Vendor Managed Inventory (VMI)

17 November 2005

In the world of vendor managed inventory (VMI), What benefits does it actually give to your business and to your customers business. Let's take an example of tank level monitoring and distributing product in tankers around the country or continent filling up tanks. How much does it cost for each delivery and how much is delivered at each drop..? If the amount delivered can be increased then you need fewer visits to the tank to fill it up and therefore you reduce your logisitics costs. The savings depend on a range of factors but typically an increase in delivery of just 6% ensures that the telemetry pays for itself.

 

As transportation costs go up then the savings provided by remote tank level monitoring go up and the benefits increase further still. In most situations the decision as to whether or not telemetry will pay for itself is not difficult, but it doesn't end there. Are you facing increased competition and reduced margins..? Does your sales team need that little bit extra to offer to the client in order to secure their business and if you could do that would you be able to tie the customer into a longer contract term…? In return your customer gets more efficient deliveries (they normally have to provide access etc..), as well as increased confidence knowing that they will never run out of product. Your customer becomes a mere bystander, you are reactive to situations that the telemetry is telling you about and everyone works better, sleeps better and saves money and the telemetry does all the hard work. You customer no longers has to get wrapped up to trek out to the tank and take a dip reading, risking life and limb balancing on top of a tank in a howling gale. You can even take it all one stage further and have automatic ordering…. It may be that the site where the tank is is unmanned so you save them a regular trip to site to take a level reading. The worse case is if your customer forgets to take a reading, runs out and their production stops - you get a call and it's panic stations. Your customer is losing money as production has stopped and you lose money as you've had to drop everything else and serve this one issue, setting a tanker off on a special journey that probably costs more than you make. Telemetry also gives you traceability. Jump on the internet, log on to the secure site and select the tank in question, enter a date range and hey presto - a graph showing the tank level. No more disputed deliveries, see if product is being drawn out of the tank when it shouldn't be to detect leaks and catch thieves. You can even give yourself a helping hand at stock take time.

 

For more information on level sensors click here:

 

http://www.powelectrics.co.uk/level/index.html


 

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