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3 Must-Have Features of Effective Digital VMI

3 Must-Have Features of Effective Digital VMI

If you are looking for the perfect automated solution to effectively manage your industrial supply chain, a digital vendor managed inventory (VMI) system is the right fit as long as it provides accurate and granular consumption data, has a magical user interface, and is affordable and easy to use.

Industrial supply chain challenges have forced suppliers and consumers to have higher expectations for product availability. An empty shelf can negatively impact your business quickly.

That’s why effective automated inventory management is essential to help suppliers and consumers optimize their supply chain. To stay competitive, collaboration is crucial, along with a robust digitized system for managing critical inventory. A digital VMI solution like ShelfAware allows suppliers and consumers to build better forecasts, improve shipments, and avoid stockouts. In addition, granular consumption data can help you respond to real-time marketplace demand swings.

When choosing an effective digital VMI solution, be sure it contains these three must-have features.

1. Effective Digital VMI Must Provide Accurate and Granular Consumption Data

Any effective digital VMI must have accurate and granular consumption data. If you don’t have very detailed consumption data, it’s difficult to automate because there are too many gaps to fill. ShelfAware collects the granular data by applying RFID smart labels to package quantities as opposed to bulk bin quantities.

On some C-class components that have very high volume, a traditional VMI system will stock using a case count or bin count using loose stock. The problem is that the data point when the inventory is gone is too big, providing only two consumption data points per month. For example, if 2,000 pieces were consumed that month, there is only consumption data for two chunks of 1,000 each.

If you are trying to get inventory collectively across several SKUs to turn 12 or 24 times per year, you must stock that one SKU in smaller increments so that you can lower the shelf quantity by a factor of 50 percent, yet never stock out.

If you only have two consumption points in a month of 1,000 each there is too much time between those two points of reference. Let’s say that 200 pieces per week were routinely consumed over a long period of time. It makes sense that you should  never put more than 200 pieces of that product on a shelf each week rather than stocking 2,000.

If you have this kind of granular, highly-detailed consumption data that is collected by allowing suppliers to tag packaging in flexible quantities, it’s possible to stock down to only one piece at a time, which is the most granular data point possible. Over a period of time it becomes evident to determine the lowest possible inventory required on the shelf without stocking out.

2. Effective Digital VMI Must Have a Magical User Interface

Traditional vendor managed inventory systems use bar codes to track products. Parts are placed in bags in pre-determined quantities—similar to what you would find in a hardware store. Each piece has a bar code. It’s not practical for a consumer to scan 500 barcodes per day.

A magical user interface, like RFID technology, ties into the granular consumption data. The user can still grab a bag of 500 pieces along with 100 other various pieces and throw them all in a tub. When placed on the scanning table, one RFID scan calculates the entire inventory of pieces in the tub in seconds. The speed that RFID smart label technology provides also includes extremely accurate data.

A magical interface like RFID smart labels eliminates the need for screens, keyboards, and handheld or peripheral devices—all of which most manufacturing floor operators find inconvenient and obtrusive.

3. Effective Digital VMI Must Make Practical Business Sense

When managing a supply chain of C-class components, gross profit margin matters. Using a traditional VMI, expenses for manual labor can add up quickly. Some high-tech digital VMI solutions are extraordinarily expensive and only make sense for gigantic suppliers.

Some digital VMI solutions have so much expense involved in the installation and maintenance, they only make sense for less than five percent of the industrial manufacturers in America. ShelfAware is affordable for any size supplier or consumer—small, medium, and large. It’s robust and scalable.

The ShelfAware digital VMI solution requires no money upfront and then only around $1,000 per month, which offers a robust system with significantly low cost to the user. The low cost provides a very broad option of optimal customer size required to make applying ShelfAware a profitable solution. This makes ShelfAware a viable solution at all sizes of manufacturing facilities, including very small industrial consumers with smaller supply chains. Even the smaller users can experience a quick return on their investment.

How to Get Started With a Robust Digital VMI

Implementing ShelfAware’s robust platform is often complex but does not need to be slow. It begins with a group conversation involving a mix of finance, operations and IT professionals. A site audit (often multiple sites) is usually required before a proposal can be made.

Final proposals usually involve a formal stocking agreement, installation fee, and a product pricing quote. Onboarding consumers varies widely, but the minimum time required to convert a supply chain in most markets is about three months.

nt 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.

More articles about using a digital vendor managed inventory system to solve your supply chain challenges:

How Collaborative Cloud SourcingTM Propels the Future of Industrial Supply Chain

How Manufacturers Can Automate Inventory Management Quickly, Effectively, and Inexpensively

How Automation Solves America’s Broken Supply Chain

How Supply Chain Automation Gives Your Company a Competitive Edge

Everything You Need to Know About Digital Vendor Managed Inventory

Why Cloud SourcingTM is a Game Changer for Digital VMI Systems

How Energy Manufacturing Tackled Inventory Challenges with an Affordable, Easy-to-Use Supply Chain Solution

What Kinds of Manufacturing Businesses Can Benefit from Inventory Management Software?

Top 10 Advantages of RFID Inventory Tracking

7 Ways to Save Time and Money with an RFID Inventory Management System

How Automation Improves Manufacturing Operational Efficiency


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