5 Ways Vendor Managed Inventory Can Reduce Your Total Cost of Ownership

Reducing Total Cost of Ownership with a Vendor Managed Inventory Partner

As technology continues to advance, vendor managed inventory (VMI) is becoming one of the best ways for Class C component fastener supply chains to lower total cost of ownership (TCO), optimize inventory, and improve operations.

Here are four ways you can leverage an experienced vendor managed inventory partner to reduce operating costs and maximize your organization’s profitability.

1.  Reducing Lead Time

You know what they say: time is money, and that’s particularly true for manufacturers. Your company doesn’t have time for part stock outs or waiting on deliveries. To meet demand, you must have the parts you need when you need them. This can be especially challenging if you’re buying from international suppliers. Shipments can take days or weeks, costing your production line time (not to mention adding international shipping costs).

Vendor managed inventory reduces your total cost of ownership by ALWAYS stocking the necessary inventory levels on all your C-class components. This massively reduces lead time and keeps your production line moving. A domestic fastener manufacturer and distributor like BFMI will always stock inventory on the parts you need and supply them to your company when you need them avoiding potential downtime.

2. Inventory Carrying Cost

Inventory carrying costs for Class C components makes up a significant portion of your total cost of ownership. A vendor managed inventory partner can help you lower your carrying costs by utilizing data. Data-driven analysis allows optimal inventory turns, avoids obsolescence and overstocking of inventory. This allows you to avoid inflated inventory carrying cost and free up manufacturing floor space. With additional space, you can increase your production floor footprint, further boosting your revenue. 

3. Supplier Rationalization

Leveraging a single source VMI partner cuts down your list of suppliers. By having less suppliers, you eliminate additional shipping costs, taxes, and other fees. Partnering with a domestic manufacturer and distributor like BFMI also provides more consistent, controlled pricing and helps you avoid international shipping costs, tariffs, and varied pricing.

4. Lowering Labor Costs

Partners like Birmingham Fastener Managed Inventory (BFMI) take the leg work out of managing purchase orders and material handling.

Leveraging a VMI partner reduces the need for certain positions in your material handling process by performing efficient inventory management tasks like sourcing suppliers, purchasing items, and managing paperwork. 

Additionally, because vendor managed inventory partners deliver to the point of use, you can eliminate extra steps in your production process. This both lowers the cost of a part and enables your production employees to focus on the manufacturing line.

5. Ensuring Quality

Your customers have high standards, and your goal is to meet them. Having quality components is critical to your success. A strong VMI partner delivers quality to you consistently. At BFMI, we ensure the quality of both our manufactured and distributed fasteners. Our in-house testing lab is ISO 9001:2015 and A2LA certified. We make it our mission to source and manufacture quality parts - whether standard or specialty. 

When choosing a VMI partner, it’s important to consider quality. Not only does your VMI partner do the legwork to ensure quality, but if issues arise, you can rest assured that your VMI partner is working to solve problems efficiently.

Knowing your Class C components have been tested for quality eliminates the guesswork and ensures you are using the best parts in your production. This helps you avoid returning items that can cause backups on the production line and helps you keep things moving to maximize profitability.

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Learn how partnering with BFMI can help you lower your TCO! Call or contact for a quote today!