Converting an assembly plant to VMI
Warehouse management with vendor-managed inventory
SITUATION
One of the world’s largest makers of Automated Teller Machines (ATM) wanted to move to a vendor managed inventory model at an assembly plant in the U.S. Southeast. The company needed a logistics partner to both operate the inbound supplier hub and manage just-in-time delivery to the assembly line based on production demand signals. DSV was chosen because of its experience providing logistics support for high-volume manufacturing operations.
KEYS TO SUCCESS
Manage warehouse under VMI model. DSV receives all inbound shipments and manages both client and supplier-owned inventory in discreet areas. DSV alerts suppliers to inventory volume and they replenish inventory per agreed min/max levels.
JIT delivery. DSV receives forecasted orders via the client’s ERP system, then prepares and delivers bins directly to the line to support a Kanban process.
Optimize pick processes. DSV invested in a comprehensive engineering analysis of processes at the VMI hub, resulting in major productivity gains. Due to client consolidation of manufacturing facilities, the DSV-operated location handled an increase in production volume with only a minimal increase in picking staff.
RESULTS
- Cut cash cycle times. Suppliers retain ownership of inventory until it is used during assembly.
- Reduced on-hand inventory. Suppliers can precisely match required inventory to production forecasts, reducing labor/space required at the VMI hub.
- Reduced administrative costs. By working with suppliers to manage the replenishment process, DSV reduces the administrative staff and time required to manage supplier relationships and inbound material flow.
