How to start up a Vendor Managed Inventory program.

 There are 2 different ways to start up a VMI program.

1. Homemade System: Some companies decide to build their own software. It requires expert knowledge in the area of VMI, Inventory Management and of course, a few good programmers.

  • Benefits: The benefits of this type of system is that it can be customized specifically for your business needs. You can build the system to reflect the uniqueness of your company.
  • Pitfalls: As mentioned earlier, you must have a project group that includes true experts in VMI & Inventory Management. They must have a true understanding of exactly how Vendor Managed Inventory operates. This would include the EDI sets used as well as how to construct a reliable inventory plan. Additionally, you may encounter issues with your programmers. Once your system is completed, will they be available for future updates or enhancements? In most companies, the project team would have the use of programmers only for a short period. Since most VMI systems need to grow or improve over time, you’ll need to have programmers at your disposal on an ongoing basis. Most of the companies I have spoken to that have built their own systems eventually decide to go with a Pre-packaged System (see below).

2. PrePackaged: There are a few very good off the shelf VMI packages on the market today. The software usually has most of the needed basic functionality. Usually it can be customized to meet your companies specific needs.

  • Benefits: Most of these packages meet all of the standard VMI
  • Pitfalls: There may be additional charges for any customization you require. Also, you can probably expect additional charges for periodic systems upgrades.

Personally, I’ve had experience in both areas. I would highly recommend purchasing a PrePackaged system. From what I have seen, the benefits justify the costs.

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