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Digital VMI Defined: Traditional vs. Modern Solutions

With ShelfAware, suppliers and consumers can make more money with less worries and eliminate stockouts with an easy-to-manage, cloud-based digital vender management inventory system.

An empty shelf negatively impacts business, sending customers directly to the competition. The traditional system of inventory management worked for a while, but leveraging automation and the Internet of Things is changing the way suppliers and consumers manage complex supply chains.

Today’s industrial suppliers and consumers want real-time visibility and granular consumption data to make key strategic decisions about how they manage complex supply chains. Historically, component suppliers have been forced to send salesmen on the road with clipboards and calculators to spend several days physically counting products on their customers’ shelves to manage inventory.

But thanks to automation and cloud-based, data driven digital vendor managed inventory (VMI) platforms like ShelfAware, supply chain partners can automatically share inventory data to create a lean, demand-driven supply chain. The results are better forecasts, optimized shipments, improved in-stock rates, and component parts available at all times across a broad channel of networked suppliers.

Comparison of Traditional Inventory Management and VMI

VMI is an inventory management technique in which a supplier of goods, usually the manufacturer, is responsible for optimizing the inventory held by a distributor. VMI requires a communication link—typically electronic data interchange (EDI) or the Internet—that provides the supplier with the distributor sales and inventory data it needs to plan inventory and place orders. Under the traditional arrangement the distributor handles those tasks.

Designed to streamline inventory management and order fulfillment, VMI is a proven inventory management model. It improves collaboration and communication among multiple suppliers and distribution partners by aligning business objectives and optimizing operations for all participants.

When the VMI platform is automated, data flows and users enjoy improved order accuracy and a reduced reliance on human work. Faster inventory turns, higher in-stock percentages, increased sales, and protection against the supply chain bullwhip are also advantages.

This business-to-business strategy enhances the supplier-distributor relationship and collaboration, helping all parties align their objectives for optimized operations.

In a traditional business model, product buyers are responsible for deciding inventory volume and when to place orders. A digital VMI platform shifts that responsibility from the buyer to the supplier.

The most obvious distinction between traditional inventory management and a digital VMI platform is that in the traditional method, the buyer makes independent decisions about the size and timing of orders. With a robust digital VMI system like ShelfAware, the buyer shares their demand data, inventory, and parameters for delivery with the supplier.

The buyer empowers the supplier to establish the size of the order and manages the supply chain from start to finish with the buyer providing timely and accurate data for forecasting.

How an Effective Digital VMI Works

Effective digital VMI platforms like ShelfAware focus on RFID Smart Labels as a data collector. ShelfAware Smart Labels are printed on standard Zebra label printers and applied at the time of shipping by suppliers.

ShelfAware deploys an RFID checkout station on behalf of the supplier at the consumer facility. This magical user interface can track the consumption of thousands of inventory packages in seconds, ensuring broad user adoption. This inventory consumption data is leveraged by the ShelfAware web-based application to automate replenishment, ensure lean inventory quantities, and guarantee no stockouts.

Enter 2024 With a Strategic Supply Chain Strategy

Effectively managing complex manufacturing supply chains requires visibility, accuracy, and strategic decision making. Digitizing inventory doesn’t have to be an expensive or overwhelming task.

In fact, with a platform like ShelfAware, suppliers and consumers can make more money with less worries and eliminate stockouts with an easy-to-manage, cloud-based digital vender management inventory system.

Embracing automation is an important first step. To get your first taste of automation, try a digital VMI platform like ShelfAware. It’s an easy entry for companies looking to flex their first digital muscle.

Here are the top 10 supply chain management tips that will help manufacturers prepare for 2024.

Try a digital VMI platform like ShelfAware for a sustainable solution to supply chain management.

Want to learn more about an affordable way to automate your supply chain? Request your free ShelfAware demo. 

Too good to be true?  ShelfAware is redefining the vendor-managed inventory industry. For this reason, we’re happy to talk to you about how our intelligent inventory platform can benefit your business. Contact us today for more information.

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