and internally, that can affect inventory.
Reduction in Costs
Using a vendor management inventory system reduces costs in a few ways. The vendor can quickly see when inventory needs to be replenished. Therefore, you never pay for overstocked goods waiting to sell. Additionally, the vendor doesn’t need to order from the distributor until analyzing the data to see what is needed and when. Finally, the vendor can manage the proper amount of just–in-time inventory based off the data gleaned from managing inventory.
Better Productivity
With a vendor managing the inventory, they are able to have a hand in helping with better long-term strategic planning, as well as short-term planning and customer satisfaction. This allows the company to focus on other areas that may need attention or restructuring. This is more productive for both the vendor and the company because the vendor receives direct data and can make necessary decisions and still communicate with the retailer so that all are benefiting from the knowledge.
Communication Across the Chain
In some cases, other parts of the supply chain will become involved. A distributor can choose to enter into the equation and simplify processes as well. They can even deliver and stock for the vendor. If data is shared across all platforms, everyone receives information in real time, and the distributor knows where products must go and when in order to maintain what is needed. This also saves on inventory costs because the vendor manages less inventory.
