Takeaways for CPOs from Indian Auto Industry’s Most Successful VMI Program

It’s amazing what a vendor managed inventory system can do to your supply chain. There is a lot to learn from the most successful vendor managed inventory systems for CPOs.

One of Indian auto industry’s leading manufacturers has put in place a  successful vendor managed inventory system.  The VMI program has enabled it to sustain cost leadership over the long term. Here is an overview of their VMI program.

75% of Components Sourced from Local Suppliers

The auto manufacturer has focused on building strategic relationships with suppliers from the ground up through vendor consolidation. A key aspect of its localization has been to develop captive suppliers that hold inventories at their warehouses.

These suppliers’ warehouses are located within a defined logistical radius. Vendor managed inventory systems allow the auto manufacturer the convenience of on-demand onsite delivery within a short period of time.

100% Visibility into Clean Procurement Data

The auto manufacturer uses an automated inventory replenishment and reordering system. All strategic suppliers have integrated their inventory holding data with that of the single digital procurement solution of the auto manufacturer.

Collaborative data sharing has paved the path for collaborative planning among the auto OEM and its suppliers. Each stakeholder in the supply chain has complete visibility into the evolving dynamics of demand and supply.

JIT Delivery and Lean Inventory Holding

The automotive manufacturer has a well-defined system for suppliers to send their industrial goods to its plant premises.  The auto manufacturer allows suppliers’ trucks to enter its plant premises 30 minutes before the scheduled time for stock replenishment.

This has radically reduced working capital blockage. It has also unlocked more real estate for storage of multiple categories of indirect procurement items, and reduced warehousing costs.

6s, Kanban, and Bin Card at Supplier’s Warehouses

The automotive manufacturer conducts periodic visits at its suppliers’ warehouses. During these visits they audit the total quality management systems and best practices of suppliers. As part of the vendor managed inventory program suppliers are required to adopt 6s, kanban and bin card systems at their warehouses.

Moglix provides vendor management inventory solutions that enable both agility at scale and reliability to your indirect procurement. To know more about vendor consolidation and  vendor managed inventory solutions for indirect procurement, visit https://blog.business.moglix.com/optimize-mro-procurement

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