Size of the Buying organization and consumption rates
This may sound glib, but it is true. Take retail for example – if you have thousands of shops and significant buying power suppliers may be able to justify the management cost against the potential reward where the customer is considerably smaller suppliers may be less willing to risk the financial cost against the likely payback.
Trust Is Hard To Earn
When everything goes well within the supply chain, there is no problem with vendor managed inventory systems, but to establish a really trusting relationship takes time. Switching over to
VMI does require a certain level of trust on behalf of all parties for example
- Will the supplier deliver as appropriate
- Will the customer consume as expected
- Have the right products been selected
Many organizations start small, with only a certain range of products, this builds trust, which means that in the early days of the VMI, rewards maybe smaller but the process is de-risked. allowing VMI time to ‗bed in‘ and to work out. It‘s important that you consider this upfront in order that your implementation doesn‘t take overly long!!
