Vendor Managed Inventory
Vendor Managed Inventory
Vendor Managed Inventory
What is Inventory Management?
Inventory management refers to streamlining the maintenance of inventory in all its aspects like ordering, maintaining stocks, handling, and distributing raw materials or finished goods. It can be the backbone of an organization to meet sales, marketing, and revenue generation goals. Oftentimes adopting an inventory management software can help drive improvements in IT software when the databases need to be connected across multiple teams to sync accounting and stocks together.
Good inventory management means that stocks are always maintained at the right levels at the right time. This involves the following components:
- Inventory Types – Businesses should always know exactly what they need.
- Forecasting – To predict demand-supply balance and be ready with stock.
- Purchase Order Management- In line with real-time needs and forecasting, orders must be placed with suppliers.
- Storage of Inventory– Knowing where the stocks are and where to dispatch from.
- Handling and Tracking– Involve processing sales, packing, shipping, and keeping track of additions, removals for order fulfilment and stock levels.
- Inventory Management System– Simplifies tracking and accounting so that analysis and business decisions can be made easily.
What is Vendor Managed Inventory?
In the Vendor Managed Inventory, the inventory management is done by the vendor or supplier for the buyer, the buyer usually being a manufacturer, SME, MSME, or any other customer type.
In traditional supply chain management, the buyer identifies the existing inventory level and determines the stocks of raw material, components, or finished goods that are needed as well as the timeframes for addition and subtraction. The buyer then places purchase orders with various suppliers to source the requisite materials. These suppliers will fulfil the orders and raise invoices with the buyer.
Vendor Managed Inventory takes this process out of the buyer’s hands by identifying the stock levels and the requisite inventory, and supplies everything as agreed upon, and only raises the invoice. The buyer need not concern themselves with managing the inventory and closing any demand-supply gaps. It’s all done by the vendor, often including the sustainable packaging requirements during procurement.
For inventory management by vendors to be successful, some important factors must be in place as follows:
- Very clear communication about the scope of the inventory management and buyer expectations in terms of stocks and timeframes.
- Modes of efficient exchange of information- whether to use apps to communicate needs in real-time or pre-determined needs maintained via sheets, etc.
- Escalation Matrix for when there are emergencies or immediate orders to fulfil.
- Agreed-upon procedures for periodic performance review
- A collaborative approach towards vendors and open information sharing.
The most famous examples of vendor managed inventory include giant retailers where hundreds of suppliers or vendors maintain inventories of their product within the massive warehouses. Closer home, many B2B companies like Moglix, favour vendor managed inventory due to its advantages.
Benefits of Vendor Managed Inventory
Vendor Managed Inventory (VMI) improves the supply chain’s efficiency and contributes to higher sales and faster inventory turnaround.
- VMI takes the trouble of maintaining stock and getting end customers what they need out of the buyer’s hands. The buyer can invest time and other resources in optimizing the sales and development growth aspects of the business.
- It reduces any chances of delay in restocking due to communication or logistics lag between the supplier’s provisions and the buyer’s order. The buyer can potentially never go out of stock if the system is designed well with good forecasting and analysis.
- Vendor Managed Inventory makes it possible for the vendors to gain valuable insights into the sales data and demand-supply. It improves the ability to forecast future requirements for big orders or projects.
- Buyers can cut down carrying, purchasing, and administrative costs by outsourcing inventory maintenance. The need to maintain safety stock and high inventory drops as do warehousing costs.
It can also cut down on the consumption of resources as vendors can be incentivized to adopt sustainable packaging practices at more achievable scales.
Vendor Managed Inventory for Sustainable Packaging
Maintaining large inventories comes with the drawback of packaging waste and pollution for manufacturing industries and FMCG sectors. Companies have historically tried to cut inventory management costs and have faced backlash in recent years due to environmental damage.
Moving to a Vendor Managed Inventory model can help with the global shift towards sustainable packaging for SMEs, MSMEs, and large companies alike. Sustainable packaging solutions providers like Moglix enable lesser consumption and more recycling while mediating vendor managed inventory. They can help procure goods from vendors that will undergo sustainable packaging and then storage at Moglix warehouses before shipping with their freight logistics partners. Contact Moglix for your procurement and sustainable packaging needs.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Vendor Management
Vendor Management
Vendor Management
What is Vendor Management?
A vendor is someone that provides goods and services to organizations. A large organization deals with hundreds if not thousands of vendors at a time. Organizations have to select the best vendors after scrutinizing the available options. They have to negotiate vendor contracts, evaluate performances, track supplies, manage relationships, and ensure timely payments. Vendor management is the process when companies do all these activities to manage their vendors effectively.
Benefits of Vendor Management
An organization that manages its vendors effectively and efficiently will enjoy the following benefits:
- Selecting the best vendors
Price shouldn’t be the key metric when selecting vendors. An organization that is serious about vendor management often selects vendors by a variety of metrics. Metrics such as reliability, reputation, turnaround time, etc. are as important as the price. Additionally, organizations must select packaging vendors that use sustainable packaging. Sustainable packaging is great for the environment. Furthermore, sustainable packaging enhances the quality of packages and brings down the cost. - Managing documentation
A large organization has tons of vendors for different geographical locations, raw materials, and so on. Even vendors that supply the same thing in the same place can have different contracts based on how their contracts were negotiated. Other than that, there are a variety of documents that need to be managed. As such, organizations should have a centralized system where all the documents of different vendors should be kept, and all the important information can be seen from the platform itself. - Performance management
To manage vendors effectively, their performances must be compared on Key Performance Indicators (KPI). A system where managers can see all the vendors’ performance on the KPIs would lead to an accurate assessment of vendors, increase efficiency, and improve the company’s performance.
Challenges
Managing vendors is not an easy task; here are the challenges an organization is likely to face:
- Selecting the best vendors for the job
Price shouldn’t be the key metric when selecting vendors. An organization that is serious about vendor management often selects vendors by a variety of metrics. Metrics such as reliability, reputation, turnaround time, etc. are as important as the price. Additionally, organizations must select packaging vendors that use sustainable packaging. Sustainable packaging is great for the environment. Furthermore, sustainable packaging enhances the quality of packages and brings down the cost. - Confusion between vendors
Without a good system in place, chaos can ensue. For example, relying on multiple packaging vendors can result in an increase in supply costs and quality issues. Additionally, through their system, organizations should ensure that their packaging vendors use sustainable packaging. With the increase in global warming, sustainable packaging is the way to go. Sustainable packaging can also bring costs down. - Managing contracts
Organizations enter into a wide range of contracts with different parties. With vendors, organizations often negotiate the terms in a long process and then sign the contract. As such, there are a lot of differences even among similar contracts. As such, a contract management system that helps in negotiating, managing, signing, and renewing contracts is a must these days. - Managing risks
Many things can go wrong when an organization is working with a wide range of vendors. Potential incidents such as breach of contract, a breach in compliance, security issues, to name a few can make things difficult for an organization. They should be able to monitor risks that can result in monetary and reputational loss.
Vendor Management Processes
The following are some vendor management processes:
- Setting up parameters
Organizations need to set up parameters on which vendors should be scrutinized. Vendors that provide products/services of a similar nature should be compared to the same parameters. Organizations should also have business goals in mind when selecting vendors. This will make it easier to gauge the performance of vendors later on. Organizations must have sustainable packaging as one of the parameters. Sustainable packaging is not only great for the environment, but it enhances the reputation of an organization. - Vendor Management Team
A vendor management team is a must for a large organization. This team should have the business acumen to select the most suitable vendors, negotiating contracts, assessing vendor performances, and ensuring timely payments. This team should be responsible for maintaining healthy relationships with all the vendors. - Vendor Database
A database for all information related to vendors will go a long way to improve an organization’s efficiency. Vendors should be categorized based on their type, function, or any other metric the company chooses. This will help in comparing the performances of vendors that serve similar functions. A centralized database will streamline data and provide key insights with the help of Artificial Intelligence.
Conclusion
Organizations are always trying to expand their business. As they grow, they have to deal with a wide range of vendors. To ensure that organizations stay efficient when dealing with vendors, an effective vendor management system is essential. The performance of vendors affects the business of an organization. You should design an apt vendor management process to ensure that your vendors provide value to the organization. For more information, fill the form attached in the footer or contact us.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Moglix becomes Latest Startup to Join the Unicorn Club
Moglix becomes Latest Startup to Join the Unicorn Club
Moglix, a B2B e-commerce platform for manufacturing goods, has raised $120 million as a part of its latest series E funding round, led by Falcon Edge Capital and Harvard Management Company (HMC), taking the overall valuation of the company to $1 billion.
Existing investors Tiger Global, Sequoia Capital India and Venture Highway also participated as part of this round.
This is almost a three-time jump in valuation for the company which had last raised $60 million in July 2019, at a valuation of $200 million-$300 million.
Read: Moglix launches supply chain finance platform Credlix
With the current equity infusion, the total funds raised till date by Moglix stands at $220 million.
“We started six years ago with a firm belief in the untapped potential of the Indian manufacturing sector. We are glad that Falcon Edge Capital and Harvard Management Company (HMC) have partnered with us in this journey. Falcon Edge, with its deep roots in the Middle East and Europe and an understanding of public companies will guide us through the next phase of our journey,”
said Rahul Garg, founder and chief executive officer, Moglix.
The six year old startup provides manufacturers with industrial goods through its e-commerce platform, and is building an operating system for manufacturing that provides its customers a full stack service covering procurement, packaging, supply chain financing and highly integrated software.
Supply Chain Management
Supply Chain Management
Supply Chain Management
What is Supply Chain Management?
Supply Chain Management (SCM) is the management of the flow or supply of goods and services from the point of origin to the point of consumption.
SCM involves the movement and storage of goods from raw materials to finished goods. It is done by creating a network chain of a supplier from the manufacturing sites to the companies or the location of point of sale . These supplier’s networks and links are crucial in the SCM to supply goods and services effectively and economically. The economic supply benefits both manufacturers and retailers to reduce inventory costs.
Study shows that 57% of companies believe that SCM provides a competitive edge to their business. The end goal of SCM is to improve the quality and performance of supply. The convenience of this supply chain helps manufacturers in shipment of goods and services, as they can reduce or increase the limit of supply according to the demand.
How Supply Chain Management Works?
The supply chain is a reliable link of suppliers for the smooth flow of goods and services from production till shipment and distribution. Every product that reaches the market is the result of organised and planned efforts of supply chain management. Recent studies show that 65% of executives report changes in the supply process..
These are components that are crucial and responsible for the performance of supply in the SCM system.
- Planning
In the process of supplying goods and services planning is the most crucial stage. It is done before the beginning of the supply chain. While planning the entire supply process the SCM checks all the important factors like manpower required, the demand for product or service, profit, costing, etc. - Sourcing
In this process, SCM chooses the supplier for the supply of goods and services. It is essential to provide good resources to the suppliers for the quality and performance of the whole process. SCM works to maintain a good relationship between suppliers and manage the ordering, receiving, and payment process. - Manufacturing
In this process, SCM works to organise the raw materials and manufacturing of the product. All the required quality checks, the packaging process, and the delivery schedule are done in this stage. - Delivery and Logistics
SCM organizes all the orders and schedules the delivery in this stage. Dispatch of the products, receiving payments, and invoice generation is the key process while delivery. Transportation and logistics account for around 12% of the global GDP. - Returning
A supply network is created to pick the exchange or return products from the customers in this stage.
Importance Of Supply Chain Management
An effective supply chain network helps the organisation to create and maintain the standard and quality of supply for the customers. It helps the manufacturer and companies to cut down the cost of supply from the production to the delivery. With good supply partners and networks, companies can supply the goods and services globally to the International markets.
Supply Chain Management is important to solve the delivery and return/exchange related problems of the customers. It works constantly to improve the quality of service by identifying the potential problems and issues in the supply process. SCM software and analytical tools further organize the ordering and shipment process of products.
Key Features Of Supply Chain Management
There are certain factors in the SCM to make the supply process of the product more effective. These are some of the key features in SCM which is crucial to maintain the good reputation of the organisation.
- Connected :
Managing organised and unorganised data from social media and other internet platforms. - Collaborative
Collaborating with the supply partners to improve the supply performance by using a cloud-based commerce network. - Cyber aware
Protection of the SCM system from hackers and other cyber-related issues. - Comprehensive
All the data and insights are scaled in real-time to avoid future supply errors. 50% of professionals believe technology plays a crucial role in the supply chain industry.
Example Of Supply Chain Management
One of the classic examples of supply chain collaboration is Walmart and Procter & Gamble who started working together in the late 1980s. Retailers and manufacturers used to share limited information before these two companies started working. Because of its good influence and strategy, Walmart formalised the retail link system in the early 1990s.
Another good example of SCM is Walgreens Boots Alliance Inc. which worked effectively to transform its supply chain system in 2016. This company has one of the largest pharmacy chains in the United States.
CONCLUSION
SCM plays an important role to overcome all difficulties in the supply chain. It helps companies to find the solution to all the challenges in the process of supplying products from the production to the marketplace. The organisation needs to have a dependable supply chain network to provide better service to the customers.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Supplier Management
Supplier Management
Supplier Management
In today’s fast-paced world, supply chains are continually evolving into multifaceted dynamic models. To accommodate the heavily changing demands of customers, companies need a robust Supplier Management plan.
What is Supplier Management?
Supplier Management is seen as a supporting pillar of the supply chain function that deals with the end-to-end activities of suppliers. Competent suppliers are crucial for the growth of a business, whether a manufacturing unit or a food retail chain.
At some point, every business or organization purchases goods and services from vendors (suppliers) to reduce manufacturing setup costs. Thus, Supplier Management refers to strategically dealing with third-party suppliers who provide essential products and services for your business.
For example: Consider that you are running a car business, in which the exhaust pipe of a specific car model is imported from a third-party vendor in a different county. You have noticed that the quality of those exhaust pipes is steadily getting worse. In such a case, you can establish a Supplier Management office in that country to regularly interact with those vendors and visit their sites from time to time to ensure the reliability of the parts supplied to you.
Why is Supplier Management important?
As most organizations are expanding their businesses globally, the demand for an effective supply chain is increasing rapidly. Supplier Management also safeguards a company’s sales in the international and domestic markets. It makes the activity of purchasing from third-party suppliers more profitable.
A well-structured Supplier Management model is required to develop good relations with suppliers, while handling customer requirements properly, and communicating these requirements to the company’s vendors..
With an efficient Supplier Management, businesses can import low-cost, high-quality goods and services from other countries without changing the current organization structure. You do not need to build a pen factory when you can order them from a third-party supplier at a discount.
Now that we have established the importance of Supplier Management, let’s look at some benefits of Supplier Management.
- Cost Saving:
With a dedicated Supplier Management team, businesses can understand the supply chain process better and focus on improvements. Supplier Management teams can use SRM (Supplier Relationship Management) tools to continually evaluate the performance of each supplier.
They can ask for quotations of required goods and services from multiple suppliers. This will fuel competition among suppliers and help organizations secure the best deals.
- Reduces Price Volatility:
Suppliers usually develop a professional rapport with their clients and establish trust so that their clients continue to purchase from them everytime there is a requirement. . Therefore, for the sake of long-term business associations, suppliers do not increase the prices of their products frequently.
Companies can take advantage of fixed prices and make long-term contracts with suppliers. A business can thus adjust the prices as per market demand without any price fluctuations from the supplier’s end.
- Quality Improvement:
Supplier Management plays a key role in maintaining quality. With onsite Supplier Management teams, organizations can understand how different markets across the globe function. . Based on this knowledge, businesses can build strategic relations with local suppliers.
To acquire more business, suppliers provide the best products and services to their existing customers, and this ultimately improves the quality of the finished goods and services. Buyers and suppliers can also exchange ideas for continuous improvement.
Buyers can implement ERP tools to track their supplies. They can generate MIS for sales, customer feedback, price fluctuations, and monitor profit figures to get the most out of Supplier Management tools.
In conclusion, Supplier Management is essential for businesses that aim to expand rapidly while effectively handling their suppliers. Supplier Management is a practical approach to maintain profits and increase the efficiency of a business. With the help of Supplier Management tools, companies can coordinate well with their suppliers and ensure significant savings. The traditional ways of managing suppliers are now obsolete. Companies need to adopt well-organized systems like Supplier Management to make informed decisions when buying from third-party suppliers.
Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
Purchase Order
Purchase Order
Purchase Order
What is a Purchase Order?
For the success of any company, tracking of inventory, ordering supplies and sellable goods is essential. For a well-organised purchasing process, it is important to look at the purchase order. But many companies fail to understand the importance of purchase order and their benefits. For packaging in purchases, it is better to use sustainable packaging as it is an eco-friendly process. We at Moglix believe in eco-friendly and earth-friendly packaging methods for our products.
Benefits of Purchase Order
Some of the benefits of using purchase orders are:
- Better accuracy in both financial and inventory management.
- Standardised budgeting as the funds must be made available before issuing a purchase order.
- Quick delivery because the purchase order schedules delivery as per the requirement of the buyer.
Elements of a Purchase Order
The purchase order contains the following information and companies’ name and the date of the purchase order. The elements are.
- Product’s name or specifications
- Exact Quantity of the product
- The Price of the product
- Any other additional terms like discounts etc.
Reasons Companies Use Purchase Order
Some of the common reasons concerning the use of purchase order by companies have been enumerated below:
1. Purchase Order Provides You Legal Protection
A purchase order is a legally binding agreement that binds both the parties, i.e. the buyer and the vendor. If anything goes wrong in the purchase, the purchase orders will help in proving it. To convert a purchase order into a legally binding document, it must be acknowledged by the vendor.
2.Tracking of Orders Becomes Easier
The PO helps you in maintaining a record for all the goods and services ordered by your company. It also keeps an account of your method of payment and the scheduled arrival time. The invoice numbers assist you in managing the invoices and also track your orders. By way of this document, you are well aware of your orders’ delivery time and date.
3.It Assists you During Auditing
Suppose your company gets audited, you will benefit through your purchase orders. You can provide the auditors with the document to cross-check with your invoices as well as slips. If you don’t have a purchase order, you have to go through a hard process of showing receipts, invoices and emails with the seller.
4.Eases the Communication Process with the Seller
Steps in Purchase Order
The steps in a purchase order for a buyer are as follows:
- The management notifies about a purchase to the purchasing department. It is also done by issuing a Requisition form for purchase.
- After getting approval of the department’s order, the purchase order is properly filled explaining the purchase details.
- The purchase order is sent to the vendor/seller to decide whether they will fulfil the order. If approved, it becomes a legally binding document.
- The purchaser then sends payment at the decided price and if not at an agreed date later on.
- Lastly, the seller delivers the order along with the invoice. The purchaser’s finance department then checks the invoice to ensure if both the documents have the same amount.
Purchase Order Format
To create a purchase order, you need to include the following information:
1.Header
Mention your company’s details, including your company name, date of the purchase order, address of the business and the order number.
2.Information Related to Vendor
Specify the original recipient of the purchase order. Here you need to mention the name of the vendor company, your contact name, and the vendor company’s business address.
3.Shipping Address
Mention the place where the order needs to be sent and the method of shipping like via air, road, shipping terms, and the expected delivery date.
4.Order Details
All the products mention the product’s code, a proper product description with name, specified price, and description.
5.Complete Summary
At the end of purchase order provide a subtotal of the amount by specifying the discounts, taxes, the total amount with the shipping costs.
Conclusion
Purchase order ensures easy tracking of goods. It also prevents fraud. What matters after approval of the purchase order is the safe delivery of the product. The product to be delivered properly needs good packaging. Hence, the best packaging method is sustainable packaging as it does not harm the environment and keeps the product safe.Industries & Impact
My vision for Moglix is to change the face of industrial commerce: Rahul Garg
Now and Next in the Infrastructure Sector
Moglix enabled Agile MRO Procurement at Scale through Workflow Digitization of large EPC company
The Benefit of E-Catalog for Indirect Materials Procurement
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Startups fight COVID-19: Moglix fights against India’s oxygen crisis
Startups fight COVID-19: Moglix fights against India’s oxygen crisis
As India battles the deadly second wave of the COVID-19 pandemic, startups, corporates, and individuals are all rallying together to ensure that they are doing their bit. The biggest challenge in the second wave is the dearth of oxygen cylinders along with crucial medicines.
“We estimate the need for at least 100,000 oxygen concentrators across India. However, each person buying an oxygen concentrator for themselves is not scalable and will lead to inefficient distribution of precious resources. Most people will find the cost prohibitive and the requirement short-lived (one to two weeks),”
Rahul says.
B2B ecommerce startup Moglix has been supplying PPE, oxygen concentrators, oximeters, thermometers etc. to essential goods and services companies to ensure their employees are protected. It has also distributed 15 million+ PPE kits and safety items amid this pandemic.
The startup has developed a “group sharing model” for increasing the impact of every oxygen concentrator by 100x, and is enabling organisations, NGOs, trusts, and RWAs to create oxygen concentrator banks for patients and providing a safety net for their communities.
“If your organisation would like to join us in this mission to provide a safety network to corona warriors, please write to us at info@moglix.com. We can help you set up similar network-based models for your organisation and share our learning/ SOPs. Let us come together to do our bit in this fight,”
Rahul Adds.
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