What to Look for in a Vendor-Managed Inventory App

Why Is a Vendor Managed Inventory App Useful? 7 Advantages

A distributor can benefit in a range of ways from using a VMI app. Let’s look at seven leading business benefits of using a VMI app:

1. Reduce the time it takes to do inventory audits or cycle counts: Since a VMI scanning app can capture a multitude of information in just one QR code scan, it reduces the time it takes to do an inventory audit or cycle count by 90%. Capture product numbers, bin location, supplier info, min/max settings, package quantity and reorder quantity, etc.
2. Reduce the cost of providing consignment inventory: Because VMI apps can optimize inventory levels based on what a customer actually uses, distributors can be assured that they are providing the value-added service of consignment inventory at the minimum cost possible. 
3. Get precise demand planning data about customer usage: If the top 10% of a distributor’s customers that account for 80% of the revenue use eTurns to track consumption and auto-replenish inventory, that distributor will have the most accurate forecasting and demand planning data for their distribution centers….much better data than historical order data.
4. Improve inventory accuracy: With real-time usage tracking and automated replenishment, the chances of human error are closer to zero. VMI apps therefore produce more reliable inventory data, ensuring both distributor and customer decisions are based on current information.
5. Increase service levels and lower costs-to-serve: For customers, having the right products available when they need them is non-negotiable. By using a VMI app, distributors ensure their customers’ inventory needs are met promptly, thereby improving service levels and customer satisfaction while lowering costs-to-serve.
6. Reduce procurement costs: VMI scanning apps reduce the manual process of reordering with spreadsheets, clipboards or multi-step ecommerce sites. The distributor rep just scans, adjusts quantity, and sends the order digitally to the distributor’s ERP. This speeds up the rep’s visit to the customer and allows them to do their job more quickly and accurately.
7. Higher quality supplier and customer relationships: A collaborative approach to inventory management creates a partnership where both parties are supporting each other’s success. It builds trust and commitment, as your involvement in managing your customers’ inventory demonstrates a vested interest in their success. VMI app usage can therefore increase the likelihood of long-term partnerships and opportunities for joint strategic initiatives.

Which 5 Industries Benefit from Distributors Using VMI Apps? 

VMI apps are vital to distributors who are using a VMI model to replenish companies in certain industries where point-of-use inventory management is complex and critical to business success. Let’s look at five industries that fit these criteria:

1. Contractors

Contractors manage a wide array of tools, equipment, and materials on job sites, making inventory management a complex and labor-intensive task. A VMI app helps distributors serve contractors by automating replenishment for their essential products, such as construction materials, electrical products, and safety gear.

With VMI apps, distributors ensure their contractor clients have the necessary supplies on hand without overstocking, which causes wasted space and increased costs. When contractors can use that same app to track inventory consumption and usage in real time, it’s much easier to plan ahead for project needs, prevent delays caused by stockouts, and optimize their resource allocation across multiple job sites.

Distributors using VMI apps also allow contractors to focus more on project execution rather than spending valuable time manually managing inventory. The app’s automatic alerts for low stock levels and predictive algorithms help distributors maintain the optimal min/max settings and inventory levels for contractors, especially in fast-paced construction environments where timely access to materials is essential. 

2. Emergency Medical Services (EMS)

Emergency Medical Services (EMS) rely on the immediate availability of life-saving equipment and medical consumable supplies. It’s incredibly useful for medical distributors to serve EMS clients with a VMI app, through which the ability to replenish inventory automatically and quickly may make a life-or-death difference.

With the unpredictable nature of emergency calls, EMS teams can’t afford to run low on critical supplies. Distributors’ use of VMI apps create certainty that essential items are constantly tracked and automated replenishment guarantees EMS clients’ inventory is maintained at optimal levels without overstocking.

In addition to ensuring constant availability, medical distributors’ use of VMI apps reduces manual tasks associated with ordering supplies, allowing EMS companies to be assured their medical inventory levels are at par and their focus can be on patient care. Real-time visibility into inventory levels across vehicles and stockrooms, the ability to transfer items between locations, and the ability to get automated alerts enable EMS managers to act quickly when supplies are running low, ensuring they’re able to prevent stockouts.

3. Medical Clinics

Medical clinics, which use products like surgical knives, oximeters, and disposable gloves, benefit immensely from their distributors leveraging VMI apps. With strict regulatory requirements and the need for precise inventory management, these operators must have the right materials on hand to meet serve patient needs without unnecessary delays. 

You may also be familiar with the reality of fluctuating demand due to changing healthcare needs, making accurate forecasting critical. VMI apps use predictive analytics to track usage and ensure distributors can meet client demands without tying up excessive capital in unused inventory. 

4. Manufacturers, Fulfillment centers, Airlines, and other users of MRO Inventory

Manufacturers, fulfillment centers, airlines, etc. handle a vast array of parts, tools, and equipment needed to keep facilities running smoothly. Often these companies do not consider inventory management one of their core competencies and so they outsource the VMI replenishment responsibilities to an industrial MRO distributor. When MRO distributors use a VMI app, it simplifies the associated complex inventory management challenges by automating the replenishment of these critical MRO or industrial supplies. 

For manufacturers, direct parts are usually managed with Material Resource Planning (MRP) software but there are a host of indirect C-class consumable parts that need to be stocked in order to keep the manufacturing line operational. Fulfillment centers and airline hangars have MRO janitorial and sanitation inventory that cannot stockout or operations would shut down. 

VMI apps help MRO distributors do cycle counts and inventory audits with min/max levels that auto-replenish inventory and provide real-time visibility into stock levels. 

Whether it's managing spare parts for machinery or maintaining tools for facility upkeep, VMI apps ensure distributors provide inventory whenever it’s needed, preventing costly downtime and improving operational efficiency.

5. Service Truck Companies

Service trucks, which are used by field service technicians and contractors, need to be well-stocked with the necessary tools and equipment to complete jobs on-site the first time without resupply trips. A VMI app is an invaluable tool for distributors managing the inventory of their clients’ central warehouses and service trucks, confirming each vehicle has the right parts and tools for the job without carrying excessive inventory that takes up valuable space. By tracking inventory levels in real-time and automating replenishment, your distributor helps your technicians avoid delays caused by missing or depleted supplies.

The best VMI apps can be used by both your distributors to keep your central warehouse stocked, as well as your technicians to create work orders with parts and labor that trigger transfers requests from your central warehouse or auto-replenishment orders to distributors if min/max levels are breached. 

Implementing a VMI App

Implementing a VMI app requires careful planning and collaboration between distributors and customers. The first step is to establish clear objectives and expectations for the VMI program. Both you and your customers should agree on the goals you aim to achieve, such as reducing stockouts, lowering inventory costs, or improving supply chain efficiency–or all of the above.

The next step involves selecting the right VMI app. This selection should be based on several factors, including the app's full range of features and capabilities, the tool’s reputation for reliability, and the technologies it supports such as scanning, RFID, smart shelf/SensorBins, and vending. It's also essential to consider the scalability of the app, ensuring it can grow with your business. 

The best VMI apps will allow you to start with simply scanning-to-order or scanning-to-count but allow you to move to scanning-to-consume inventory and track usage very easily. 

Finally, successful implementation depends on effective communication and training. Both suppliers and customers need to understand how to use the app effectively. This may involve training sessions, the ability to watch how-to-videos that are embedded in the software, and ongoing support to address any issues that arise. With the right approach, implementing a VMI app can be a smooth process that leads to tangible wins for everyone involved.

Leveraging the right vendor-managed inventory app can be a game-changer for distribution companies looking to optimize the replenishment of their inventory at the customer’s sites. By understanding the ins and outs of VMI apps and carefully planning their implementation, you can unlock new efficiencies you didn't know were possible, vastly improve service levels, and drive lasting business growth.

Reduce ordering costs and increase your VMI sales reps’ efficiency by four to 10 times with eTurns’ VMI app. Start your free 30-day trial or call us now with any questions.