News Articles

May 15, 2009

Vendor Managed Inventory – Beating Retail’s Catch-22

Vendor Managed Inventory – Beating Retail’s Catch-22
By Peter Blum, RedPrairie
Refrigerated & Frozen Foods Retailer, May 15, 2009

In today’s tough economic conditions, grocers of all sizes face an inventory management version of Catch-22. They must have the right inventory in the coolers at the right time in order to maximize their sales; yet they can’t afford to tie up their cash in inventory that could sit in the walk-in freezers or warehouses for weeks or months.As grocers cut spending across all levels of the business, a bloated supply chain is usually the top target. And that’s where a Vendor Managed.

Inventory (VMI) approach helps. VMI and consignment inventory capabilities enable grocers to free up funds by deferring the cost of inventory ownership further back into the supply chain until the transaction of filling a replenishment order at the store actually takes place.

In a VMI model, the supplier, distributor or 3rd Party Cold Storage Logistics (3PL) provider controls inventory levels at the distribution center (DC) or warehouse, managing what should or should not be shipped to a grocer. These levels are managed by the supplier based on several factors, the most critical of which are expected demand and minimum and maximum inventory levels.   Read more

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