Sunday 19th Feb 2017 - Logistics & Supply Chain

Time to look again at VMI

Some 36 per cent of senior managers in retailers and manufacturers reckon their organisations have too much cash tied up in inventory – and 29 per cent think they have too much excess and/or obsolete inventory.

Malory Davies FCILT, Editor.

Malory Davies FCILT, Editor.

A study sponsored by E2open found that there is increased interest in inventory management programmes such as vendor managed inventory, but companies face challenges in actually establishing such programmes.

In fact, only 33 per cent felt that inventory levels reflected optimised cost and service levels.

Not only that, a third of total respondents rated their visibility levels between “average” and “none”. Only 26 per cent rated their visibility into current inventory levels as “great”.

E2open has identified several trends from the past three annual surveys:

* Using VMI on both buy-side and sell-side is relatively rare. Only 30 per cent of those surveyed report this capability, whereas those implementing solely buy-side VMI programs outnumber those implementing solely sell-side programmes by more than two to one.

* Visibility into time-sensitive supply chain data continues to be a struggle. More than half of those surveyed reported that their business cannot share daily forecast information.

* There is a sustained demand for better inventory management collaboration. Among those surveyed, nearly one-third reported collaborating “poorly” or “not very well” with trading partners.

Pawan Joshi, vice president for strategy at E2open, points out; “Though VMI is a proven approach for creating a highly responsive, demand-driven supply chain, the latest research shows a holding pattern in VMI program implementation.”

Is this simply because companies over-estimate the difficulty of implementation? The survey, which was conducted by Gatepoint Research, found that less than 22 per cent of respondents used automated B2B technology. The majority view the drivers of inventory information-sharing between partners as time-consuming, involving enterprise resource planning or manual methods.

But nothing stands still – and inventory management programmes are constantly developing. Perhaps this is a reminder that it is time to look again.

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