What is Vendor Managed Inventory?

Here’s How to Determine if Vendor Managed Inventory Solutions are Right for Your Business

Vendor managed inventory is a strategy for businesses to allow their warehouse to be used in the most efficient way possible. What is vendor managed inventory and how does it work? We’ll discuss all that and more in this article.

Your warehouse is the key location where orders are stored and shipped out. There is a finite amount of space that you have to store all your products, orders to be shipped out, and the packaging they’ll be shipped in. You want your business to grow, but if you start running out of space to store products, things start to back up quickly. That’s where a vendor managed inventory solution can help.

Warehouse space is valuable, and no one ever wants to give any up because you need a place to store all of your packaging supplies. With vendor managed inventory, your corrugated packaging vendor keeps track of the current status of your packaging inventory and makes sure you always have the right amount in stock for your shipments.

Instead of filling your shelves with extra packaging materials, you’ll be able to ensure that your warehouse space is being used in the most efficient way. You won’t have to think about over ordering materials to make sure you never run out at the last minute. Rather, your packaging provider will check your inventory levels to see if you’re running low on something and will replenish your stock without you having to give it a second thought.

How does this help? Vendor managed inventory saves you time and money. In regard to your time, with someone else managing your packaging material inventory, you won’t have to worry about keeping track or counting. That’ll all be done for you so you can go back to focusing on more pressing matters within your business. You’ll also be able to cut down on your costs because you won’t be paying for additional cartons or materials that you don’t currently need, or spending extra money to replace damaged or incorrect shipments.

Everyone is familiar with the nightmare scenario of running out of packaging supplies right before an order is due to be shipped out. Or packaging orders that you need at the last minute being delayed. Or the stock you need becoming outdated and not knowing what to order next. Or when your order finally arrives and some of the shipment has been damaged. Each of these scenarios costs your business more money and more time than you’re willing to spend on packaging, and it only sets you back from increasing your revenue.

Vendor managed inventory is a solution that helps your business eliminate common issues with packaging by ensuring that you always have what you need when you need it. With your packaging supplier managing your inventory levels, you can forget about having to place emergency orders because they’ll already know what you need.

Add Value to Your Operations With a Vendor Managed Inventory Program

So, how does a vendor managed inventory solution work? Many are a form of software that, at a high level, keeps your warehouse stock levels connected with your supplier at all times so they can make sure you never run out.

If you don’t want a software option, there are also “non-electronic” versions that still offer the same solutions. With this kind of vendor managed inventory, an account manager will come directly to your warehouse and perform a manual count of your packaging supplies. While there’s a little more work involved, your supplier will still have all the information they need to make sure you have the right materials.

For electronic vendor managed inventory, this solution works through a type of barcode inventory management software, like our electronic vendor managed inventory (eVMI) solution. Essentially, this means that all your packaging orders will arrive with specific barcodes that stay with them until you are ready to use the materials. You’ll use a hand scanner that is provided to you by your supplier to scan the barcodes each time you take a skid of cartons down from the shelf. When a barcode is scanned, the stock levels of your packaging supplies are updated on a web-based system, and your supplier will be notified that item has been used. This allows your packaging supplier to either release a delivery that will replenish that used inventory, or plan for an upcoming order.

With the data that your packaging supplier receives from your scanned barcodes, they can also do more than just replenish your supply. From that data, they can determine your expected usage of packaging materials to help you place more efficient orders, identify lead-time for upcoming orders, and acquire buffer stock if it’s necessary. If something changes, they’ll know immediately and be able to adjust your order. They’ll also be able to store all of the specifics for your orders, so whether you have stock boxes or custom designed cartons you’ll be able to trust that you’ll have what you need when you need it.

How can you find the best vendor managed inventory software for your business? Start by working with a packaging manager you can count on. At Jamestown Container Companies, we provide our vendor managed inventory as well as our eVMI service, both complimentary, to our clients to help them maximize the space in their warehouse and put more of their time back into what matters.

Jamestown Container Companies has been helping companies navigate their packaging and shipping challenges with innovative solutions since 1956. We're a family owned and operated organization, and we're dedicated to being a partner to all of our customers from initial concept to the moment their products reach their final destination.