In this age of virtual reality, I pose a question: “Do you know where your inventory is located?”
Not your physical inventory – that’s probably somewhere on your plant floor and you probably have a very efficient system to track this inventory.
Vendor Managed Inventory
VMI is inventory on consignment. You’ve shipped items to your customer and they are fundamentally storing them for you until they either sell them or consume them, while you virtually own the inventory. Having a way to track this inventory, as well as bill your customer when the items have been consumed, is essential.
Can you track when the inventory was shipped, the tracking number, how much has been consumed, what serial numbers were associated to the shipment and of those, which have been consumed? Can you immediately invoice the consumption and, if necessary, change the price during consumption? Can all of this be done easily and quickly in one module with the press of a button?
Outsourced Inventory Management
Outsourced inventory is the inventory you’ve shipped to a vendor for a service and/or it’s the inventory you expect to receive from that vendor or another one up the supply chain.
You may determine it’s more efficient to have your widget inspected by an outsourced testing facility to ensure the quality of your product. The vendor will literally stamp their approval on the widget and send it off to the next vendor for assembly before sending the final product back to you (or your customer) for shipment.
Do you have a method to track all of this, especially since there is a lot of virtuality involved (and faith) in getting a quality product back to you or your customers? Can you track the state of the inventory, who has it, when was it shipped either from you or a vendor up the line and when you can expect the final product? Is it easy to view pending Advanced Shipping Notices (ASNs) and drop shipments? Can you do all of this easily, within one module, without going back to your purchase orders, packing slips or sales orders?
We live in fast-paced times and we aren’t ever going back to spreadsheets and whiteboards.
If you can’t track your VMI and outsourced inventory at least as efficiently as I’ve described, you are wasting time and money. And that’s not virtual time and money, it’s real.