How do you adapt vendor-managed inventory to different industries and contexts?

1 Benefits of VMI

VMI can offer several advantages to both the supplier and the customer, such as lower inventory costs, better service levels, improved visibility and communication, and increased trust and loyalty. The supplier can optimize inventory levels and ensure timely and accurate deliveries, while the customer can monitor the supplier's performance and provide feedback. Additionally, the supplier can access the customer's data and forecasts, enabling better planning and coordination. This can create a long-term partnership between the supplier and the customer, with the supplier demonstrating its commitment and reliability, as well as its expertise and innovation.

2 Challenges of VMI

VMI is not a one-size-fits-all solution and requires careful planning and execution. Potential challenges include data sharing and integration, role and responsibility changes, and cultural and organizational barriers. Data must be shared accurately and timely, and systems and processes must be integrated for compatibility and security. The supplier and customer must redefine roles and responsibilities, align incentives and goals, and establish trust and transparency. A culture of collaboration and continuous improvement must be fostered, and staff must be involved and trained to ensure their buy-in and support.

5 Case study 3: Healthcare industry

A third example of a successful VMI implementation is the partnership between Cardinal Health and Mercy Health, a leading provider of healthcare services. Cardinal Health and Mercy Health have been using VMI since 2016, as part of their value-based care (VBC) model. Cardinal Health manages the inventory of its products at Mercy Health's hospitals and clinics, using radio-frequency identification (RFID) and cloud-based software to track and replenish the items. Cardinal Health also provides consulting and analytics services to help Mercy Health improve its clinical and operational outcomes. This way, Cardinal Health can reduce its inventory and distribution costs, improve its customer satisfaction, and create new revenue streams. Mercy Health can also benefit from Cardinal Health's product quality and availability, as well as lower its inventory and waste costs.