Benefits of Vendor Managed Inventory
Vendor managed inventory consistently offers significant rewards for the customer and the supplier as well. Today, most companies chose to have a number of vendors so that they can find the lowest price. Vendor managed inventory can have financial and operation perks for your business as they eliminate the need of relying on multiple vendors.
1. Enjoy stable pricing
When you learn how to negotiate pricing with one vendor it becomes easy to get a stable pricing that can be extended for a certain period of time. Vendor contracts are usually annually, and with stable pricing a business can analyze its financial growth and come up with a flexible budget. Stable pricing also helps to reduce manufacturing costs since the business knows the materials it will need for the entire year.
2. Steady supply
Vendor managed inventory can also help you to plan your production schedule in order to meet company needs. When you learn to work with one vendor, it becomes easy to monitor whether the deliveries are made on time. This can help you to plan for delivery in advance so that you can meet consumer’s needs during busy times. A steady supply of materials and products from one vendor simply means you know who to hold accountable when the product is late or defective. In other words, it makes material management less costly.
3. Easy bill paying
A vendor managed inventory plays an essential role in your company when it comes to paying bills. Instead of paying several bills to different vendors, why not work with one vendor and reduce service charges and late fees.
4. Better customer service
Vendor managed inventory also improves customer service. Rather than dealing with several vendors and cases of defective products and missed shipments, you only have to deal with one vendor to help you with these issues.
Vendor management inventory is often vulnerable to non-foreseeable hazards such as hurricanes, employee strikes, and so forth as a result of low inventory levels.