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How CUSTOM is Your CUSTOM VMI Program? What You Don't Know Could Cost You (Part 1)

Posted by Seth Swanner, VP Sales and Marketing

VMIblogSeth Swanner, Vice President of Sales and Marketing of Supply Technologies, shares his views on his industry and the dangers concerned with “Custom” VMI Programs being marketed by many competitors. 

Vendor Managed Inventory programs (VMI programs) have become an extremely important tool in global supply chain operations. Many companies offer these types of value-added services, but very few can do this process well. The risk of a large scale transition from one supplier to another is far too great and creates potential exposure if either the new supplier is unable to accomplish such a task, or they work hard to implement a VMI program that isn’t truly customized to meet the current challenges of your organization. This is especially true for companies operating on a global scale. Before listening to the well-prepared rhetoric that most VMI suppliers are sharing, take time to investigate the following:

  • From the very first meeting, did this potential supplier begin discussing differentiators or how much better they are than the competition? Beware: how can they truly know they are different without completely understanding the current program, your needs and expectations, and the specific challenges each individual plant is experiencing today? In our industry, there should never be a “cookie cutter” program (One size fits all); and unfortunately, these are offered every day. The potential new supplier should provide a more consult-style approach, as there are many questions that need to be addressed.  
  • “Does this company manage all the key components that I want under a VMI structure?" If they don’t, are they willing to offer creative solutions that can support those particular components? Flexibility is key and a true VMI supplier can maneuver around the most complex challenges associated with inventory management. They must be “thought leaders” and “problem solvers.”

  • Does the potential supplier operate on a single, global platform that provides complete visibility of systems at all locations? One of the greatest challenges is integrating with multiple locations that operate on different system platforms. Because of its complexity and required expertise, this should be weighed heavily in the decision process.

  • “If I place an overlay of our locations on top of their locations, how well do they match with my plant locations?” This could negatively affect certain locations, even if others can be serviced well.  Freight costs and On-Time Delivery are just a few problems that could occur. Just because a company states they have a global footprint, it doesn’t mean those locations are true distribution sites that will be servicing your plant(s). These locations could be satellite locations, part of another division, have space constraints, or be only a sales office. 

  • “Is this Supplier willing to provide a detailed plan to visit all plant locations so they can perform a Tactical Process Analysis? Will they actually quantify direct and indirect cost savings for my company and truly define a custom VMI Program for each of my plant locations?” This isn’t a plant walk through by your sales representative. This is a real-time, Tactical Process Analysis that’s made up of a team that specializes in these activities. This is where the rubber meets the road and please be aware that there are many very good copy cats out there that say they can do this.

  • Does this supplier have a clearly defined “Implementation Plan” that includes a detailed Timeline, Gap Analysis, Transition Reporting, EDI Process, Part Qualifications, Communication Path, etc?  “Do I have complete confidence that this supplier can truly handle a task of this magnitude?” This is one of the most critical aspects of implementation and the actual transition can be the most dangerous, especially when your production lines being able to run seamlessly are at stake.

Please take the time to go to the “Our Advantage” section to learn more about some of the additional key aspects to the VMI Program process. Never cut corners here, as the risk is just too great. If you’re working with a company who wants to take short cuts or can’t provide a comprehensive plan, eliminate them from consideration immediately and strategically align with a legitimate VMI Supplier that will provide a true “Customized VMI Program” that meets the specific needs of your company.  
Please look for (Part 2) of this blog to learn more on this subject.