What is a VMI Program?
A VMI program is a vendor-managed inventory program. This means that the vendor decides when and how much stock to replenish instead of the laboratory. You can think of a VMI program as a symbiotic relationship, where both the vendor (lab supplier) and the lab manager (buyer) benefit. Utilizing a VMI comes with many benefits - they reduce the risk of businesses accidentally running out of lab supplies, reduce excess inventory within the supply chain, and keep overall costs low. In theory, the features of a VMI work to serve both parties, and company heads spend less time trying to solve the daily issues that come with stocking and ordering tasks. VMI’s remove the stress and unpredictability associated with analyzing and improving routine operations and instead restructure resources to flow more naturally to reach company objectives.
What are the benefits of a VMI Program for lab supplies?
Customers choose to use VMI because it relieves them of the stress and burden of managing large amounts of inventory. There are several added benefits that labs can enjoy when they utilize a properly developed and implemented VMI program; including clearing up objectives, reducing stress, freeing up time, and bringing down costs.
Reduce restocking stress
A VMI program reduces the stress and panic when lab supplies diminish.
When a lab establishes a VMI program, the supplier assumes the responsibility of restocking and placing orders. This also entails handling any added costs, expedited orders, and additional communication with extra suppliers about order logistics. The supplier can handle producing new stock and recovering depleted stock so that all lab supplies and equipment are ready on an as-needed basis. This is important when handling laboratory and cleanroom supplies as they serve important functions in research, medical, and general laboratory facilities. With this cycle taken care of, the associated stresses that come with restocking items are completely dissolved from your routine.
Optimize time management with a VMI
With the reduced stresses of restocking comes an added influx of open time. All the time you would have spent on numerous tasks that come with orchestrating stocking your supply is freed with a VMI. Time spent planning through a proper VMI now are hours saved later; and you can use this time invested in other ways to continue improving your business model.
To maximize all the benefits that come with a VMI, establishing a thorough plan with a qualified VMI supplier is your first step. Some key things to consider when choosing a supplier and constructing a plan are:
- Your company's specific expectations, needs, and clearly defined objectives
- Typical operations
- Inventory use
- Storage capacity
- Control quantities (maximum, minimum)
Once these are established, the supplier can manage the inventory for all the different pieces of lab equipment and cleanroom supplies you will need, which will ease the pressure on your company and storage facilities. The supplier can then take over the task of monitoring stock and determining when stock needs to be refilled and handle all aspects of distribution. Make sure to communicate with the supplier to ensure that all parties are on the same page, and relay any changes to operations, inventory, or storage availability that may arise. Once you have completed these steps and established a good relationship with the supplier, you can reap the benefits of being freed from time-consuming smaller tasks that come from handling restocking and purchasing inventory.
Money saved on lab supplies can be used for other investments
If a vendor is placing their purchases regularly, they may be costing themselves more money in the long run. While exact savings may vary by the size of the organization and company, investing the time in establishing a VMI can prove to be widely cost-effective.
How does a VMI save you money?
Saving money is always an important goal for any medical device and electronic manufacturing laboratory. A huge advantage to a vendor-managed inventory program is that it can automate the ordering process. Within the ordering process is a host of factors and hidden costs. With a VMI automating this process, a huge financial burden is lifted - creating a much more fiscally efficient supply chain.
There are several key areas where using a VMI can save you money. These include, but are not limited to:
- Lower transaction costs / purchase orders
- Lower item costs per unit
- Lower reporting and personnel costs
- Lower freight/shipping costs
VMI’s can reduce costs in shipping by already having connections to manufacturers that may be located across the globe, and they account for delivery times and prices. A VMI program will assume the responsibility of ensuring all transactions run smoothly and keep an ongoing stock of the components the vendor needs. VMI’s also reduce OEMs having to pay for excess inventory, therefore reducing inventory costs. Additionally, a VMI partner will more than likely already have an established base of reliable manufacturing companies that will provide quality products.
Cost of generating a Purchase Order (PO)
A purchase order cost can vary by organization. To estimate a PO cost, several variables need to be understood and factored in like paper and overhead costs, salaries of individuals involved in the process, the price paid for systems per number of purchase orders, etc. An established and properly arranged VMI program can greatly reduce your PO cost by simplifying it for you.
Any medical device or electronic manufacturing lab would their supply chain to be as streamlined, efficient, and cost-effective as possible. Establishing a well-developed relationship with a lab distributor who can implement a vendor-managed inventory program can ease several time costs and financial burdens. VMI allow laboratories to flow much more smoothly than a traditional customer managed inventory system.
For over 40 years, Lab Pro Inc. has been committed to delivering the highest quality lab supplies, chemicals, and cleanroom PPE apparel to medical device and electronic manufacturing laboratories worldwide. To learn more, visit the biggest Lab Supply showroom in California, or contact us online or at 888-452-2776.