Process and Operations

MRO Q&A: Vendor Managed Inventory

A reader is curious about vendor managed inventory in maintenance, and what guidelines to help determine which parts should be considered.

Q. What does vendor managed inventory mean in maintenance, and are there guidelines to help determine which parts should be considered?

A. With vendor managed inventories (VMI), an agreement basically is reached between a vendor and a manufacturer to ensure that an agreed-upon level of specified parts is maintained by the service provider. Either an agreed-upon frequency of replenishment is determined or information is furnished, through electronic data interchange (EDI), to alert the vendor when inventory levels need replenishment.

In maintenance, the guidelines for parts that could be incorporated into the VMI initiative would specify parts that are individually low in cost; parts that are not considered “critical” to the operation; components that are commonly and continually used in multiple applications; and parts which are not perishable or have a shelf life (for example, rubber goods). These guidelines entail a minimum of risk for the user.

If you wish to expand vendors' roles in VMI, you could consider including perishables, assemblies and parts manufactured by an original equipment manufacturer (OEM) or a secondary supplier to an OEM. Your risk would be greater, so it’s important to set specific expectations for both sides.