How Vendor-Managed Inventory Can Reduce Risks For Large Industrial Projects
Date Published: November 8, 2018
Large-scale, industrial projects come with their own unique set of risks. Vendor-managed inventory can help customers significantly reduce these risks and improve efficiency.
Vendor-managed inventory is a streamlined method of supply-chain management where the vendor (supplier of the product) manages the inventory the customer needs. Through this relationship, the customer informs the supplier of anticipated production quantities, and the vendor adjusts deliveries to keep inventory levels as needed.
Here’s how vendor-managed inventory can help you reduce project risks and support your industrial project’s success:
Reduce chances of downtime
Downtime is one of the biggest fears in project management. Downtime is a period of time where equipment essential to the job is unavailable for use due to malfunction, and production is forced to stop.
Vendor-managed inventory helps to reduce the chance of downtime as backup equipment is on-site or in consignment in case the needed equipment breaks down or fails on-site.
Consignment is when the equipment vendor holds equipment at their own expense for the customer’s need.
Specific parts for equipment components could take days to order and ship to your jobsite, slowing down your production and costing you money. In some cases, certain parts or components could be temporarily out of stock, delaying your project’s completion even further.
Because having vendor-managed inventory means full visibility for your equipment vendor, vendor-managed inventory ensures that the right equipment will be available for the customer at the right time.
It also ensures that your equipment supplier keeps stock of spare parts, which are ready-at-hand as needed.
Reduce unnecessary expenses and wait times
In addition to helping prevent downtime, one of the greatest things about vendor-managed inventory is that it reduces unnecessary on-site expenses and wait times. If a project’s timeline is moving faster than expected and equipment ends up being needed sooner than anticipated (supply chain planning), the inventory is ready-at hand.
In addition to not having to stall the project while waiting for equipment (and incurring labour expenses and other daily costs while waiting), the customer can avoid processing and shipping delays because the equipment is on-site or available through consignment.
Vendor-managed inventory can also reduce the customer’s capital that is tied up in inventory. Having excess inventory is an unnecessary expense, which vendor-managed inventory curbs by having the right equipment available for the customer at the right time. Not to mention to storage space required to stock excess inventory and parts and insurance.
Vendor-managed inventory is successful in limiting the expenses associated with carrying inventory. Typically, a better pricing rate is offered by the equipment vendor for opting for vendor-managed supply rather than a non-vendor managed supply relationship through reduced supply-chain costs.
When suppliers and buyers operate separately, opportunities for cost-savings are missed from purchase limitations that don’t qualify for larger volume discounts. Since an established equipment vendor has big buying power, they can pass these savings on to the customer through a vendor-managed inventory relationship.
Reduce administrative errors and mishaps
Another perk of vendor-managed inventory is a lessened personal responsibility for the customer, as the experienced vendor manages the equipment inventory.
Customers often use equipment and services from many different vendors, which can be overwhelming to keep track of on top of regular project management duties. For example, a project manager can spend many hours in a day ordering, sourcing, receiving, inspecting, stocking and replenishing equipment and related parts and tools.
Equipment vendors like Axiom Equipment Group have decades of experience with equipment and project management.
By examining the customer’s operations, current usage, estimated production volumes and other important factors, the vendor can develop a strategy to order, stock and replenish an inventory. This streamlines and consolidates the process for the customer.
This reduction in administrative work allows the customer to focus their time and attention on more important aspects of their projects. Additionally, having a single point of contact is much more convenient.
A summary of billing and inventory, often called “logistics management” is sent by the vendor for streamlined and enhanced record keeping for the customer’s benefit. This ensures that project managers and key stakeholders have a big picture view of inventory management and can successfully integrate the data into future project planning.
Axiom Equipment Group’s team has decades of combined experience in equipment rental, sales and service. Working with other internationally accredited organizations, we have the unique ability to provide on-demand products for sale and rent. With our large fleet of new, reliable, well-maintained site equipment, we can meet large project demands quickly and supply quality equipment for smaller projects cost-effectively.
At Axiom Equipment Group, we believe in ZERO DOWNTIME so much that we stand behind it with a unique iron clad promise that combines a reliable equipment fleet with a rapid response program, around-the-clock availability, expert service and a financing option to fit every budget. Gain peace of mind knowing that if your equipment breaks down, we have the inventory to repair and replace it on the fly!
Axiom Equipment Group offers an exclusive VIP program, exclusively for customers with large projects with diverse and dynamic equipment needs.
This exclusive program is designed specifically so customers with complex, time-sensitive project requirements receive a customized solution that guarantees quick and convenient service and equipment supply 24/7.
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