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Vendor managed inventory challenges: A steady supply

Corey Bakhtiary, Global Director of Programs and Product Management 

What is vendor managed inventory (VMI)? Simply put, VMI empowers suppliers (rather than distributors or end-customers) to ensure a steady supply of inventory.

Think of it as “push” rather than “pull.” In a pull model of supply chain management (SCM), a distributor will track inventory and reach out to the supplier to “pull” more supply when it’s time to re-up (usually, well-past when it’s time - their inventory is gone). But with VMI, the supplier keeps track and pushes out more inventory before it’s gone, ensuring a steady supply.

It’s a win-win scenario as 1) it lessens the workload for distributors by taking inventory management tasks outside their day-to-day, and 2) it can increase revenues for suppliers by enabling them with the insights to provide exactly what’s needed, nothing more or less.

An eye on supply: Step one for VMI

While we believe VMI is an SCM improvement, it’s not without its challenges. When supply chain management and finance professionals think about challenges in VMI, they go in all kinds of directions.

It’s the platform being used that presents the most challenges. Our data is all over the place and orders are hard to track.

True. Definitely a challenge, but perhaps one of the easier ones to solve as the technology (e.g. Dynamics 365 Supply Chain Management) keeps getting better and better. All we need to do is learn how to master it.

It’s regulations and compliance issues. We can’t keep up: it seems like once we have our processes aligned with the latest standards, they drop a whole set of new ones on us.

Also true, and often solved via technology — when fueled by AI, Azure, and with access to information sources such as data lakes — can automate many compliance issues and/or create the reporting needed to assure adherence.

It’s stuff beyond our control: the weather, local construction, and COVID requirements.

True, but also… c’mon. Most everything is beyond our control. Make a plan and make a plan to pivot should the external world impact your workflows.

We posit that the #1 VMI challenge is the first word in supply chain management: SUPPLY.

Raw materials, inventory, and the finished products demanded by customers. Think about it: the other issues presented above (and most every issue faced by supply chain management professionals) don’t even enter the picture if there are issues with supply.

Keeping on top of supply means being able to both anticipate what’s going to be needed next and being able to quickly order what’s needed now.

For the latter, “there’s an app for that,” an easy way to extend Dynamics 365 Supply Chain Management and Dynamics 365 Finance with Arbela Rapid Reorder.

View a recent webinar on Arbela Rapid Reorder or read on to learn more.

Rapid Reorder: Speeding supply in VMI

With manufacturers or distributors managing supply, SCM was a reactive task for suppliers — they’d have to wait for the orders to come in and then jump to fill them. But with VMI, suppliers can be proactive and optimize when and how they increase the supply of raw materials and goods, and reduce the risk and costs of having overstocked inventory returned.

As the supplier takes on a larger role in managing customer inventory, teams of fields service representatives are often deployed with laptops and clipboards in hand to ensure that customer inventory counts remain steady. Then they carefully take note of inventory counts and required reorder amounts, and then transfer their notes to an order entry system or order entry clerk.

This is where VMI challenges arise as this process opens opportunities for transposition errors, requires multiple staff to support orders, and can create missed windows in order entry deadlines as information is collected and entered. This is why Arbela Rapid Reorder was developed.

Built on the Power Platform, Arbela Rapid Reorder empowers team members to respond to customer demand in real time (regardless of connectivity issues). Your field sales representatives can simply scan product barcode numbers with their phones, and trust that the entered reorder amounts are accurately synched back to Dynamics or saved offline in the application until a data connection can be established (making it ideal for replenishing inventory in mines, large warehouses, and other weak signal access points).

The ease of use and intuitive scan functionality of Arbela Rapid Reorder removes data entry errors and delays from responding to customer demand. It helps VMI professionals ensure timely order processing, resulting in higher customer satisfaction and lower operational costs.

The right amount, the right time, and the right place: The VMI supply trifecta

Success in VMI all comes down to supply: the right amount at the right time and in the right place.

With Arbela Rapid Reorder, you simply enter the right amount and the application does the rest. Because it syncs with Microsoft Dynamics, you’re always getting data to the right place. And because it can store data and sync it later, it’s always the right time.

Want to learn a lot more? Watch the webinar or contact us.