Are you consuming the same 100+ expendables and consumables over and over again?
If so, you'd be crazy to ignore the powerful impacts of a vendor managed inventory. The title might deceive you. You think vendor + inventory...no thanks. That's just giving them a sale.
If done right, with a win/win mindset, you could cut 30 - 90% of your total material costs (not the same as material price, read more here) instantly.
Let's dive deep into what a vendor managed inventory can do for you.
It'll eliminate 99% of your normal supply chain annoyances
This one may seem odd to you but it's the cold hard truth.
What annoys you when you have to source, process, chase and trace your expendable and consumable needs?
Is it the sourcing? Sending and reviewing quotes? Inputting them into your system?
Or is it cutting POs? Getting approvals? Fixing issues? Dealing with 10+ suppliers at the same time?
Think about it. If you feel a tingle in your gut when you think of a certain topic...those are your annoyances. You have them. Everyone does.
With an aircraft expendable and consumable vendor managed inventory, these annoyances are nearly eliminated for the items they cover.
It's true. The reason why you ask.
Save $15,000+ a month in material processing cost
Processing costs is a real expense. If you cut 50 POs a month your spending $10,000 - $20,000 a month in processing costs.
Imagine if you could cut that in half. Your CFO would praise you and raise you!
We've seen 10x this amount.
The exact amount will vary depending on the amount of material covered under a vendor managed inventory but the potential is there.
When you put your high consumption expendables and consumables in a vendor managed inventory, you eliminate nearly all of the processing that's normally required for the material.
No more sending RFQs, no more cutting, and following-up with POs, no more tracing shipments.
You get it.
Freight costs you 15 - 60% of your PO amount and a VMI will cut that
It costs you 15 - 60% of your total PO amount.
When you start using a vendor managed inventory, shipments are pre-planned and always consolidated.
Because your material planning will be more organized, you'll reduce your need to ship material critically. And either weekly or monthly you'll receive a consolidated shipment of all your replenishment material.
Consolidating saves and a vendor managed inventory is hyper focused on that.
Increase you and your team's productivity
Just imagine if you didn't have to cut any more RFQs or POs for certain material.
You'd have more productive time to focus on the more important projects. Your pooling agreement, asset repairs, an AOG, an upcoming maintenance check, whatever it is.
But you won't have to play around with expendable and consumable material.
If you can save even 3 hours of your time a week, I'd say that's a nice ROI on your time.
Dramatically cut your inventory burden and save millions of dollars
Inventory costs money.
Each and every year you have material sitting on your shelves. It's costing you 20% of the value of that inventory, every year.
So if you have a million dollars worth of inventory, it costs you $16,666.67 a month just to keep them in stock.
With a vendor managed inventory you only stock for the near term.
I've seen airlines go through a yearly RFP process and stock up their entire years worth of material.
Talk about a costly decision. They're not only incurring the 20% holding costs month-to-month, but it's a huge cash pit. All that money is tied up, unused, stuck in inventory.
A vendor managed inventory will help you reduce the cost of inventory but it'll also help you recapture cash.
You'll be able to plan better
The great part about a vendor managed inventory is you don't have to buy so much inventory and watch it waste away.
What if you have a fleet change or new SB or AD comes out that replaces material? You're stuck with it!
A vendor managed inventory is structured around minimum stock levels with a degree of safety and auto replenishment once you hit the minimum benchmark.
You'll not only have your own internal planning tools, you'll also have your trusted material advisors planning tools.
Planning. It's better and more visible in a VMI.
Automate redundant activities
The buzzword everyone loves to hate.
With a vendor managed inventory you get to automate redundant activities. No, it's nothing like iRobot .
By automation, I mean you'll receive material as you need them.
From your point of view, everything happens automatically.
Of course, you'll have to pitch in, help resolve possible issues, push freight through customs, but not very often.
Everything is on autopilot.
Expand your relationship with your trusted material adviser
Without your material partners, you'd have a flightless aircraft.
But when you start working with your material partner, you're a skeptic. Everyone is pulling at your sleeves saying they can sell you a part.
Great! But that makes you cautious of everyone. They're all sales and no value.
When you deepen your relationship by going with a vendor managed inventory agreement, you're putting a lot of trust in your counterpart.
This relationship will build and deepen your working relationship and friendship. As long as both parties do their part.
It'll also lead you to more material solutions that'll have an even bigger impact on your operation.
Whether you've thought about using a vendor managed inventory for your high consumption items or not, I urge you to re-read the benefits and really consider it.
It'll make you, your supply chain and your operation a lot more efficient. And it dramatically cuts your total material costs with zero investment.
And if you're considering it, take these 3 actions first:
- Download and read "The Ultimate Guide To Vendor Managed Inventory"
- Do some homework on our President...we like to build trust.
- Set up an initial 30-minute vendor managed consultation here.
Take advantage of these benefits and always remember, Never Forget Your Wings.