Improving stock management, visibility, and control with Vendor Managed Inventory (VMI) process

CASE STUDY

September 2021

Key Results

Increased the availability and number of high demand products

Standardised product lines and automated processes

90% reduction in RFQs, POs and invoices

An energy service company approached 80:20 to implement a Vendor Managed Inventory (VMI) process

Overview

A customer requested 80:20’s help to better manage their high demand consumables inventory by setting up Vendor Managed Inventory stores at their sites and streamlining their stock use and ordering processes.

The customer already had some products stored on-site, however, too much time was being spent counting, keeping track of stock movements, and placing orders for replenishment. Management also wanted more visibility and control over stock use and required standardisation of the products stored and used across all sites.

Approach

Using Data Analytics from our ERP System, we identified all high usage items that would be appropriate as VMI stock. The final list of standardised items doubled the number of items available on-demand to end-users at the client’s site.

Next, we developed a specialised eProcurement solution and virtual warehouse with min/max levels to automate the customer’s stock processes, eliminating the need for manual tracking and ensuring stock would be replenished regularly, on time, and with no stock-outs.

We further reduced administrative burdens by requiring only one PO and issuing only one invoice per month for stock used.

Finally, we increased management visibility and control over stock use with our in-portal approval matrixes and monthly spend reports.

Deliverables

We successfully increased the number of high demand products available for immediate use at the client’s site, while standardising the products and automating processes.

The client reported a significant reduction in time and administration costs associated with their stock management, as well as high satisfaction with the increased availability of items needed for regular consumption, and the ease of using ePro for stock orders.

In addition, the client benefitted from a 90% reduction in RFQs, POs, and invoices due to their new VMI set-up and streamlined processes.